UPDATE: SWATCH

STAY SHORT: SWISS WATCH EXPORTS FELL 12.3% IN OCTOBER : THE NEGATIVE DATA FLOW CONTINUES

HK -38.5%, USA -12.2%, Japan flat, China -5.1%, Italy -4.1% , Germany -4.7%

USA poor again as has been an area of support for them. Nothing has changed for us as worrying mix development continues and inventory will continue to require elevated marketing spend to shift.

Warning from peers in the US and struggling weak demand in Asia continues as the the Apple watch and wearable tech will continue to bite.
Could be tough Christmas ahead for them. Another warning on the way….

We stay short as we see a continued deterioration. Currently +38.77% on the trade

 

UPDATE: SWATCH
SWISS WATCH EXPORTS FELL MOST SINCE 2009

Tuesday • 20 October 2015 • 09:54

Europe looks ok but the rest pony by looks of it.

Record tourist numbers this summer so maybe not a surprise. Will that continue into winter?

USA is a major problem as has been a bright spot recently.

We are happy to stay short Swatch.

 

UPDATE: SWATCH
STAY SHORT

Thursday • 05 February 2015 • 13:31

UHR posted a poor set of figures with inline sales not feeding to the bottom line as a result of an increase in marketing expenses, and a worrying mix development, with low end brand outperformance impacting margins.

This will lead to mid single digit EBIT downgrades today, and both trends are expected to continue, as inventory will continue to require elevated marketing spend to shift

This is before the much anticipated and talked about launch of the Apple Watch.

Without the currency tailwind this year, and with luxury end markets set to remain under pressure (Japan, HK, Middle East, Russia).

We closed half the position post the SNB. For now we are happy to stick with the second bear call.+18.8%.

 

SHORT SWATCH = CLOSING HALF THE POSITION +17.50%

Thursday • 15 January 2015 • 16:09

CFR numbers this morning were poor. Not only was it a sales miss, but the miss was in the high margin Asian region which will hit the bottom line to a greater degree

The bull case has largey been driven on the FX headwind of 2014 becoming a tailwind, adding as much as 10% to EBIT alone without stabilisation of operational trends

That tailwind has disappeared today. As Swatch CEO Nick Hayek says “words fail me” as Swiss National Bank abandons franc cap. “Today’s SNB action is a tsunami, for the export industry and for tourism, and finally for the entire country”

The implications will be far reaching, translational and transactional, so the move lower for UHR will be greater than the FX move itself (as it was the last time the CHF moved aggressively in July/Aug 2011)

We have been fortunate today. Both times we have shorted UHR it has been good to us (+11.3%/+17.5%) and we are locking in half of our gains since the trade now becomes as much FX driven as it is operational and we have no edge in FX. But for the operational reasons listed above we are happy to stay short half a position

 

SHORT SWATCH = SWITZERLAND NOVEMBER WATCH EXPORTS FELL 4.4%

Thursday • 18 December 2014 • 07:56

Switzerland Nov. Watch Exports Fell 4.4%. Poor numbers and more confirmation of our bear case

Numbers still need to come down as loved by analysts. The iWatch still has not arrived

UBS think that 24m iWatches will be sold next year vs 28mn total exports from Swiss watch industry in 2013

Stay Short

 

SHORT SWATCH… TAG HEUER REACTING TO iWATCH THREAT

Wednesday • 17 December 2014 • 07:55

Tag Heuer enlists partners in smartwatch plan and may make acquisitions (Reuters article)

“Smartwatches represent a challenge to the Swiss watch industry that is comparable to the appearance of quartz technology. We cannot ignore this tsunami that is coming closer,” Semon said

They are all finally waking up to the threat. They have been in denial so far. iWatch is not even here and analysts are still in love with Swatch and numbers are too high

Stay short sell any rallies

 

REOPENING A SHORT

Tuesday • 09 December 2014 • 07:46

2014 EBIT consensus is too high at CHF1.97bn – could come down to c.CHF1.75 according to Mainfirst

One of our original arguments was that consensus was too high

Analysts still love them and expect organic growth. I think they are dreaming

Apple watch is not far away and will have a much bigger impact than most expect

UBS think that 24m iWatches will be sold next year vs 28mn total exports from Swiss watch industry in 2013

Tech and iWatch is the future

Looking to see them back at this years lows in the next 3 months

See original idea from September

 

CLOSING SHORT +11.33%

Tuesday • 21 October 2014 • 10:08

One we will re visit but Swiss watch data for September was fine. Time for a technical bounce.

MT still see them as a company in denial. The ongoing threat of the smart watch and that they are no longer an organic growth company will continue to weigh.

Still loved by analysts for the organic growth=dreaming.

Taking profit will look to re-short bientot.

 

STILL HAS 56% BUYS, 35% HOLDS AND 9% SELLS (-)

Friday • 19 September 2014 • 07:58

Optimism For Watch Industry Below Previous Years: Deloitte.

*Deloitte: 44% of Watch Execs. See Smartwatch As Next Big Thing.

*Swiss Watch Exports Fell Last Month, Ending Recovery: BI Chart.

More negative news yesterday.

Start of the D/G cycle for me as Barclays reduce PT to 565 vs 600 CHF and Stay Overweight this morning.

The HK numbers where poor and it’s their biggest market.

They are no longer a growth company and the street is banking on organic growth=dreaming.

Still has 56% Buys/35% Holds and 9% Sells.

One to stay short add on any bounces.

 

Wednesday • 17 September 2014 • 08:56

Richemont numbers miss. Sales light. Talking down demand in Europe & Asia. Jewellery & watches weak Bought into numbers yesterday as was swatch to an extent. Few recent articles talking them both up. Negative read for swatch whose business mix is not as good as CFR. Keep selling swatch on back of inventory/smart watch and management denial.

Smartwatches may comprise 40% of wrist devices by 2016: Gartner.

Release of Apple Watch next year will trigger greater consumer interest in the market.

Gartner says Apple Watch will probably attract many users despite comparatively high pricing due to its design and user interface.

Supply chain advantages mean Chinese vendors likely to sell Android Wear based smartwatches at very affordable prices.

By 2015, Android Wear smartwatches will probably retail at avg of $150.c

 

TRADING SHORT INTO TONIGHT’S APPLE EVENT

Tuesday • 09 September 2014 • 16:11

Swiss watch industry post an iWatch launch is compared to Blackberry’s demise, post the Apple iPhone introduction. Jonathan Ive, chief designer at Apple according to the NY Times.

Bold statement and a lot has been made of this in relation to Swatch. There is no doubt it will have an effect if they get it right. Apple has a massive following and a great track record at getting things right.

Until recently Swatch have been in denial stating that the iwatch will have no effect on sales
Swatch have finally reacted with talk of a fitness function. Too little too late in an area they have spent no money and have limited if any expertise.

Apple has employed world class big names to work on the iWatch.

Marc Newson Designer.

Burberry chief executive Angela Ahrendts.

Yves Saint Laurent’s Paul Deneve.

Nike’s Ben Shaffer.

So far Swatch has de rated more on poor earnings momentum. This is more on China sales and inventory issues which are set to continue.

Now is the time of the iWatch.

Trading Short into tonight’s Apple event