Swatch Group Returns to Profit, Sees Strong Sales Ahead

SwatchPAY! watches, usable for pay-by-the-wrist contactless payments, are seen at the shop of Swiss watch manufacturer Swatch in Zurich, Switzerland April 14, 2021. (Reuters)
SwatchPAY! watches, usable for pay-by-the-wrist contactless payments, are seen at the shop of Swiss watch manufacturer Swatch in Zurich, Switzerland April 14, 2021. (Reuters)
TT
20

Swatch Group Returns to Profit, Sees Strong Sales Ahead

SwatchPAY! watches, usable for pay-by-the-wrist contactless payments, are seen at the shop of Swiss watch manufacturer Swatch in Zurich, Switzerland April 14, 2021. (Reuters)
SwatchPAY! watches, usable for pay-by-the-wrist contactless payments, are seen at the shop of Swiss watch manufacturer Swatch in Zurich, Switzerland April 14, 2021. (Reuters)

Swiss watchmaker Swatch Group said it expected double-digit sales growth in local currencies this year after sales and profits recovered in 2021.

It returned to a net profit of 774 million Swiss francs ($845 million), from a 53 million loss in 2020, while sales at constant currency rose nearly 30% to 7.31 billion francs, the maker of Omega and Longines watches said in a statement on Tuesday.

Sales of Swiss watches recovered strongly last year from the slump caused by pandemic-related lockdowns, but Swatch Group has been losing market share to industry major Rolex and connected watches like the Apple Watch.

Its shares, which rose significantly less than peers last year, fell out of the blue-chip SMI index in September.

Peer Richemont also posted a sales jump this month thanks to its strong jewellery business amid a wider luxury goods revival.

Swatch Group's operating margin reached 14%, after 0.9% last year and 12.4% in 2019. Its Watches & Jewelry segment (excluding production) had an operating margin of 17.7% for the entire year and 18.4% in the second half.

It said its board of directors would decide on its dividend proposal at its next meeting.



Uniqlo Operator Fast Retailing Seen Posting 14% Jump in Q2 Profit as Tariffs Loom 

Shoppers walk past Uniqlo store in King of Prussia Mall, as global markets brace for a hit to trade and growth caused by US President Donald Trump's decision to impose import tariffs on dozens of countries, in King of Prussia, Pennsylvania, US, April 3, 2025. (Reuters)
Shoppers walk past Uniqlo store in King of Prussia Mall, as global markets brace for a hit to trade and growth caused by US President Donald Trump's decision to impose import tariffs on dozens of countries, in King of Prussia, Pennsylvania, US, April 3, 2025. (Reuters)
TT
20

Uniqlo Operator Fast Retailing Seen Posting 14% Jump in Q2 Profit as Tariffs Loom 

Shoppers walk past Uniqlo store in King of Prussia Mall, as global markets brace for a hit to trade and growth caused by US President Donald Trump's decision to impose import tariffs on dozens of countries, in King of Prussia, Pennsylvania, US, April 3, 2025. (Reuters)
Shoppers walk past Uniqlo store in King of Prussia Mall, as global markets brace for a hit to trade and growth caused by US President Donald Trump's decision to impose import tariffs on dozens of countries, in King of Prussia, Pennsylvania, US, April 3, 2025. (Reuters)

The operator of Uniqlo, Japan's Fast Retailing, is expected to post another quarter of strong earnings on Thursday, but the focus will be on how the global clothing chain navigates a trade environment thrown into disarray by new US tariffs.

Fast Retailing is expected to post a 14% rise in operating profit to 125.9 billion yen ($866 million) in the three months through February from a year earlier, based on the LSEG consensus forecast drawn from six analysts.

That would be a record for the second quarter and a near doubling of the 7.4% profit growth of the first quarter.

From one store in Hiroshima, western Japan, 40 years ago, Uniqlo has grown to more than 2,500 locations across the world, selling inexpensive fleeces and cotton shirts made primarily in China and other Asian manufacturing hubs.

But that business model has been upended by widespread tariffs announced by US President Donald Trump, along with retaliation by some of America's trading partners.

The company has recently looked to North America and Europe for growth due to a slowing economy in China, its largest overseas consumer market with more than 900 Uniqlo stores on the mainland.

The tariffs will certainly be a negative for Fast Retailing, said independent analyst Mark Chadwick, but the measures will have the same impact on its retail peers and have a worse effect on other industries.

"Textile supply chains are probably more flexible than, say auto supply chains," said Chadwick, who writes on the Smartkarma platform. "In short, US tariffs will have a negative impact on Fast earnings looking out over the next 12 months, but less so than other global firms like Nintendo, Toyota."

SHARES RETREAT AFTER 2024 JUMP

Fast Retailing shares have fallen more than 4% this month, as Trump laid out his tariffs plan. They are down 19% in 2025, after surging nearly 50% last year.

Its founder Tadashi Yanai, Japan's richest man, aims to make his company the world's No. 1 clothing brand. Yanai, due to speak at Thursday's earnings briefing, has long been an advocate of free trade and has defended the company's business dealings in China when human rights concerns there have sprung up.

Trump said Japan would be hit with a 24% reciprocal tariff on non-auto products, while duties on Chinese goods will rise to 104%.

UBS analysts said that Uniqlo goods shipped to North America are procured from sources outside China, and Fast Retailing's tariff costs would be an estimated 34.3 billion yen next fiscal year, curbing business profit by about 6%.

"We will be watching closely whether a heightened price consciousness among consumers leads them to re-rate the balance between value and pricing at Uniqlo, potentially translating into business opportunities over the medium term," UBS's Takahiro Kazahaya wrote in a report this week.

Fast Retailing expects operating profit to reach 530 billion yen in the fiscal year ending in August, which would be a fourth straight year of record earnings.

Domestic sales have recently gotten a boost from a surge in duty-free shopping amid a tourism boom in Japan fueled by a weak yen.