Interessant:
Shares of Swiss watchmaker
Swatch – owner of Balmain and Omega – ticked up 6% on Wednesday. Its profit for the last six months
fell 11% from last year, but that was a smaller drop than investors expected.
What Does This Mean?
Last month’s US retail sales grew
faster than predicted, which may have worked in Swatch’s favor: the timepiece specialist has turned a brisk business Stateside this year. Looking east, meanwhile, Asia gaveth and Asia tooketh away. Sales in China and Japan rose, but
recent protests in Hong Kong – the world’s biggest market for luxury Swiss watches – put off local shoppers and high-rolling tourists alike. Swatch’s sales there fell by more than 10% – leading to lower total revenue in the last six months than this time last year.
Why Should I Care?
For markets: Long-term greedy.
Another reason for Swatch’s sales decline was its recent crackdown on unauthorized resellers of its watches. The company has been cutting off their supply – which stops them from selling at large discounts – by buying back unsold stock from authorized dealers. That should mean Swatch can sell its watches at higher prices in the future. And since the cost of making watches won’t change, investors buying up Swatch’s shares may expect a higher future profit, all else being equal.
The bigger picture: Luxury’s eyeing up sustainability.
Luxury brands have a
reputation for being slow to adapt – especially compared to their fast-fashion cousins – and that’s certainly been the case for retail’s
transition to ecommerce. So you’d be forgiven for thinking luxury firms would be slow to pick up on consumers’
focus on sustainability, too. But on Monday, the world’s biggest luxury company LVMH (chaired by the world’s
second-richest person) announced a
tie-up with Beatle daughter/fashion brand Stella McCartney, known for her/its focus on sustainable and ethical luxury wares. LVMH may now find itself on the wishlists of investors
keen on companies that put ethical practice center stage.
