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Last Updated: Thursday, 2 February 2006, 10:58 GMT
Luxury brands boost Swatch sales
Omega watch
Swatch says shoppers are prepared to splash out for expensive watches
Swiss watchmaker Swatch has reported a record jump in sales, boosted by increasing demand for its luxury Omega and Breguet brands.

The world's biggest watchmaker said its gross sales rose 8.3% to 4.49bn Swiss francs ($3.5bn; $1.9bn) in 2005.

In common with other luxury watch manufacturers, Swatch has seen sales of its top-of-the-range products soar.

But the family-run company has been battling to improve the performance of its lower-price Swatch watch brand.

Expensive tastes

Swatch said cutbacks and savings at the division, which is famous for producing colourful plastic watches, had started to bear fruit.

Swatch watch display
Analysts are not convinced that all is well with the Swatch watch brand

However, analysts said Swatch faced stiff competition from Chinese manufacturers in the lower-end market.

"The company has a strong growth catalyst behind brands like Omega, (but it) is still struggling with the Swatch brand," said analyst Mario Montagnani at Julius Baer.

"I don't think that we will see a strong turnaround for these (lower segment) brands."

Nevertheless, increasing consumer demand for more expensive, jewel-encrusted watches has helped to lift sales across the industry.

Swiss luxury goods group Richemont and Italian jeweller Bulgari have both reported strong luxury watch sales.

Swatch, which also announced a share buyback worth 300m Swiss francs, said it expected to deliver "considerably better" full-year results in March.

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