Swatch Group's Japan sales rise 20% in H1, one of its strongest markets as group profit slips

Swatch Group's half-year results, published 21 July, name Japan as one of the group's strongest markets — sales there rose 20% at constant exchange rates in the first half, a pace matched among major markets only by the United States, at 27% — even as the Swiss watchmaker's own group-wide profitability slid over the same six months.

Group net sales rose 8.5% at constant exchange rates to CHF 3,121 million, according to the company, though currency movements — a hit of almost CHF 200 million — cut that to a 2.0% gain at reported rates. Operating profit fell to CHF 52 million from CHF 68 million a year earlier, taking the operating margin down to 1.7% from 2.2%, while net income slipped to CHF 16 million from CHF 17 million. Swatch Group said the weaker profit reflected the currency drag and the results of its Production segment, where it had 'deliberately' kept manufacturing capacity and jobs in place rather than resorting to short-time-work compensation, even as order volumes were still catching up.

Sales grew across every continent, the company said. Beyond Japan and the US, Spain (+28%) and Italy (+12%) led in Europe, while South Korea (+12%) and Australia (+5%) rounded out gains in Asia-Pacific. Growth was steeper still in what Swatch Group calls 'high-potential markets': India (+38%), Saudi Arabia (+41%) and Mexico (+26%). China, including Hong Kong and Macau, was more muted by comparison — sales through the group's own retail network there rose 9% on a stable store count, while third-party retailers' own replenishment orders 'remained modest', the company said. Ongoing instability in the Middle East also weighed on the more than 200 points of sale Swatch Group runs across that region.

The gain reads as more striking set against the wider Swiss watch industry: exports across the whole sector fell 0.7% over the same six months, according to the Federation of the Swiss Watch Industry — the benchmark Swatch Group itself cited in calling its own performance a case of 'very important global market share gains', not a rising tide. Japan's 20% is therefore not Swatch Group riding a stronger Japanese watch market; it is the group taking a larger share of one that, industry-wide, shrank.

Individual brands show where that share is coming from. Omega's own retail (boutique) sales grew 20% at constant rates and now make up 42% of the brand's total turnover, helped by its marketing spend as official timekeeper of the Milan–Cortina Winter Olympics. Harry Winston booked a 'remarkable' gain of nearly 20% in Greater China (including Hong Kong and Macau). Breguet had a strong half built on product launches tied to its 250th anniversary, and the entry- and mid-range trio of Longines, Tissot and Hamilton all grew by double digits — a performance the company linked to a 'growing middle class' of first-time Swiss-watch buyers across multiple markets. Swatch itself supplied the half's most-talked-about launch: its Audemars Piguet collaboration, Royal Pop, went on sale 16 May to demand that 'far exceeded supply', generating more than 25 billion social-media views by the company's own count and lifting sales of its existing MoonSwatch and Scuba Fifty Fathoms lines alongside it.

Group-owned boutiques, on a broadly stable store count, lifted productivity by 18% at constant rates and now account for almost half of Watches & Jewelry segment sales, while online sales grew 30%. Notably, the release flags a sharp late acceleration: sales rose 13.1% at constant rates in May and June alone, with an 8.6% operating margin over those two months against 1.7% for the half as a whole — a pace the company says has continued into July and should drive 'a significant improvement in profitability' in the second half.

The release gives no reason for Japan's strength specifically — no comment on tourist versus domestic buying, no brand-by-brand local detail — which is itself notable for a market this size: Swatch Group is content to let a bare 20% do the talking. Whether that number reflects a durable shift in Japanese appetite for Swiss watches, or simply a strong half riding the broader May–June acceleration the company is banking its full-year outlook on, is the thing to watch when Swatch Group next reports.