{"id":21949,"date":"2026-02-15T04:29:53","date_gmt":"2026-02-15T04:29:53","guid":{"rendered":"https:\/\/microvibenews.com\/?p=21949"},"modified":"2026-02-15T04:29:53","modified_gmt":"2026-02-15T04:29:53","slug":"swiss-watch-giant-gets-bullish-as-an-activist-pushes-for-change","status":"publish","type":"post","link":"https:\/\/microvibenews.com\/?p=21949","title":{"rendered":"Swiss watch giant gets bullish as an activist pushes for change"},"content":{"rendered":"

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American activist investor Steven Wood\u2019s one-man mission to overhaul the governance and culture of Swatch Group AG\u00a0just became a lot harder.<\/p>\n

The Swiss watchmaker and its plain-talking, cigar-smoking chief executive officer, Nick Hayek, may have spent most of the past two years disappointing shareholders with tumbling sales and shrinking profits, but last month they surprised with an upbeat outlook and bullish predictions of a recovery this year.<\/p>\n

The market\u00a0reaction\u00a0was dramatic. The company\u2019s shares \u2014\u00a0the most shorted in Europe \u2014 had their best day ever, and are up 15% this year.<\/p>\n

It was a timely riposte from Hayek, the son of Swatch\u2019s founder, as Wood\u2019s push to get on the board enters its second year.\u00a0The CEO says he\u2019s not troubled by the campaign, but recent statements\u00a0suggest the company isn\u2019t\u00a0taking any chances. Days after the updated forecasts, it nominated its own new board member, which it said would strengthen governance.<\/p>\n

The implied message from Hayek to shareholders: Trust him\u00a0and don\u2019t side with the outsider.<\/p>\n

The\u00a0Hayek name is synonymous with the Biel-based company\u00a0and the family is\u00a0the dominant force,\u00a0with 44% of voting rights and\u00a0three board seats. The CEO has a testy relationship with investors and enjoys baiting them, once with a gimmick to publish the\u00a0annual report in a format so small it required a magnifying glass to read it.<\/p>\n

Wood, the founder of US-based\u00a0Greenwood Investors, argues that change is needed, particularly to loosen the family\u2019s grip. He says he has support, and it may not be a one-man mission for much longer.\u00a0Geneva-based Ace & Company plans to back Wood at this year\u2019s AGM, as does BWM AG, according to people familiar with the matter.<\/p>\n

The activist campaign comes as Swatch deals with a\u00a0challenging market.\u00a0Swiss watch exports haven\u2019t been this weak in more than 40 years, and 2025\u00a0sales\u00a0at the company were\u00a0the lowest since 2010, excluding the Covid-induced slump.<\/p>\n

Swatch\u2019s reach into the industry is extensive, stretching from luxury names like\u00a0Omega and Harry Winston, to Longines and its namesake low-cost brand.\u00a0It\u00a0also owns numerous component\u00a0manufacturers.<\/p>\n

In addition to external pressures \u2014 a strong Swiss franc, sluggish demand in China and raw material prices\u00a0\u2014 some say the company has underperforming brands and are critical of its huge inventory stockpile. Despite the recent gains, the shares are\u00a0down about 43%\u00a0from their post-pandemic peak.<\/p>\n

\u201cWe wonder whether Swatch Group will remain the ultimate value trap as long as management refuses to acknowledge that the watch market has undergone a crippling downsizing \u2014 particularly in the entry-level segment \u2014 and to adjust production capacity accordingly,\u201d said\u00a0Jean-Philippe Bertschy, an analyst at\u00a0Vontobel.<\/p>\n

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Wood\u2019s focus is governance concerns, and he\u2019s not the only critic.<\/p>\n

Last year,\u00a0proxy advisor\u00a0Institutional Shareholder Services\u00a0recommended shareholders vote against the reelection of directors, citing a lack of board independence.\u00a0Advisor Ethos Foundation, which says Swatch is \u201cnot in line with best practices,\u201d backed Wood when he tried to get on the board in 2025.<\/p>\n

Swatch was formed in the 1980s in a merger guided\u00a0by Nick\u2019s father, Nicolas Hayek. It takes pride in its Swiss heritage,\u00a0and to many\u00a0it almost\u00a0single handedly saved the watch industry during the quartz crisis, when competition from battery-powered Japanese timepieces destroyed businesses and jobs in Switzerland.<\/p>\n

A dual-class share structure means the Hayek\u2019s registered shares have\u00a0outsized voting power relative to their\u00a0stake.\u00a0This form of governance has come under pressure in Switzerland, and some firms have abandoned it.<\/p>\n

Hayek, 71, has been CEO since 2003 and a director since 2010.<\/p>\n

His\u00a0sister, Nayla, is chair of the board, and has had a seat for\u00a030 years.\u00a0Of the remaining five board members, one is Nayla\u2019s son, and three others have been there for at least 15 years.<\/p>\n

Wood, who has a\u00a00.5% holding, was blocked from joining the board last year. He\u2019s argued that the decision breached Swiss corporate law, which Swatch rejects.<\/p>\n

The investor also says there\u2019s a \u201cculture of caution,\u201d with few inside the company willing to say anything at odds with the family.<\/p>\n

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\u201cThe Hayeks are very important for the history and the future of Swatch,\u201d he said. \u201cBut I strongly believe that Swatch would benefit from a refreshment of the board with members who are able to express an opinion openly.\u201d<\/p>\n

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Swatch\u2019s profit margin fell to just 2.1% in 2025. The company has a policy of maintaining jobs and production to be ready for an upturn, as well as about 7.3 billion francs ($9.4 billion) in inventory. It\u2019s a costly exercise that has its critics.<\/p>\n

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The Swatch and Omega stores on 5th Avenue in New York, US. Image: Gili Benita\/Bloomberg<\/p>\n<\/div>\n

\u201cSwatch Group has a massive production overcapacity that can be solved only by selling some production units or closing them down,\u201d\u00a0said Oliver M\u00fcller, founder of industry advisor\u00a0LuxeConsult. \u201cAs brutal as it may sound, you can try to swim against the tide, but at some point you will drown by exhaustion.\u201d<\/p>\n

CEO Hayek rejects the inventory criticism, saying it\u2019s \u201clong-lasting, fantastic products or movements, it\u2019s not an issue.\u201d<\/p>\n

The company has\u00a0had recent successes, including the Tissot PRX and the\u00a0Omega-Swatch \u201cMoonSwatch\u201d\u00a0that became a global phenomenon.<\/p>\n

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But these are isolated cases, and industry watchers say the group needs to do more to capitalise on the high-end segment, the strongest part of the market. Omega is the big earner: LuxeConsult and Morgan Stanley estimate that it accounted for about 75% of the group\u2019s operating profit in 2024, a share that has probably grown since.<\/p>\n

One option for Swatch would be to streamline its portfolio, which is happening elsewhere.\u00a0Richemont sold Baume & Mercier last month, and there\u2019s been\u00a0speculation\u00a0that LVMH will offload Zenith.<\/p>\n

Speaking Monday, Wood said Swatch hasn\u2019t properly taken advantage of\u00a0the strength of the US market.<\/p>\n

\u201cEven post tariffs, it is getting stronger because residuals are going up,\u201d he said on Bloomberg TV, referring to resale prices on the secondary market. \u201cSo having an American on the board might not be such a bad thing, given they are not participating in the strongest market in the luxury space.\u201d<\/p>\n

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A vintage classic Breguet watch and two Swatch watches, specifically from the Swatch Trendy Lines. Image: Gili Benita\/Bloomberg<\/p>\n<\/div>\n

Wood is set to propose himself as the representative of the bearer shareholders on Swatch\u2019s board and introduce a package of reforms, including new board members and an independent chair for the compensation committee.<\/p>\n

The activist faces\u00a0many hurdles. He\u2019s\u00a0currently trying to confirm his 0.5% holding to the company after his latest submission was rejected by the Hayeks\u00a0over documentation. Wood has since slightly increased\u00a0his stake\u00a0to get around the issue.<\/p>\n

He\u2019s also sent an explainer package to help investors tackle the complicated\u00a0process Swatch has in place for bearer shareholders to be able to vote.<\/p>\n

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Investors need a letter from a custodian bank confirming their holding and blocking the stock from being traded. They then send this letter to the company \u2014\u00a0by post \u2014\u00a0to receive documentation on how to register.<\/p>\n

\u201cThe fact that shares cannot be freely traded restricts many investors from exercising their voting rights,\u201d said Andrea Bischoff, managing director at Sodali & Co., a consulting firm specialising in governance.<\/p>\n

Wood is hoping his fact sheet will get more shareholders set up to vote in May, backing his proposals.<\/p>\n

\u201cThe idea is just to\u00a0break the concentration of power of two people and open it up,\u201d he said. \u201cI made my proposals so standard that I hope that the family could support some of them because if they\u2019re against all of them, then they\u2019re publicly declaring that they are against basic governance and Swiss standards.\u201d<\/p>\n

\u00a9 2026 Bloomberg<\/p>\n

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