BUSINESS NEWS: Why the Swatch Group has millions of watches sitting in warehouses

Nick Kenyon

The Swatch Group have published their 2019 Half-Year Report, revealing some interesting information. The group has reported an increase in their inventory levels, which include components, movements and watches, to a total of 7.1 billion Swiss francs (up 2.6 per cent from 2018).

More broadly, the group, which owns brands such as Tissot, Longines and Omega, has reported a 3.7 per cent dip in sales compared to the previous year, attributing a portion of this negative result to efforts against the grey market, which undercut their retail channels by selling watches at heavily reduced prices.

 

Swatch Group have taken “uncompromising action against grey-market dealers, especially in Europe, the Middle East, Eastern Europe and South America, at the expense of a short-term negative impact on sales in the first half year in the triple-digit millions. In the long term, this will lead to positive effects, especially in the major markets.”

 

One part of this effort was explained as a “suspension of deliveries to grey-market dealers”, clearly attempting to dry up their access to stock by limiting the number of watches that leave Swatch Group production facilities. However, these numbers have reached concerning heights, with the 7.1 billion Swiss francs worth of inventory seen against the group’s full-year sales for 2018 at 8.48 billion, making the unmoving inventory worth almost a full year of watch sales at full retail pricing.

At least this surplus of stock means the Swatch Group has watches to sell, possibly explaining why the business is predicting positive growth for the full 2019 year. It will be interesting to see if these positive growth figures are realised, and where inventory levels are at by the close of 2019. For more details visit Swatch Group.