Swatch Group has cut about 2400 jobs, its biggest cull in at least three decades, and will trim its store network as the Swiss watchmaker recorded its first-ever loss.
The maker of Omega and Longines timepieces said Tuesday it accelerated plans to shut stores definitively in Hong Kong as well as shops that sell its colorful namesake brand and CK. The loss came as sales in the six months through June plummeted 43 percent due to tot the impact of Covid-19.
In a break with its strategy during previous crises such as the 2009 financial downturn, Swatch is leaning more on slashing jobs, a signal that this year is different. CEO Nick Hayek has said that during hard times, the problem with cutting jobs is it’s difficult to find qualified staff when the market rebounds.
“Winston Churchill said ‘never waste a good crisis’, and that’s exactly what we’re going to do, especially in the second half of the year,” Hayek said in prepared video remarks.
The stock was little changed in early trading, having dropped 28 percent this year.
The CEO said Swatch expects a profit this year as countries ease lockdown measures that had led to shuttered shops and travel bans amid the coronavirus pandemic. The company’s first-half operating loss of US$347 million was twice as big as analysts expected. In the second half, Swatch plans to introduce new products, including a Tissot smartwatch.
Swatch announced the end of its 22-year-old contract to sell Calvin Klein watches in October, and many of the closures were related to that decision, Hayek said. The company’s plastic namesake brand is also reducing its reliance on brick-and-mortar stores and will rely more on e-commerce.
Swatch forecast that the industry will recover quickly as consumers catch up on shopping after lockdowns, as seen in China and Korea. The month of June already was profitable, thanks to pent-up demand in mainland China, where sales rose at a double-digit rate in May and June.
Still, only about half of its employees in Switzerland have returned to work full-time. Some 6000 employees were on short-time work on average last week, while about 2500 were taking an unused vacation or reducing overtime, according to chief controlling officer Peter Steiger.
The company had to shut up to 80 percent of its sales outlets around the world during lockdowns. Swatch closed 260 stores definitively and now has about 1800.