Swatch Group reported profit plunged in the first half of 2016 with the Harry Winston jewelry brand outperforming the company’s famed watch brands.
Net income slumped 52 percent to $266.5 million (CHF 263 million) due to continued global economic weakness and an “overvalued” Swiss franc. Sales dropped 11 percent to $3.77 billion (CHF 3.72 billion), weighed by the company’s wholesale division.
“Unfortunately, worldwide turbulence did not decrease in the first half of 2016, characterized to no small extent by the unexpected Brexit decision on 24 June,” the company said in a statement.
Positive sales in Southeast Asia and the Middle East failed to outweigh weakness in Hong Kong and Europe. Swatch noted Hong Kong distributors were “very uneasy and do not reorder,” while Chinese and Russian tourism was near non-extant in Europe and Switzerland. Terror attacks in France and Belgium also affected tourism and the company’s retail sales.
Swatch singled out the Harry Winston brand after the high-end jeweler posted a strong half-year and record month in June. “Among the brands, Harry Winston increased net sales of high jewelry, thanks to its wider retail network, which now totals 36 salons, and to its extensive range of the most beautiful diamond jewelry and noble watches,” Swatch said.