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January 15, 2015, 3:05 P.M. ET
Barron's Magazine
Watch- Makers- Wound- Up- by- Swiss- Shocker ...........................
By Johanna Bennett:
It’s not as if watch makers don’t already have plenty to worry about these days. Now, two of Switzerland’s biggest watch makers are getting hammered by today’s surprise move by the Swiss National Bank to ditch its anchor to the euro.
U.S.-listed shares for Swatch Group (SWGAY) and Cie. Financiere Richemont (CFRUY), the owner of the Cartier and Piaget brands, sank in afternoon market. Swiss central bankers scrapped a three-year-old cap against the euro, which sent the Swiss franc soaring against the euro.
The problem is that a strong Swiss franc can hurt exporters of Swiss goods, of which watch makers are among the most famous.
Swatch fell 5.3% to trade at $21.34, while Richemont dropped almost 4% to $8.36.
Watch makers already face a litany of challenges, namely lackluster economic growth in Europe and slowing growth in Asia. The pro-democracy protests that shut down Hong Kong last year hurt sales in the world’s biggest watch market.
And of course, watch-wearing in general has been hurt by the rising popularity of smart phones.
Earlier today, Richemont unveiled quarterly financial results, revealing that revenue growth stagnated for the first time in six years.
In the U.S., Movado Group (MOV) fell more than 11% during afternoon market action.
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