Shares of Swatch have surged more than 18 per cent since the start of this year after sales of the MoonSwatch, a collaboration between Swatch and Omega, helped propel the world's biggest watchmaker's top line in 2022 as optimism about China's reopening boosts investor confidence.
The company's share price has increased about 22 per cent over the past year.
Swatch Group's sales increased 2.5 per cent to 7.499 billion Swiss francs ($8.18 billion) or by 4.6 per cent in constant currency terms. Net profit attributable to shareholders increased more than 5 per cent to 807 million Swiss francs in 2022 from a year earlier.
"After the end of Covid measures, consumption quickly recovered, not only in China, but also in the surrounding markets of Hong Kong SAR and Macau," the company said in its latest earnings statement.
"In addition, lifting of travel restrictions in China will revitalise sales in tourist destinations. The sales growth in January in China reinforces the group's expectation to aim for a record year in 2023."
China, the world's second largest economy, is expected to accelerate 5.2 per cent this year, after growing 3 per cent in 2022, according to the International Monetary Fund.
The company is upbeat about a rebound and expects strong sales growth in 2023 in all regions and segments of its 17 brands after double-digit sales growth in Europe, America, the Middle East, and most of the Asian markets was "severely dampened" by the significant decline in sales in China last year due to lockdowns, and then the Covid wave.
For the past two years the US was the biggest single market for the Swiss watch industry, accounting for 15 per cent of exported watches in 2022, the consultancy Deloitte said in a report last year on the Swiss watch industry.
Most industry executives surveyed by Deloitte indicated that the US is the next big growth market, followed by India, China and the countries comprising the Gulf Co-operation Council.
Swatch could hit record sales of as much as 9 billion Swiss francs in 2023 as China reopens, Swatch chief executive Nick Hayek told Bloomberg last week.
Swatch has 17 brands: Breguet, Harry Winston, Blancpain, Glashütte Original, Jaquet Droz, Léon Hatot, Omega, Longines, Rado, Union Glashütte, Tissot, Balmain, Certina, Mido, Hamilton, Swatch and Flik Flak.
The company has produced a special edition red dial watch commemorating the Chinese Year of the Rabbit that retails for $105.
This follows the successful roll-out of the MoonSwatch last March, which created a frenzy among watch enthusiasts and was trading at meteoric prices after its debut.
The MoonSwatch line was a best seller last year, with more than a million watches sold at 180 of the company's shops that exclusively offer the watch.
The MoonSwatch, a plastic version of the Omega Speedmaster, retails for $260 but due to high demand and not enough supply, prices soared more than 250 per cent.
The 11 versions of the watch are selling for between $320 and $1,370 on the Stockx market place, while the range on Chrono24.com is $278 to $4,442.
"The cosmic success of the MoonSwatch launch ... has changed the tide for entry level watches at least temporarily and has succeeded in attracting a legion of new fans to the industry," according to Deloitte.
"Demand ... remains unbroken high nine months after their launch, and queues in front of Swatch stores are still the order of the day," Swatch said in its latest earnings statement.
"Despite an additional 70 points of sale and greatly increased production, daily demand still far exceeds available product. The MoonSwatch is popular with an extremely broad spectrum of customers of all ages and origins. In the wake of the MoonSwatch hype, the entire Omega Speedmaster collection, for example, the Moonwatch models, also profited from greatly increased interest."