Swatch reports stronger sales, but profit miss hurts shares

ZURICH, July 21 (Reuters) - Swiss watchmaker Swatch Group reported improved first-half sales on Tuesday but missed profit forecasts as the owner of the Omega, Longines and Tissot watch brands was hit by negative currency effects, sending its shares lower.

Sales were boosted by robust demand for the company's Royal Pop pocket watch, made in collaboration with high-end Swiss watchmaker Audemars Piguet.

The company said net sales rose 8.5% year on year at constant exchange rates in the first half of 2026 to reach 3.12 million Swiss francs ($3.85 million) despite geopolitical challenges in the conflict-riven Middle East.

Operating profit was 52 million francs, down from 68 million francs a year earlier, missing forecasts for 120 million francs.

Profits were burdened by negative currency effects and the results from the production segment owing to the decision to maintain capacities and jobs, Swatch said.

"Positive to see Swatch Group on a strong growth wave, though this has not translated into profitability," Bank Vontobel analysts said. "We see downside risk to market estimates."

Shares in the company were down 3.4% at 196.05 francs by 0747 GMT.

Swatch was forced to close some of its stores and limit queues after the Royal Pop's launch in May, with social media posts and video showing long lines of shoppers at stores in New York, London, Barcelona and Dubai. 

"From day one, demand for Royal Pop far exceeded supply and this frenzy will continue for months to come," Swatch said.

As well as boosting sales for Swatch, the $400-plus timepiece boasts high profit margins, which contributed to the improved operating profit.

A strong acceleration of sales in May and June points to continued growth and improved profitability in the second half, the company said.

Rival Richemont, which makes watches under the IWC, Jaeger-LeCoultre and Cartier brands, increased sales at its specialist watch business by 8% in the three months to June 30, the company said last week, buoyed by strength in the Americas, Japan and South Korea. 

($1 = 0.8098 Swiss francs)

(Reporting by Ariane Luthi and John RevillEditing by Miranda Murray and David Goodman)