Struggling Swatch profits under scrutiny by activist due to China's weak influence
In a tense and active legal dispute, GreenWood Investors, an activist investor, has taken Swatch Group to task, seeking a strategic rethink within the company. The conflict erupted after GreenWood failed to secure a board seat at Swatch's annual meeting in May 2025, despite garnering the support of more than 60% of Swatch's bearer shareholders [1].
The controlling Hayek family, who hold registered shares with greater voting rights, effectively blocked Steven Wood's campaign for a board seat, leading to a heated confrontation [2]. In response, GreenWood Investors has alleged that Swatch's general meeting was mismanaged and has initiated conciliation proceedings, which could potentially escalate into a court case [1].
Swatch Group's financial situation has taken a significant hit due to weak demand, particularly in China, leading to a substantial reduction in profits. This challenging market environment has added pressure to the ongoing dispute [1][4]. The Swiss watchmaker reported a 7.1% decline in revenues for the same period, with sales in its wholesale business in China falling more than 30%, and retail sales dropping by 15% [3]. Swatch Group's net income for the first half of the year is SFr17mn ($21mn), a stark decrease from SFr147mn a year earlier [6].
The company has not yet been served with a complaint or received a request for a conciliation hearing [7]. However, if a resolution cannot be found through conciliation, the issue may end up in court. GreenWood Investors is currently not seeking further comment on the matter [8].
Analysts at Vontobel have observed initial positive signs of improvement in China, particularly in ecommerce and a reduction in retailer inventories, which could bode well for Swatch Group's future prospects in the region [9]. Swatch Group remains optimistic about the Chinese market, expecting it to improve in the second half of the year [10].
If GreenWood Investors manages to gather the backing of 5% of all Swatch shareholders, they may still request an extraordinary meeting [11]. The current legal dispute between GreenWood Investors and Swatch Group remains a significant point of interest, unfolding against the backdrop of Swatch's declining profits linked to sluggish Chinese demand and broader market softness [1][2][4][5].
Business tension persists between GreenWood Investors and Swatch Group as the activist investor pushes for a strategic review within the company, citing mismanagement at Swatch’s general meeting. The investor aims to secure changes in the Swiss watchmaker's business practices and financial strategies through investing in the company. The ongoing legal dispute could impact Swatch Group's future business and finance decisions, particularly amid weak demand and sluggish profits, notably in China.
