>>> Stellantis Announces further temporary factory shut downs due to global semi

Stellantis Announces further temporary factory shut downs due to global semiconductor shortage
- To idle Jefferson North Detriot assembly plant through Aug 9th
- To idle Belidere plant in Illinois through the end of July
- Windsor Ontario assembly plant will be idled through the end of July
- Toluva plant in Mexico to be closed through the end of July
- Toledo,Ohio plant will resume next week
- Sterling Heights, Michigan plant to resume production the week of July 26th

>>> FEDERAL RESERVE BEIGE BOOK: ECONOMY STRENGTHENED FROM LATE MAY TO EARLY JULY

FEDERAL RESERVE BEIGE BOOK: ECONOMY STRENGTHENED FROM LATE MAY TO EARLY JULY; OUTLOOK FOR DEMAND IMPROVED FURTHER BUT SOME EXPRESSED UNCERTAINTY OR PESSIMISM OVER EASING OF SUPPLY CONSTRAINTS

- Prices increased at an above-average pace, as seven Districts reported strong price growth and the rest saw moderate gains
- Pricing power was mixed, as some contacts reported that high end-user demand enabled them to increase their prices and others said that input price pressures had reduced their profit margins.
- Bank lending activity increased slightly or modestly in most Districts
- Strained car inventories resulted in somewhat lower car sales despite steady demand, and home sales rose slightly despite limited supply
- Three-quarters of Districts reported either slight or modest job gains and the remainder reported moderate or strong increases in employment

Overall Economic Activity
The U.S. economy strengthened further from late May to early July, displaying moderate to robust growth. Sectors reporting above-average growth included transportation, travel and tourism, manufacturing, and nonfinancial services. Energy markets improved slightly, and agriculture had mixed results. Supply-side disruptions became more widespread, including shortages of materials and labor, delivery delays, and low inventories of many consumer goods. Strained car inventories resulted in somewhat lower car sales despite steady demand, and home sales rose slightly despite limited supply. Nonauto retail sales grew at a moderate pace on balance, and tourism was buoyed by the further abatement of pandemic-related concerns. Residential construction softened in several Districts in response to rising costs, while commercial construction was mixed but up slightly on balance. Bank lending activity increased slightly or modestly in most Districts. The outlook for demand improved further, but many contacts expressed uncertainty or pessimism over the easing of supply constraints.

Employment and Wages
Three-quarters of Districts reported either slight or modest job gains and the remainder reported moderate or strong increases in employment. Healthy labor demand was broad-based but was seen as strongest for low-skilled positions. Wages increased at a moderate pace on average, and low-wage workers enjoyed above-average pay increases. Labor shortages were often cited as a reason firms could not staff at desired levels, with firms in three Districts delaying expansion or scaling back services due to understaffing. Higher than average turnover and lower retention rates were reported in three Districts. All Districts noted an increased use of non-wage cash incentives to attract and retain workers. Firms in several Districts expected the difficulty finding workers to extend into the early fall.
Prices
Prices increased at an above-average pace, as seven Districts reported strong price growth and the rest saw moderate gains. Pricing pressures were broad-based and grew more acute in the hospitality sector, as the reopening of hotels and restaurants confronted limited supplies of materials and workers. Construction costs remained high, but lumber prices reportedly eased a bit. Container prices returned to very high levels after having moderated in the spring. Pricing power was mixed, as some contacts reported that high end-user demand enabled them to increase their prices and others said that input price pressures had reduced their profit margins. While some contacts felt that pricing pressures were transitory, the majority expected further increases in input costs and selling prices in the coming months.

>>> US Close Dow +0,36% S&P +0,35% Nasdaq +0,21% Russell +0,08%

Closing Stock Market Summary

The S&P 500 (+0.4%), Nasdaq Composite (+0.2%), and Dow Jones Industrial Average (+0.4%) closed at record highs on Monday, tallying modest gains as investors remained committed to the market ahead of a busy week of events. The S&P 500 also set an all-time intraday high while the Russell 2000 increased just 0.1%. 

The financials sector (+1.0%) was the most influential group today, propped up by some enthusiasm surrounding the Q2 earnings reporting period, which will be kicked off by JPMorgan Chase (JPM 158.00, +2.23, +1.4%) and Goldman Sachs (GS 380.50, +8.74, +2.4%) tomorrow morning. A turnaround in Treasury yields also helped.  

The 10-yr yield settled one basis point higher at 1.36% after touching 1.33% overnight, and the 2-yr yield settled one basis point higher at 0.22% after touching 0.20% overnight. On a related note, the $58 bln 3-yr note auction was met with lukewarm demand while the $38 bln 10-yr auction received strong interest. The U.S. Dollar Index increased 0.1% to 92.23.

The communication services (+0.9%) and real estate (+0.9%) sectors followed closely behind with decent gains, with the former supported by Walt Disney (DIS 184.38, +7.34, +4.2%) after its "Black Widow" movie raked in more than $215 million globally over the weekend. Disney is also reportedly aiming to increase ESPN+ subscription costs. 

Today's lone holdouts were the consumer staples (-0.2%) and energy (-0.1%) sectors while the information technology sector (+0.04%) was held back by Apple (AAPL 144.50, -0.61, -0.4%) and Microsoft (MSFT 277.32, -0.62, -0.2%). Evidently, no sector gained or lost more than 1.0%.

Besides earnings, investors may have restrained conviction for the release of the June CPI report tomorrow. For what it's worth, PPI data for June will be released on Wednesday followed by Retail Sales data for June on Friday. Fed Chair Powell will also testify before Congress in his semiannual report on monetary policy, starting Wednesday.

In other corporate news, Broadcom (AVGO 485.75, +5.57, +1.2%) was a technology winner amid reports that it's looking to acquire SAS Institute for $15-20 bln. Chevron (CVX 104.28, +0.21, +0.2%) bucked the negative trend in the energy space after the stock was initiated with an Outperform rating at BMO Capital Markets.

Energy stocks in general were clipped by lower oil prices (74.10/bbl, -0.46, -0.6%), which some attributed to demand concerns because of the Delta Covid variant.  

Investors did not receive any notable economic data on Monday. Looking ahead, the Consumer Price Index for June, the Treasury Budget for June, and the NFIB Small Business Optimism Index for June will be released on Tuesday. 

  • S&P 500 +16.7% YTD
  • Russell 2000 +15.5% YTD
  • Nasdaq Composite +14.3% YTD
  • Dow Jones Industrial Average +14.3% YTD

(ZH) Mike Wilson Re-Emerges As Wall Street's Biggest Bear: Here's Why He Expects

Mike Wilson Re-Emerges As Wall Street's Biggest Bear: Here's Why He Expects A 20% Drop In Stocks

Back in the summer of 2018, when stocks were surging at least until the fourth quarter when the Fed made the policy error of hiking too hard and unleashing the first mini bear market since the financial crisis, and when virtually all sellside analysts were euphorically bullish, Morgan Stanley's Mike Wilson emerged as the street's lonesome bear (in addition to SocGen's permabear Albert Edwards of course), and it was then that Wilson first popularized the concept of the "rolling bear market." Speaking in May of 2018, Wilson said that "every sector has gone down at least 11 or 12 percent at least once this year. Some were down 18, 19, 20 percent. It’s fooling everybody at the index level, but there’s a lot of pain out there: Staples, homebuilders, some of these semiconductor stocks that are more cyclical are having problems."
Fast forward a little over three years, when Wilson has just reincarnated the "rolling" drop concept, only this time it has yet to grow to a fully mature "rolling bear market" and instead in his Monday Weekly Warmup note, Wilson defines what is plaguing thebroader market as a series of "rolling corrections", which like 2018 has meant that while 2021 has "produced another year of above average returns for major indices, under the surface it has been far from easy to navigate." This, to Wilson, is a classic mid-cycle transition price action (as a reminder Wilson has been pounding the table on his assertion that the market is now mid-cycle") resulting in "rotations away from higher risk with deteriorating breadth." The ultimate outcome of such rolling corrections will be a 20% "de-rating" in the broader market, i.e., an aggressive selloff.
Here is how Wilson defines his own descent into bearishness:
Over the past several months we have taken a less optimistic view of the markets than most based on our "mid cycle transition" narrative. During such periods, it's common for the market to rotate away from early cycle winners toward larger cap, higher quality stocks. This rotation away from early cycle leadership and small caps is now well established and underway (Exhibit 1). There is also a de-rating process for the broader market of approximately 20% that usually occurs (Exhibit 2).
So far, Wilson calculates, that derating process is only about 25% of the way done but he "fully expects it" to complete before year end. That means a forward P/E that is about 18x versus today's 21.3x, which using simple math means a drop of just under 700 S&P points (assuming flat fwd earnings). And while Wilson notes that "push back to that view has been strong" he reiterates that his bearish conviction "remains high based on other moves we have observed in the markets."
Going back to his trademark concept of "rolling bear markets corrections", Wilson writes that while "the S&P 500 has grinded higher and even exceeded our year end price target thanks to very positive earnings revisions, many sectors and stocks have corrected by 20%+. In fact, one could say we have experienced a rolling correction even as the index has remained in an strong uptrend."
Furthermore, and this validates our own recent observations on the technical cracks underneath the market surface, the Morgan Stanley strategist warns that financial markets "have taken on a much more defensive posture which is in-line with his midcycle transition narrative. Nowhere has this defensiveness been more visible than the Treasury market where 10 year yields have plummeted along with the yield curve."
While most have blamed extreme positioning and short covering on the back of the Fed's modest hawkishness after its June meeting, Wilson disagrees and argues that rates, and the yield curve topped in March, long before the Fed pivoted in June: "As such, we have taken a different view than the consensus citing the potential for a slow down in the second half of the year due to monetary aggregates' growth decelerating and peak rate of change on economic and earnings revisions."
There's more behind Wilson's growing bearish sentiment, and it has to do with the economy's deteriorating fundamentals.
In addition to the very difficult comps from last year's pull forward of demand for many consumer and technology goods, Morgan Stanley's chief equity strategist also thinks the consensus underappreciates the magnitude of the fiscal stimulus that was distributed in 1Q, or as he puts it, "The effect on personal disposal income, and spending, cannot be over-stated." And so, given the sharp decline in personal income since the last stimulus checks went out in March, retail sales and consumer spending more generally will likely follow soon, he argues.
Here Wilson notes that while some have countered that the child care tax credit checks will maintain the momentum in consumer spending, he disagrees stating that it doesn't really compare: "we're talking about $18B per month versus trillions over the past year from other programs that are fading fast. For example, the expiration of the supplemental unemployment benefits in August which will essentially offset the child care tax credits. Net net, when we include all these programs, our economics team forecasts a trajectory that moves more in line with GDP from here." Based on the impossible comparisons, Wilson warns that the US economy is headed for a big deceleration in y/y growth from the 22% surge in 1Q21 that troughs at -9% y/y decline in 1Q2022. Unless, of course, a new mega-crisis "unexpectedly emerges" greenlighting the injection of several trillions more in fiscal stimulus - one wonder if said crisis will be the "delta", "lmabda" variant, or something yet undefined...
Still looking back at the recent economic performance, Wilson notes that the trillions in Q1 stimulus translated into much better than expected GDP, sales growth and operating leverage, which he notes was "part of our bullish view a year ago but now it's played out and more importantly, it has been embedded into earnings expectations." Paradoxically, earnings revision breadth has never been higher even though the underlying causes behind the growth bump are now long gone.
Furthermore, absolute increases to 2Q estimates for the S&P 500 since the end of 1Q have amounted to +7.5% or 2x the typical revision during a normal quarter. In some sectors, it's much more extreme. In particular, we would cite consumer durables and tech hardware as outliers where a payback in demand seems likely.
Stepping away from economic fundamentals and turning back to recent market performance, Wilson says that he believes "the recent decline in rates, commodities, and cyclical stocks geared to economic growth is indicative of a market that is getting worried about the sustainability of the pace of recovery, especially relative to expectations."
He adds that perhaps the greatest warning sign coming from the market is "the increasing deterioration in breadth as the index makes new highs every week", something we highlighted last week when we showed the collapse in new 52-week highs on the NYSE.
And while the decline in long end rates has appropriately benefited large cap growth stocks over the past month, with the likes of AAPL, MSFT and AMZN all hitting record highs in recent days, Wilson argues that lower rates from here will no longer prove to be beneficial to stocks "as it will signal these growth fears are coming true."
We then get to one of Wilson's favorite topics: The equity risk premium.
We have long argued that the Equity Risk Premium (ERP) is unlikely to break 275bps on the downside as long as we are in a world of financial repression (Exhibit 9). Indeed, the ERP bottomed once again at that level in April just as rates were topping. Since then, rates have backed up 50bps as ERP has risen by slightly more, thereby keeping PEs the same. From here, our view is that ERP will rise further as rates drift lower, particular as the market starts to interpret these lower rates as bad for economic growth. Furthermore, whenever real 10 year yields have been this low in the context of decelerating growth, the ERP has been materially higher (Exhibit 10).
Conversely, should rates begin to recover and move higher later this year as the growth scare comes to an end, the ERP is unlikely to offset on the downside as it will begin to price in the continued recovery and inevitable move higher in rates as the Fed tapers asset purchases and raises the front end.
Wilson's bottom - and bearish - line is that valuations are coming down further as they typically do during all mid cycle transitions; the coming correction also fits with Wilson's 1940s analog (which he first detailed back in March), in which the MS strategist showed how ERPs bottomed around the same levels about a year after WWII ended and the economy reopened. In other words, "similar to today, the market anticipated the end of the war and appropriately priced the recovery to come. PEs fell sharply once the recovery was in full bloom in 1946 and the Fed began its long move away from the zero bound"
The only difference between the 1940s and now, is that back then the US was coming out of a war; well, according to many the only thing that can keep the US economy - and stocks - growing at the current nosebleed pace, is entrance into a war, either a regional, container conflict or something much bigger: think China.

(ZH) Goldman Admits There's No Value In The Junkiest Debt, Pushes 'Investors' To

Goldman Admits There's No Value In The Junkiest Debt, Pushes 'Investors' To Add More Complexity

In the latest Macro Credit note from Goldman Sachs' Credit Strategy Research group, Lofti Karoui admits that the Fed’s shift coupled with thin spread valuations most likely puts the trough in USD spreads behind us, as risk premia continue to adjust to the prospects of slower growth and a gradual tightening of policy.
In fact, they admit, there has been an almost record erosion of the excess premium in the low end of the USD bond market's rating spectrum, now trading at their richest since right before completely collapsing in 2008...
But, rather than cash-in your chips and wait for better opportunities (because how is a lowly i-bank gonna earn the spread and the commish if you don't trade), Karoui and his credit group suggest you 'rotate' from simple (extremely rich) credit exposure to more complex (and slightly less expensive) credit assets.
The exact wording could not be more 'doublespeak' as the bank says they:
"also shifted to a more defensive posture, preferring the “complexity premia” offered in structured products such as CLOs and consumer ABS."
So buy BB CLOs and sell your HY bonds because... elevated valuations coupled with the Fed’s shift leave little room for further compression in risk premia...
Historical percentile ranks for various bond index spreads. We use OAS for the HY, IG, agency MBS, and credit card ABS indices, discount margin for CLO tranches, and Z-spread for non-agency RMBS.
And we can only guess how much wider the bid-ask spread is on those 'complex' assets (ker-ching).
Buried deeper in the report, Goldman does admit there are 'some risks' to this decision at such extremely elevated spread valuations...
...risks naturally skew to the downside, especially over longer horizons. Coupled with the ultra-level of implied volatility, both on an absolute basis and relative to the equity market, we think this provides a good entry point to add hedges. In the near to medium term, and aside from the spread of new and more vaccine-resistant virus variants, we see three key risks to risk sentiment.
The first is a large inflation shock. So far, credit investors have treated the recent spike in inflation as a transitory shock (rightly so, in our view). But the risk of more persistent upward pressure on prices cannot be ruled out.
Given still negative average real yields in the IG market, investors’ protection against any repricing of inflation risk is non-existent.
The second risk is a premature return of shareholder-friendliness that would weaken liquidity positions and offset the tailwind from strong growth to credit quality. So far, the funding structures of the ongoing M&A wave have remained neutral to bondholders. But low funding costs, record-levels of balance sheet liquidity and elevated valuations in the equity market could gradually turn managements less conservative, from a credit perspective.
The third risk is a change in tax policy beyond what is currently priced in. In recent research, we showed that investors already demanded an extra premium against the risk of a higher statutory tax rate, following President Biden’s election. Should the rollback of the TCJA fuel a larger shock to free cash-flows than what is currently priced in, we think performance could be challenged, particularly among lower rated and over-leveraged issuers.
Trade accordingly.

The State of Fashion: Watches and Jewellery Report — Bringing the Sparkle Back

The State of Fashion: Watches and Jewellery Report — Bringing the Sparkle Back
The Business of Fashion and McKinsey & Company are pleased to present our State of Fashion Watches and Jewellery Report.
Download here : https://bit.ly/3AX1phC

With combined annual sales of over $329 billion in 2019, as estimated by McKinsey, fine jewellery ($280 billion) and watches ($49 billion) are highly significant industries in terms of their contribution to global business. They also represent meaningful cultural assets that have for centuries reflected human preoccupations with creativity, status, symbolism and self-expression. Yet today, both sectors find themselves at an inflection point.
As uncertainty caused by the Covid-19 pandemic rippled across the globe and short-circuited demand, the fine jewellery and watch industries suffered revenue declines of 10 to 15 and 25 to 30 percent respectively, according to McKinsey estimates, putting further strain on slow-to-adapt players and crystallising emerging trends in the market. Physical retail’s closure for extended periods revealed cracks in the fine jewellery and watch industries’ slow transition to digital — which lags far behind other luxury categories — with online sales representing approximately 13 percent of the market for fine jewellery and just 5 percent for watches. Meanwhile, the abrupt halt to global travel stifled fine jewellery and watch purchases made by consumers on trips abroad, which accounted for some 30 percent of the pre-pandemic market for both sectors.
While global travel is not expected to return to pre-pandemic levels much before 2024 according to McKinsey recovery scenarios, the fine jewellery and watch industries can get some of their sparkle back with a new set of rules that enable them to regain lost momentum. By 2025, we expect demand to increase from younger consumers as well as those shopping domestically, amid continuing restrictions on international travel and the rise of domestic duty-free zones in China. Already the biggest regional market, accounting for approximately 45 percent of branded global fine jewellery sales and approximately 50 percent for watches, Asia is set to expand its share even further, with China leading the way.
As part of the broader fashion industry, fine jewellery and watches share some common dynamics with luxury apparel and footwear. Yet, at the same time, the industries operate at a different pace from fashion and the direction of change is not always the same. They are set apart by different consumer behaviours, levels of brand penetration and paths to purchase, among other market dynamics. Moreover, since both the fine jewellery and watch industries have seen change accelerate throughout the pandemic, they merit a dedicated analysis that supplements our annual review of the broader fashion industry in The State of Fashion report.


This inaugural The State of Fashion: Watches and Jewellery special edition by The Business of Fashion and McKinsey & Company analyses the driving forces behind the industries’ changing dynamics. The scope of the market analysis featured in the report covers fine jewellery above the entry-level segment — that is jewellery which contains precious metals, such as gold and silver, and precious gems and is priced over $360 — in addition to watches spanning the premium to ultra-luxury value segments, meaning those priced over $180, in which the majority of industry value lies. This excludes the entry-level watch segment which is shaped by distinctly different market dynamics.
Through executive interviews and analysis of public and private companies, market intelligence and consumer surveys, we have identified six seismic industry shifts that we believe will influence transformational change in the fine jewellery and watch industries over the next five years. These cover a variety of perspectives ranging from consumer behaviour and business models to the products themselves. The report also spotlights several additional unfolding industry shifts. While these important shifts should be on industry leaders’ agendas over the next five years, they offer less certainty in terms of their trajectories, timing and magnitude of impact on individual players.
In the fine jewellery market, a brighter future lies ahead for branded jewellery, which according to McKinsey estimates will see compound annual growth rates (CAGR) of 8 to 12 percent from 2019 to 2025. As price points in branded jewellery can be around six times higher than of unbranded products, competition between established luxury jewellery brands, fashion brands and new direct-to-consumer (DTC) companies will heat up as players compete to win customers who are turning towards brands that reflect their distinct point of view.
Meanwhile, sustainability will play an increasingly important role in buying decisions. Purchases of fine jewellery that are influenced by sustainability will more than triple in the years ahead, presenting an opportunity for the industry to learn from its history and make positive change. To show consumers that they are sincere about driving environmental and social progress, companies will need to establish more transparency and traceability in their supply chains and move beyond the performative marketing that has plagued the industry in the past.

Finally, no business leader can ignore the game-changing impact of digital transformation in the years ahead. While the jewellery industry had been slow to make the leap to online sales, the pandemic has fundamentally reset expectations for both consumers and companies. The onus will be on business leaders to create compelling online solutions that serve a clear customer need and measure up to trusted face-to-face interactions which form part of the magic of the in-person buying experience.

In the premium to ultra-luxury watch industry, McKinsey analysis predicts a slower growth rate of 1 to 3 percent each year between 2019 and 2025 (compared to branded fine jewellery’s growth at 8 to 12 percent a year) which is a symptom of structural weaknesses in the short- to medium-term. Shifting consumer demand will require brands to fundamentally rethink their go-to-market strategies. As a result of this and a broader reshuffle of deeply embedded market dynamics, approximately $2.4 billion in revenue will transfer from retailers to watchmakers as direct-to-consumer business models take centre stage. This will fundamentally upend the industry’s current structure, requiring brands to improve client serving capabilities and multi-brand retailers to search for new ways to add value.
As brands forge closer relationships with their customers, they will also find opportunities to double-dip in the revenue pool by engaging in the pre-owned market. Driven by younger consumers in addition to collectors and cost-conscious shoppers — as well as an increasingly authenticated supply on digital marketplaces — the pre-owned watch market is set to become the industry’s fastest-growing segment, reaching $29 to $32 billion in sales by 2025. With digital pre-owned marketplaces currently dominating, brands must urgently decide how they want to participate.

Finally, established mid-market players, mainly based in Switzerland, will be squeezed at both ends: by smartwatches, digitally native brands and fashion players at the bottom, and at the top by a shift in demand to higher-value segments. As a result, they will risk foregoing $2.5 billion in value by 2025. Incumbents must breathe new life into both their products and brand narratives if they are to stem this revenue erosion.
While there is little doubt that the market will continue to present tough conditions for both the fine jewellery and watch industries, the next five years also offer significant opportunities for players to rewrite the rulebook across products, distribution models and engagement strategies. The impact of the global pandemic on the fine jewellery and watch industries has only made these necessary changes more apparent. The players who anticipate and embrace these marketplace shifts can take advantage of the glimmers of light that will punctuate an otherwise cloudy recovery period.
DTC Shakeup
Offline retail has been the life source of the watch industry for decades, with multi-brand retailers owning the customer relationship. But as consumers demand better online shopping experiences and brands aim for higher margins, watchmakers will grow their direct-to-consumer channels and take control of the customer relationship through a dynamic, omnichannel approach, as $2.4 billion in annual revenues are set to transfer from retailers to brands by 2025.
Mid-Market Squeeze
The traditional mid-market for watches is feeling pressure from both sides. At the entry level there is intense competition from digital natives, fashion brands and the fast-growing smartwatch category, and at the higher end many customers are trading up to luxury. Mid-market brands must revitalise their brand narratives to differentiate themselves, refine their product offerings and create more intimate connections with consumers, or risk foregoing revenues of up to $2.5 billion by 2025.
Pre-Owned Profits
Once the preserve of private dealers and small-scale retailers, the pre-owned watch market has become increasingly attractive thanks to digitisation, which turned it into the industry’s fastest-growing segment. The market is expected to reach $29 to $32 billion in sales by 2025, which will be more than half the size of the first-hand market at the time. Brands must work hard to capitalise on this shift, and digital platforms will need to sharpen their business models in an increasingly competitive environment.
Buying Into Brands
Despite the prominence of some of fine jewellery’s biggest players, with their iconic brand identities and global reach, sales of branded fine jewellery still account for just 20 percent of the market. But by 2025, brands are set to take a bigger slice from the unbranded segment, growing to represent between 25 and 30 percent of the market. Those able to convert consumers to branded jewellery will share in the spoils of the collective $80 to $100 billion up for grabs.
Online Magic
Fine jewellery sales are traditionally associated with a bespoke service and magical in-store experiences that do not easily translate online. With online jewellery purchases surging since the pandemic, the onus is now on brands and retailers to better understand the relationship between physical and digital channels to develop enchanting experiences that capture more of the online fine jewellery market. With online sales expected to grow from 13 percent to 18 to 21 percent of the overall market between 2019 and 2025, $60 to $80 billion are at stake.
Sustainability Surge
Fine jewellery purchases influenced by sustainability considerations are poised for dramatic growth. By 2025, an estimated 20 to 30 percent of global fine jewellery sales will be influenced by sustainability considerations from environmental impact to ethical sourcing practices. But leaders in a previously slow-to-act industry must look beyond sustainability as a factor in risk mitigation and embrace it as an opportunity to build brand equity by pursuing responsible business practices.

WWD : Swatch Sees Improved Sales in H1, Expects to Surpass 2019 Levels in H2

Swatch Sees Improved Sales in H1, Expects to Surpass 2019 Levels in H2
Swatch said sales from its own retail stores outpaced the group average over the first half of the year.
Hodinkee x Swatch
Courtesy

PARIS — Sales have picked up at Swatch Group, the group reported Monday, citing a significant acceleration in the second quarter thanks to the reopening of key markets following months of pandemic lockdown measures.
The group, which owns Longines, Blancpain, Harry Winston, Tissot and Omega, among other labels, is targeting strong growth in the second half of the year, when it aims to rise above 2019 levels.
“The easing of COVID-19 restrictions announced by European and Asian countries, as well as the resumption of tourism in many regions, will provide a further boost in sales,” predicted the group in a statement.
Sales for the first half came to 3.39 billion Swiss francs, or $3.7 billion, up 55 percent compared to the previous year at constant exchange rates. That figure was 12.3 percent lower than the first half in 2019.

Swatch said the sales performance was led by China, Macau, the U.S. and Russia, with business from its own retail stores outpacing the group average, while e-commerce continued to grow. Travel-related business continued to suffer, however, with sales in airports and travel destinations remaining significantly below 2019 levels, the group said.
The group closed 135 stores over the period, reducing employees by 2.7 percent. It also opened 36 new stores.
Net income came to 270 million Swiss francs compared to last year’s operating loss of 327 million Swiss francs. The company flagged improvement in its operating margin over the first half, which stood at 17 percent — above the 2019 figure of 19.2 percent.
In March, executives at Swatch flagged a strong recovery in the U.S. while the situation in Europe remained complicated. They also noted a quick recovery in countries no longer in lockdown, especially mainland China. Greater China was Swatch’s largest market last year, accounting for 44.5 percent of sales.