Swatch shows there’s plenty of time left for non-smart watches

Time will tell.
Time will tell.
Image: Reuters/Denis Balibouse
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The numbers: Ticking along. Headline profit in the first half of this year fell by nearly 20% versus the previous year, which doesn’t sound like a great result for the Swiss watch group. But the shortfall was due largely to the surging Swiss franc, which has gained more than 15% versus the euro so far this year. When the group converts its sales outside of Switzerland into francs, it puts a big dent in otherwise decent results.

The takeaway: The markets are looking past the currency complications and focusing on Swatch’s expectations for a “strong second half,” with sales in South Korea, China, and traditional mechanical timepieces expected to boost growth. The company’s shares jumped by more than 5% in early trading, clawing back losses it has suffered due to Swiss franc strength and a big new competitor entering the market…

What’s interesting: That competitor is, of course, the Apple Watch, and to defend its territory Swatch is adding some smart features to its watches—a chip that allows for wireless payments will appear in the US, China, and Switzerland later this year. But besides this and some other rudimentary touchscreen functions—a compass for hikers, a fitness tracker tailored for, slightly randomly, beach volleyball players—Swatch is not planning to launch a fully fledged smartwatch. After all, it has plenty of other brands and models to bolster its market share in the mechanical-watch market, which remains plenty lucrative—Omega’s latest tie-in with the upcoming James Bond film Spectre is expected to quickly shift a limited run of 15,007 units (get it?) at more than $7,000 a pop.