Jun 15, 2009
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Swatch Group says cheaper brands holding up

Jun 15, 2009

By Silke Koltrowitz

ZURICH, June 15 (Reuters) - The wealthy are crimping their spending on high-end watches, the head of Swatch Group (UHR.VX) told Reuters, but the group is confident its 2009 sales will be flat as demand for its less expensive brands holds up.

James Bond, as played by Daniel Craig - ambassador for Omega of Swatch Group

"The really expensive luxury (watches) are suffering the most, but we are very strongly positioned thanks to Omega, Longines, Tissot and Swatch," Chief Executive Nick Hayek said in an interview on Monday 15 June.

Swatch Group, the world's largest watchmaker, is best known for its colourful plastic Swatch watches, but it also owns higher-end brands such as Breguet and Blancpain.

Hayek said he was confident 2009 sales would be flat in local currencies as demand for its watches, including its luxury brands, has improved, with demand in May and June higher than the previous year.

Swatch Group was being helped by the fact that stock of its watches at retailers was lower than for rivals, so shops were having to order more inventory.

By 0907 GMT, shares in the group had fallen 1.2 percent, largely in line with the DJ Stoxx personal and household goods index .SXQP.

Demand for Swiss watches has fallen sharply as customers worry about the economy and their jobs. Swatch Group component maker Universo is introducing shorter working hours from September.

"Universo makes over 50 percent of its sales (by supplying) third parties. They already cut back massively on orders in February," Hayek said.

Universo, which makes hands for Richemont's (CFR.VX) Cartier watches, will introduce shorter working hours for around 280 of its 350 employees and is making employees take three weeks holiday this summer.

It was difficult to tell whether other businesses at Swatch Group would also have to cut working hours, he said, though no job cuts were planned.

Hayek expects first-half sales to fall year on year, but the drop will not be as bad as the drop in Swiss watch exports. Swiss watch exports slumped 24 percent in the first four months of this year.

(Writing by Katie Reid, editing by Will Waterman)

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