While the likes of Richemont and LVMH have posted double-digit gains in 2025 as the under-pressure industry shows signs of an earnings recovery, Omega brand owner Swatch Group AG is barely changed, failing to recover from a 28% drop last year.

A key difficulty for the watchmaker is its heavy reliance on China, where luxury spending has been particularly hard hit. The firm’s plastic timepieces also aren’t at the high end of luxury, where buyers are more resilient. Analysts now have the biggest proportion of sell ratings on Swatch since 2016, while the stock has become one of the most shorted in Europe.

“Swatch Group is a bit of an easy target for the market given the current situation in the luxury goods market,” said Jon Cox, an analyst at Kepler Cheuvreux, who cut the stock to reduce last month and sees it falling 16% in the next 12 months. “It has more exposure to China than any other European consumer company and China is the epicenter of the industry’s weakness.”

The next trigger for investors will be earnings due in February, after its last half-year results showed a 70% slump in profit. Since then, the stock has been dragging along near lows seen in the pandemic. Shares out on loan represent about 18% of Swatch’s free float, making it one of the most shorted in Europe’s Stoxx 600 Index, according to the latest data from S&P Global Market Intelligence.

Swatch now has one of the highest number of sell ratings in the index at 11, versus only four buys. Analysts have been lining up to slap underperform calls on it this month and point to several factors. First and foremost is an outsize reliance on China, with the country accounting for a third of sales in 2023, according to its financial statements.

That’s more than luxury behemoth LVMH, owner of watch brands Hublot and Tag Heuer, which made 31% of its revenue from the whole Asia region excluding Japan.

Swatch’s exposure to watches — including luxury brands Blancpain and Breguet — is also among the factors worrying investors. Swiss watch exports fell for a third straight month in November due to a drop in shipments to China, while prices for the most sought-after models fell to a three-year low in 2024.

Vontobel analyst Jean-Philippe Bertschy flagged pressure from Swatch’s exposure to entry-level products, as well as its high inventory levels. Swatch’s performance this year has even lagged behind Kering SA, which is suffering its own problems in trying to turn around its Gucci brand.

Luxury labels that cater to the ultra-wealthy, such as France’s Hermes International or Brunello Cucinelli SpA, have been more resilient given their clients are insulated from swings in the economy. That’s been seen in recent earnings reports from the Italian fashion house as well as by Switzerland’s Richemont, which owns the Cartier and Van Cleef & Arpels jewelry brands.

Finally, both Vontobel’s Bertschy and Kepler Cheuvreux’s Cox note tension between the company and the financial community. Swatch has hit back at investors who have called out the firm for its governance and management practices after it was questioned on its lack of shareholder engagement.

A spokesperson for Swatch declined to comment.

The nearly two-year decline in Swatch’s shares did see some respite last September amid buyout rumors. 

Chief Executive Office Nick Hayek said then it was “pure speculation” that the company is considering going private now, although it was something that “would be nice to do.”