Swatch Group fires extraordinary broadside at Morgan Stanley
In a way that’s not necessarily out of character, Swatch Group has delivered a scathing attack on Morgan Stanley’s ‘Swiss Watcher’ report.
The report claimed, amongst other things, that Swatch Group brand Omega had fallen out of the top four watch brands in the world, which will not have gone down well with CEO Nick Hayek Jr.
In a passionate and animated open letter to Morgan Stanley Investment Management (MSIM), Swatch Group makes claims of a litany of inaccuracies in the report, citing specific examples of where it feels that MSIM has failed to live up to its own code of ethics when it comes to the research and methodology behind its findings.
“Releasing research reports with lack of research quality, lack of verified statements and numbers, even completely wrong estimations and/or wrong statements even when the information already is in the public field is harming the reputation of MSIM itself,” the letter says.
It cites unreliable data, deceptive methodology, negligent rankings, damaging misstatements, and conflicts of interest amongst its primary grumbles.
Some specific examples it flags up include the profitability of Longines, which it claims made a 16.6% profit last year, despite the report claiming that it made a loss; and the growth of Tissot, which the report said had been -5% but Swatch Group claims is +3%.
Threat of legal action
At one point in the diatribe, Swatch Group goes as far as to say that it was considering legal action against MSIM. “Some of these wrong statements are so severe that in addition to communication measures, legal action should be considered.”
One of the issues with both the report’s claims and Swatch Group’s counter-claims is the opaque nature of the world’s biggest luxury watch brands, who are not overly forthcoming when it comes to the detail and transparency of their financial results. This avoids some difficult conversations for the brands but can also create problems, as evidenced here.
“The research is highly speculative, based on unsuitable and unverifiable data sources,” the letter says in its concluding paragraph. “Instead of acknowledging this, it masks this weakness through excessive details, artificial precision, and questionable plausibility checks. As a result, the figures and conclusions regarding turnover, unit sales, average retail price, market shares, and ranking are unusable. Occasionally, the research even produces defamatory and potentially damaging statements.”
