Swatch chairman warns of overheating market amid exceptional growth >

03 august 2006

ZURICH (AFX) - Swatch Group chairman Nicolas Hayek warned of an overheating market amid exceptional growth rates in both the luxury and mainstream sectors.

In an interview with the Swiss Sunday paper SonntagsZeitung, Hayek said: 'The market is growing by 12 pct on a yearly basis and this cannot possibly go on forever.'

The Swiss watchmaker's luxury brand Breguet boasts annual average sales growth of 42 pct with the group currently unable to meet demand despite a 115 mln sfr investment in production since 2000, Hayek said.

He added the group was surprised at Breguet's quick recovery after it acquired the brand in 1999. 'Back then Breguet had annual turnover of 40 mln sfr, for the current year we expect more than ten times that.'

The plastic Swatch is currently also reporting exceptional sales growth of 17-18 pct, Hayek said.

Hayek said Swatch was cautious to avoid the three typical mistakes in an overheating market: pressuring retailers to order more watches than they can sell; raising product prices on a yearly basis; and hiring more people than can be sustained once growth rates fall.