This story has been updated at 1:20 p.m. EST.
PARIS — Swatch Group is showing signs of improvement with an uptick in sales in the first half of 2026.
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The Swiss watchmaking company said Tuesday that net sales grew 8.5 percent at constant exchange in the six months ended June 30, reaching 3.12 billion Swiss francs.
Attributing the increase to "a solid momentum across all price segments and on every continent," it noted a marked acceleration in the second quarter's sales, which were up 9.4 percent at constant exchange rates.
Operating profit reached 52 million Swiss francs, down 23.5 percent compared to the same period in 2025. The figure was weighed down by currency headwinds, which left a 200 million Swiss francs dent, and the production segment, as Swatch chose to keep factories and jobs intact rather than cut hours.
Net income stood at 16 million Swiss francs.
For Citi analyst Thomas Chauvet, the semestrial results indicated that "growth inflection [is] confirmed, but margin recovery [is] still needed" in a research note.
The note also highlighted that while Swatch Group had done better than consensus estimates in net sales, its EBIT margin and net profit were below the expected targets by 57 percent and 81 percent respectively.
Markets had mixed reactions, with shares initially at 199 Swiss francs slipping 1.7 percent in early trading before rallying by 3 percent to 205.10 Swiss francs by mid-afternoon.
Swatch Group also highlighted "very important global market shares gains" against the 0.7 percent slump in first-half exports shared by the Federation of the Swiss Watch Industry, released separately on Tuesday after the group's results.
The group's core watches and jewelry division saw sales rise 9.5 percent at constant exchange rates, with a 9 percent operating margin that jumped to 15 percent in May and June.
Looking ahead to the second half, Swatch Group said the "strong sales acceleration" in May and June that continued in the first weeks of July set expectations for "an important sales growth" as well as a significant improvement in profitability for the remainder of 2026.
It also said that its verticalized production capabilities and choice to maintain production jobs despite high costs would allow it quickly react to rising market demand across all price segments.
In the first half of 2026, Swatch Group's brands saw growth on every continent, with the U.S. growing 27 percent while markets across Europe saw "a positive trend," with the company highlighting Spain up 28 percent and Italy 12 percent.
It also saw "a very strong growth" in markets deemed "high-potential" such as India, which grew 38 percent; Mexico, up 26 percent, and Saudi Arabia with a 41 percent surge.
In Greater China, which includes the Hong Kong and Macao markets, the picture was mixed, with retail sales rising 9 percent on a stable store base, but wholesale replenishment orders described as modest.
In the Middle East where the war with Iran continues to unfold, the group said chronic instability "negatively impacted" its points of sales, which top the 200-mark across its porfolio.
The Swatch Group's own retail network, which accounts for "almost half" of the division's revenue, was a key growth driver for the semester, with sales growing 18 percent at constant rates. Online sales increased 30 percent.
Although the company does not break out sales by brand, it said Bréguet saw a strong first half thanks to releases around its 250th anniversary; Harry Winston had "outstanding growth across regions," including a 20 percent constant‑currency gains in Greater China, and Omega's retail sales climbed 20 percent and now represent 42 percent of its turnover, helped by its role as Official Timekeeper of the Milan-Cortina Olympic Winter Games.
Longines, Tissot and Hamilton all booked double‑digit growth, underlining demand for entry‑level and mid‑range Swiss watches.
The company noted that "these segments provide excellent visibility for Swiss watches among a growing middle class in many countries and which may convert into future customers."
Another play in that direction is its Audemars Piguet x Swatch "Royal Pop" collaboration, which launched on May 16 amidst scenes of chaos globally.
The watchmaking group described it as a global hit that far outstripped supply, with more than 25 billion social media views and a "huge flow of new consumers around the world, sometimes very young and who take interest for the first time in a mechanical watchmaking product."
Demand for its MoonSwatch and Scuba Fifty Fathoms collaborations, respectively with Omega and Blancpain, was also lifted.
The Royal Pop, "which aims to change the customers' habit of wearing watches only at their wrist, gives the opportunity to the entire Swiss Made watch industry to create a new market," it said.
New avenues would certainly plump up prospects for the sector, which is seeing "global demand remaining on track for fragile recovery," as Bernstein's Luca Solca in a research note on June Swiss watch export figures.
Shipments exiting the country grew 11.2 percent in June, just shy of 2.4 billion Swiss francs, according to the FHS's tallies.
Solca noted that "the month's data seems to be skewed upward" by the exports to France, which skyrocketed 103.5 percent year-on-year and have seen "significant increase since [December 2025], driven by its role as a logistics hub."
The FHS likewise characterized the figure as "broadly unrepresentative of actual demand in this market."
Excluding France would see the monthly tally for June exports grow a more modest 5.6 percent, Solca said.
Overall, the picture by market remained sharply divided in June. The U.S. continued to act as locomotive, with exports up 12.7 percent while Japan and Hong Kong also returned to growth, up 8.8 percent and 6.9 percent, respectively.
In Europe, the U.K. climbed 12.2 percent and Italy slumped 21.4 percent.
Shipments to the Middle East also grew 23.8 percent in the month, a positive result tempered by the fact that "part of this seems to reflect a catch-up in exports lost in March and April due to the war in the region," according to Solca.
"It remains too early to tell whether this growth is driven by momentary optimism from wholesale buyers about a return of tourists or reflects a more sustainable improvement in local demand," he added.
The picture for Asia likewise emerged mixed. Exports to mainland China shrank 16.5 percent while exports to Hong Kong rose by 6.9 percent. Japan and Singapore, respectively the fifth and sixth market by size currently, also grew by high-single-digit factors. South Korea and Taiwan, although more modest markets in size, leapt by 24.9 percent and 34.6 percent respectively.
"We believe mainland Chinese consumers continue to exhibit relatively high price elasticity — flocking to Hong Kong, Japan or South Korea to capture [foreign exchange]-driven price gaps, largely at the expense of mainland demand," Solca said.
All main material categories gained in value, with steel models growing 5 percent and bimetallic watches jumped 42.1 percent. Meanwhile, precious metal watches went up 2.9 percent in value although they were down 1.4 percent in volume, suggesting a rise in precious metals affecting prices.
Volumes also moved higher, with 123,000 more pieces exported in June, driven by steel watches, up 7 percent, and "other materials," rising 21.9 percent.
By export price, momentum was strongest at the accessible and high ends of the price range. The 200-to-500 Swiss franc segment jumped 54.1 percent, "likely supported by the Swatch x AP Royal Pop" collaboration, said RBC analyst Nikolaos Lafioniatis in a research note.
The high-end segment of watches over 3,000 Swiss francs at export prices climbed 14.2 percent.
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