Swatch faces pressure to overhaul strategy

Swiss watchmaker Swatch is facing growing pressure from investors and analysts to accelerate reforms, as years of weak share performance and declining profits raise questions about its long-term strategy.

Market observers say the company needs to revive innovation, simplify its large portfolio of brands and strengthen corporate governance to regain investor confidence. Swatch recently proposed adding Swiss businessman Andreas Rickenbacher to its board at its May shareholder meeting, only the second new board appointment in the past decade, News.Az reports, citing Reuters.

Despite a recent boost from stronger-than-expected quarterly sales, Swatch’s shares have lagged behind major rivals and the broader luxury sector for more than 15 years. Critics argue the company has struggled to deliver major product breakthroughs since the death of founder Nicolas Hayek in 2010.

Analysts also point to structural challenges, including family control through a dual-class share system that gives the Hayek family significant voting power. Some governance experts say the board still needs more independent directors and stronger international industry experience.

Swatch’s wide portfolio of 16 brands has also drawn scrutiny. Some investors believe the company should focus more on high-margin luxury names while considering changes to weaker mid-market brands.

Operational issues have added to the pressure. High production levels despite softer demand have increased inventory and weighed on profitability, with core earnings falling sharply in the last fiscal year.

While some investors argue Swatch remains undervalued based on its assets, others warn that a full turnaround could take several years, even if major reforms are implemented.

News.Az 

By Aysel Mammadzada