Swatch Group AG’s shares fell the most in four years after sales and profit plunged amid a China-led slowdown for Swiss watchmakers and other luxury companies. The group, whose brands include Omega, Blancpain, and jeweler Harry Winston, reported a 70 percent drop in operating profit and a 14 percent drop in sales for the first six months of the year.

Swatch Group shares fell as much as 10 percent in early Zurich trading, the most significant drop since March 2020. The results highlight the downturn in demand for luxury goods in China as consumers in that key market avoid purchasing high-end items.

CEO Nick Hayek revealed that Swatch has cut production by more than 20 percent while maintaining its workforce to weather the downturn. “The big impact is really mainly China,” Hayek said. He anticipates that the Chinese market, including Hong Kong and Macau, will remain challenging for the entire luxury goods industry until the end of the year.

Entry-priced brands such as Swatch and Tissot are expected to fare better than luxury brands like Omega, Blancpain, and Breguet. RBC analyst Piral Dadhania indicated that Swatch’s results are worse than expected and anticipates “material earnings downgrades.” Bernstein analyst Luca Solca described the report as “really bad,” noting that Omega may be suffering from increased availability of retail models from rival Rolex.

Swatch has been under pressure as inflation drives consumers to curb spending post-pandemic. The company, managed by the Hayek family, has faced criticism from shareholders over governance and share-price performance. Swatch shares have dropped about 17 percent in 2024.

Hayek emphasized that the company is keeping workers to avoid the “short-term thinking” typical of many publicly traded firms and to be prepared when the market recovers.