Story Highlight
– Swatch Group shares dropped 35% in five years.
– Richemont’s stock rose 61% during the same period.
– Swatch Group profits fell from CHF 800 million to CHF 25 million.
– Japanese watchmakers gaining market share over Swiss brands.
– Seiko, Citizen, and Casio stocks have significantly increased.
Full Story
Investors involved with the Swatch Group have intensified their calls for a more significant role in shaping the company’s strategy, as the group faces troubling financial performance.
Over the last five years, the share value of Swatch Group, which operates renowned brands including Omega, Longines, and Breguet, has plummeted by 35%. In contrast, shares of rival Richemont, home to luxury names such as Cartier and IWC, have surged by 61%.
Despite market fluctuations, long-term trends reveal a strong correlation between share prices and underlying profits. Swatch Group’s profit has experienced a steep decline, falling from over CHF 800 million in 2021 to below CHF 25 million last year. Conversely, Richemont’s fortunes have been more volatile, with its net profit rising dramatically to over €3.5 billion in 2023 before decreasing to €2.75 billion last year.
Recent financial results illustrate this disparity:
– Swatch Group (CHF bn):
– 2025: 6.28
– 2024: 6.74
– 2023: 7.89
– 2022: 7.50
– 2021: 7.31
– Richemont (EUR bn):
– 2025: 21.4
– 2024: 20.0
– 2023: 19.9
– 2022: 19.2
– 2021: 13.1
Richemont’s jewelry brands, particularly Cartier and Van Cleef & Arpels, have significantly outperformed many watch manufacturers, whose sales peaked at €3.9 billion in 2023 but contracted to €3.3 billion last year.
As previously reported, the market for Swiss luxury watches has become increasingly concentrated, with top brands like Rolex and Patek Philippe gaining dominance, leaving others struggling to sell a minimum of 50,000 watches annually.
Though there was a temporary surge in sales following the pandemic, Swiss watchmakers have generally balanced revenue by reducing unit sales while increasing prices. In addition, they have sought to capture a larger share of retail revenues through direct sales via their own stores, albeit often at the cost of margins due to the financial performance of some outlets.
Despite warnings from analysts about the sustainability of this high-price, low-volume strategy, as demonstrated at this year’s Watches and Wonders event, the Swiss watch industry appears to be steadfast in its approach.
It is particularly noteworthy that the Swatch Group remains a major player in the affordable watch segment with its Swatch and Tissot brands, selling millions of watches at lower price points.
However, to understand how new generations are introduced to wristwatches, attention must be given to lower-priced alternatives from firms like Timex, Fossil, and leading Japanese companies such as Citizen, Seiko, and Casio. These brands have been steadily increasing their market share, appealing to consumers that Swiss brands often overlook.
Notably, Casio leads with its G-Shock series, while Citizen excels in chronograph sales. Seiko enjoys popularity for both digital watches and entry-level mechanical options. These Japanese manufacturers are also gradually elevating their price points with premium lines, effectively retaining customers as they advance in their purchasing power.
Within just a few years, consumers may well own several Japanese watches before investing in their first Swiss model.
Financially, markets have responded favourably to the strategies employed by Japanese companies, with Seiko Group’s shares rising by 512% over the last five years, and Citizen’s stock increasing by 388%. While Casio’s stock has faced a 16% decline since 2021, it has rebounded by 28% in recent months.
These three Japanese watchmakers each generate substantial revenue from their watch divisions, surpassing CHF 1 billion annually. In contrast, only six Swiss brands have achieved this level of success, with few prospects of others joining them in the near future.
