According to Morgan Stanley analysts’ own price tracking data, Omega raised prices by 2 percent in Switzerland and China, while the largest export market for Swiss timepieces, the United States, experienced an 8 percent increase.
The timing of this price hike is notable as other watch brands under Swatch Group AG are grappling with revenue growth challenges. This increase in prices could potentially impact sales volumes for Omega, which ranks as the third-largest Swiss brand in terms of revenue.
In a report, Morgan Stanley analysts led by Edouard Aubin noted, “The Omega price increase results from weakness rather than strength. With some of the group’s leading brands (Longines, Tissot, Breguet, etc.) struggling, we estimate that the Swatch Group is increasingly dependent on Omega’s cash flow.”
As of now, there has been no immediate response from Omega regarding these developments.
The price hike by Omega, while aimed at strengthening financial performance, carries potential risks in terms of sales. As the watch industry continues to navigate challenges, the impact on Omega’s market position and overall brand performance will be closely observed.
Swatch Group got a third of its sales and about 60 percent of its operating profit from Omega in 2022, according to Morgan Stanley estimates. The brand, which recently introduced new versions of its Seamaster diving watch collection to mark the 75th anniversary of the model, could see pressure on sales growth following the price hikes.
The US overtook China in 2021 as the top export market for Swiss timepieces. Recent demand is showing signs of weakness however with exports to the US declining in April for the first time in more than two years. They rebounded in May.
While models from Rolex SA, the biggest Swiss watchmaker, are extremely difficult to buy at retail because demand outstrips supply, products from Omega, whose sales are estimated at about 2.5 billion francs ($2.8 billion), are easier to come by.
The price increases may reduce Omega’s sales volumes, especially since the brand isn’t actively trying to keep its bestselling models scarce, the Morgan Stanley analysts said.
Omega and other Swatch brands including Longines and Tissot raised prices in the UK and Europe in February.
Most Omega watches trade below their retail price on the secondary market while most Rolex models trade at a premium, according to data from WatchCharts.