Core Viewpoint - Swatch Group, once a leader in the watch industry, is now facing significant challenges, including a decline in stock value and internal management conflicts, despite being the largest watch company by production volume and third in retail sales globally [1][3]. Group 1: Company History and Achievements - Swatch Group played a crucial role in reviving the Swiss watch industry during the "Quartz Crisis" of the 1970s and 1980s, which saw traditional Swiss mechanical watches lose market share to affordable Japanese quartz watches [4][6]. - Nicolas Hayek, a Swiss consultant, restructured two failing companies to form Swatch Group, introducing the Swatch watch, which transformed watches into fashion accessories and significantly boosted sales [6][8]. - By the 1990s, Swatch Group had become one of the largest watch groups globally, acquiring prestigious brands like Blancpain and Breguet, thus solidifying its position in the luxury watch market [10][12]. Group 2: Current Challenges - The luxury watch industry is experiencing a downturn, with Swatch Group facing internal management issues and external market pressures, particularly from the declining demand in the Chinese market [14][28]. - The mid-range market, where many of Swatch's brands operate, has been particularly affected, with a significant drop in sales due to competition from smartwatches [16][24]. - In 2024, Swatch's net profit plummeted to 219 million Swiss francs, down from 890 million the previous year, largely attributed to a 30% decline in sales in China [28][30]. Group 3: Internal Management Conflicts - Steven Wood, an activist investor, has attempted to gain a board seat to advocate for minority shareholders, highlighting the closed culture and decision-making processes within Swatch Group [33][39]. - The Hayek family controls a significant portion of the voting rights, leading to tensions between management and external investors who feel their voices are not heard [39][45]. - Wood's proposals for revitalizing Swatch's high-end brands have been met with resistance from the Hayek family, who prioritize maintaining a diverse brand portfolio that serves a broader market [49][62]. Group 4: Product Innovations and Market Strategies - The launch of the MoonSwatch in 2022, a collaboration with Omega, generated significant consumer interest and sales, demonstrating that affordable products with compelling stories can still resonate in the market [50][57]. - Despite the initial success of MoonSwatch, it has not resolved the underlying structural issues within Swatch Group, as the mid-range market continues to struggle against smartwatches [59][61]. - The Hayek family's commitment to accessibility in the watch market contrasts with the push for exclusivity from some investors, reflecting a broader cultural conflict within the company [62][70].