Magic Markets #157: Pandora and Swatch

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To kick off 2024, we take a look at two businesses that sit adjacent to each other in the speciality retail space. Pandora sells jewellery and Swatch sells watches at various price points.

That brings us neatly to Moe’s first point, which is that Swatch is more than just the colourful and playful watches that you know and possibly love. The group is a hybrid of affluent and luxury brands, like Omega. Of course, this creates a real risk of brand dilution in the luxury space as Swatch attempts to improve the competitiveness of its core affluent offering.

At Pandora, there is no such confusion. The strategy is tight and the core product range of bracelets and accessories is still growing. So are the other lines like necklaces and earrings, contributing to a fantastic share price performance this year that looks completely different to what Swatch went through.

The biggest risk to Swatch is arguably smart watches, with a recent legal dispute with Samsung showing just how “interchangeable” they really are for the average consumer. At Pandora, the risk sits more in the valuation than anything else at the moment, although the share price has had a highly volatile history over the past decade.

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