A modest blip in Swatch Group’s full-year results was enough to trigger a slide among European luxury goods makers on Tuesday.
Swatch Group fell 4 per cent to SFr398.30, after its full-year results came in slightly below expectations. The Swiss watchmaker sank after reporting an 18.1 per cent jump in net profits, compared with a consensus view of 18.5 per cent.
Swatch's losses were exacerbated by its 2012 performance so far. The Swiss stock had gained 18 per cent since the start of January before Tuesday’s session. “Had [Swatch’s] stock not rallied by so much, it would have been different,” said Eva Quiroga, an analyst at UBS. “Taking a step back, with the currency working against them; this number isn’t a bad number at all.”
“[Luxury goods is] a sector that has done exceptionally well for three years now. Everyone is constantly watching for points of weakness in the sector and Swatch’s results came in slightly below expectations,” said Ms Quiroga.
Elsewhere in the sector, Christian Dior, the French fashion house, sank 3.5 per cent to €110.45, while its peer Hermès International lost 2.9 per cent to €268.75. The luxury goods group LVMH also fell 2.6 per cent to €125.30.
The FTSE Eurofirst 300 fell 0.2 per cent to 1,072.79. The CAC 40 index closed up 0.2 per cent at 3,411.54. ArcelorMittal boosted the index, gaining 3.3 per cent to €16.69, after it announced in its fourth-quarter results that it had cut its net debt to $22.5bn, six months ahead of schedule. The reduction overshadowed an otherwise difficult quarter for the company, which made a $1bn loss.
In Italy, UniCredit gained 4.7 per cent to €4.38. The gains cemented a remarkable turnround for the bank, which was down by up to 45 per cent in January, after it announced a larger than expected discount on its €7.5bn rights issue.
“The reason why UniCredit is rallying is that it’s a cheap stock. It’s already fully compliant with Basel III when most of its European competitors – in France, Spain and Germany – are behind the curve on that. All in all, it’s a good-value stock,” said Matteo Ramenghi, analyst at UBS.
On the wider market, the FTSE MIB gained 0.6 per cent to 16,491.71. Telecom Italia gained 3.6 per cent to €0.82 after Citi highlighted the Italian stock as part of the broker’s “dividend growth at reasonable price” income strategy.
The Xetra Dax ticked down 0.2 per cent to 6,754.20. Profit-taking knocked BMW off its seven-month high, as the German carmaker fell 2 per cent to €69.36.