Swatch Group's Response to Morgan Stanley Investment Management's Research on the Swiss Watch Industry

Introduction: Swatch Group's Concerns with Morgan Stanley's Research

Morgan Stanley Investment Management (MSIM) prides itself on conducting timely and in-depth research to serve its clients' best interests. However, Swatch Group believes that the research report titled 'Ninth Annual Swiss Watcher' dated 18 February 2026 fails to meet these standards. The report contains unverified data, incorrect figures, and misleading conclusions that could harm both investors and the analyzed companies. This response outlines the specific shortcomings and their implications.

Lack of Reliable Data Basis

The research claims to rely on five data sources, including public financial reports, CEO statements, direct discussions with brands, FHS export data, and industry contacts. While the first two are generally reliable, they do not provide brand-level details, making them unsuitable for the report's purposes. The remaining sources are inherently subjective and unverifiable. As a result, the entire foundation of the report is shaky, and none of the presented figures can be independently confirmed.

Questionable Methodology and False Precision

The report uses point estimates instead of ranges, creating a false sense of accuracy. For instance, it states that Swatch Group held a 16.1% market share in 2025, a precise figure that is impossible to derive from such speculative data. Additionally, the methodology appears designed to obscure the poor data quality, with plausibility checks yielding absurd results, such as halving Breguet's unit sales without explanation when confronted with incorrect pricing assumptions. This approach misleads readers and undermines the report's credibility.

Incorrect Findings and Significant Deviations

Swatch Group compared the report's estimates with actual figures for its brands and found substantial discrepancies. On average, turnover estimates deviated by 24%, with individual brands ranging from -53% to +46% error. Unit sales estimates were even worse, averaging a 39% deviation, with Hamilton's actual sales being three times higher than reported. Retail share assumptions also missed the mark, such as Breguet's actual 54% retail share versus the estimated 22%. These errors compound when calculating average retail prices, leading to further inaccuracies, like Mido's actual average price of CHF 969 versus the estimated CHF 2,131.

Negligent Conclusions and Rankings

Given the magnitude of errors, any ranking derived from this data is unreliable. For example, the report places Omega fifth by turnover, but with a potential deviation of up to 50%, Omega could rank anywhere from second to sixth. Such rankings are meaningless and could mislead investors and consumers. The report's claim that Omega fell two positions is thus baseless.

Reputation-Damaging Statements

The report includes assertions that could harm brand trust, such as claiming that 10 brands, including several from Swatch Group, experienced turnover contractions of 15% or more. These statements are not only inaccurate but also potentially damaging to customer and retailer confidence. Swatch Group may consider legal action if such false claims persist.

Potential Conflicts of Interest

While Morgan Stanley discloses its conflicts of interest, the report's author, LuxeConsult, does not. Given that the data relies heavily on discussions with brand representatives, this lack of transparency raises concerns about bias. A credible research firm should disclose all potential conflicts to maintain objectivity.

Conclusion: Call for Accountability

Swatch Group urges Morgan Stanley to acknowledge these flaws and take corrective action. Financial research must be accurate, transparent, and based on verifiable data to serve the best interests of clients and the industry. Until then, the findings of the 'Ninth Annual Swiss Watcher' should be treated with extreme caution.

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