Tackling the gray market is the right thing to do because the practice dents a watchmakers’ full-price sales and devalues its top-end brands (which in Swatch’s case include Omega and Longines). Swatch is heavily exposed to China and Hong Kong, with 22% of its revenue coming from the mainland and 11% from Hong Kong, according to analysts at Bryan Garnier. This echoes Chow Tai Fook Jewellery Group Ltd., whose same-store sales slipped 11% in Kong Kong and Macau in the three months to June 30. Inventories rose 2.6% to 7.1 billion Swiss francs ($7.2 billion) as the company culled those gray market deliveries. Swatch may well be able to navigate the challenges ahead, but don’t set your watch by it.

Source: Mint July 18, 2019 03:45 UTC