Profit at Swiss watch brand Swatch was cut by more than half during its latest financial year despite its sales increasing further past the £200m mark.
The London-headquartered division has reported a pre-tax profit of £11.1m for 2023, down from the £23.6m it posted for 2022.
According to newly-filed accounts with Companies House, Swatch has also reported a turnover of £218.1m for the year, up from £211.5m.
Swatch said that the increase in its pre-tax profit was a result of a rise of cost of sales and distribution and administrative expenses.
According to the results, distribution and administrative expenses grew by 14 per cent to £63.8m.
Swatch eyeing new UK stores
A statement signed off by the board said: “Management will continue to develop the company’s operations and to take necessary steps to improve the trading performance of the company as it considers appropriate including opening new retail stores and reviewing [the] existing portfolio on an ongoing basis.”
Swatch generated a turnover of £195.2m from the sale of watches in the year, a rise from £192.9m, while its sales from spare parts and repair services also increased from £13.1m to £14.9m.
Its turnover from commissions and warranties grew from £5.4m to £7.9m.
In England, Swatch’s turnover rose from £206.9m to £211.3m and from £4.6m to £6.7m in Ireland.
During the year the average number of people employed by the UK arm of Swatch increased from 423 to 462.
Watch seller expects ‘strong improvement’
For the same financial year, the wider Swatch group reported that its net sales were up by 12.6 per cent at constant exchange rates to CHF 7.8bn (£7bn)
For the first half of 2024, Swatch posted net sales of CHF 3.4bn (£3bn), down 14.3 per cent against the previous year at current exchange rates.
On the outlook for its second half, the group said: “The group expects the Chinese market (including Hong Kong SAR and Macau SAR) to remain challenging for the entire luxury goods industry until the end of the year.
“However, China’s potential remains intact. The current situation presents the group’s brands in the lower price segment with excellent opportunities for further growth and market share gains.
“Further strong growth is expected in Japan and the USA in the second half of 2024, accelerated by investments in the group’s own retail network.
“The prospects in many European countries are promising. The Omega brand will benefit from a global media presence as the official timekeeper of the Olympic Games in Paris.
“The cost-cutting program introduced at the start of the year has begun to bear fruits. The full positive impact, particularly on results in the Production segment, will be felt in the second half of the year.
“The group expects the situation to improve strongly in the second half of the year.”