1) Omega is trying to move upmarket, having:
- increased prices dramatically (~30 to 50%) in the past few years, with
- more marketing: Olympics and James Bond, and
- pulling stock from third party stores while relying on their own boutiques. Who no longer give the expected 20% off MSRP.
If successful, they will end up like Rolex: widely known to the general public as an expensive watch to buy when you've 'made it'. Instead of 'the watch for when you cannot afford Rolex'. I think it will take 5-10 years for the general public's perceptions to change, but Swatch (being family controlled) should be disciplined enough to pull it off.
Those buyers priced out can always buy a cheaper brand instead: its common here to see am Omega boutique next to a Longines or Tissot one. I love Swatch's long term branding strategy, market segmentation...and their profit/cashflow numbers. Just wish they would give more transparent: giving breakdowns between their high end and low end segments, make conference calls available, and give a better breakdown in their P&L statement.
2) In late March, HSBC downgraded Richemont to neutral on fears that high-end watch demand may be starting to see a downturn (poorer sales and rising inventory at Hengdeli), partially due to a decline in 'gift giving' due to China's leadership transition. They were more optomistic on Swatch due to its lower end brands. HSBC turned out to be a a bit early, but still take note of this to see how accurate their reading of the (Chine) watch market was.
I still like Richemont, and would buy on any serious downturn.
Sterling ‘Flash Event’ of 7 October 2016
1 hour ago