Despite this, shares of Swatch Group AG (SIX:UHR) rose more than 7% on Friday after the company reported an increase in sales for the second half of the year along with a forecast for 2026, reports investing.com.
Swatch posted a 7.2% increase across all price segments in the fourth quarter, with the company noting that the momentum “continued into January 2026.” Sales in the second half of the year rose 4.7%, reversing the decline in the first half.
Swatch management expects “significant growth” in 2026 across all price segments, predicting that this will “significantly reduce or even help reverse” operating losses and significantly improve group profitability.
The company’s balance sheet remains strong, with operating cash flow up 52% to CHF507 million, helped by a 4.5% decline in inventories to CHF7.3 billion.
Net liquidity amounted to CHF 1.20 billion and the equity ratio was 87.1%. The Board of Directors proposed to maintain the dividend at CHF 0.90 per registered share despite the decline in earnings.
The 7% jump in Swatch shares reflects investor relief over improving sales trends and management confidence, which outweighed short-term earnings weakness.
As the stock has been subjected to strong short selling and trades at a P/E ratio of 38x for 2026 on reduced earnings, realizing the promised recovery in profitability will be critical to sustaining the rally.
Analysts remain divided on whether the consumer market recovery in China and improved manufacturing efficiency will materialize as management expects.
