The job cuts were predominantly at the shops, as Swatch held on to production workers. The company closed 260 stores and now has about 1800.
The CEO said Swatch expects a profit this year as countries ease lockdown measures, shops reopen and travel resumes. The company’s first-half operating loss of $US347 million ($496 million) was twice as big as analysts expected. In the second half, Swatch plans to introduce new products, including James Bond Omega timepieces and a Tissot smartwatch.
Swatch announced the end of its 22-year-old contract to sell Calvin Klein watches in October, and many of the closures were related to that decision, Hayek said. The company’s plastic namesake brand is also reducing its reliance on brick-and-mortar stores and will rely more on e-commerce.
The company will be shutting further stores going forward as it focuses more on online growth, according to Rene Weber, an analyst at Bank Vontobel.
“A big step has been made, but it will be ongoing,” Weber said. The Swatch brand alone had more than 500 stores at the end of last year.
Swatch forecast that the industry will recover quickly as consumers catch up on shopping after lockdowns, as seen in China and Korea. The month of June already was profitable, thanks to pent-up demand in mainland China, where sales rose at a double-digit rate in May and June.
Still, only about half of its employees in Switzerland have returned to work full-time. Some 6000 employees were on short-time work on average last week, while about 2500 were taking unused vacation or reducing overtime, according to Chief Controlling Officer Peter Steiger. The company expects the partial unemployment measures to end in the third quarter, when manufacturing will return to full capacity.
The company had to shut 80 per cent of its sales outlets around the world during the peak of the lockdowns. Its own stores have recovered faster than third-party retailers as measures eased.