Investment: Swatch or Richemont? What investors should consider when buying shares in watch manufacturers
The luxury industry is under pressure. However, watches and jewelry remain popular with investors. An analyst explains why the shares of Swatch and Richemont are in focus.
The Swatch Group's stock has been under pressure since Swatch surprised investors with weaker-than-expected half-year results. The Swiss watchmaker reported a decline in its operating profit from 68 to 52 million Swiss Francs (72 to 56 million Euros) compared to analysts' expectations of 102 million Swiss Francs (109 million Euros).
As a result, the stock price fell from around 200 Francs (214 Euros) to 182 Francs (just under 200 Euros). Chart-wise, the Swatch Group lacks momentum, with the stock failing to break above its key support level of 166 Francs (176 Euros), potentially leading to a drop to 155 to 150 Francs (176 to 170 Euros). Investors seem to be cashing in their profits and waiting to see how the company develops in the future.
Swatch is optimistic about the management's prospects, given that the company continues to operate underutilized factories.
On the other hand, Richemont appears to be a more profitable venture stemming from the demand for watches and jewelry. The Swiss company manufactures the Cartier brand, whose watches have been in high demand due to their association with superfan Taylor Swift. Richemont's portfolio also includes successful jewelry businesses such as Lange & Söhne, IWC, and van Cleef & Arpels.
Unlike Swatch, which focuses solely on watches, Richemont benefits from strong jewelry sales even during economic downturns. This diversification makes Richemont less cyclical than other luxury assets, making its stock potentially more stable in the long run.
Written by urgent.news from Handelsblatt's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
