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Swatch Group may struggle to hit 2011 sales guidance

Two women enter a Swatch watch store at Zurich central station
Two women enter a Swatch watch store at Zurich central station

By Silke Koltrowitz and Nathalie Olof-Ors

BASEL (Reuters) - Swatch Group, the world's largest watchmaker, will struggle to meet its 2011 sales guidance of 7 billion Swiss francs ($8.23 billion) if the franc remains at such high levels, Chief Executive Nick Hayek said.

The maker of high-end watch brands such as Omega and Blancpain as well as colorful Swatch watches is, however, still eyeing another record year in 2011 after posting sales of 6.4 billion francs in 2010 as demand from Asia remains robust.

Hayek told journalists after the group's annual shareholders meeting on Tuesday it could get close to sales of 7 billion francs this year at exchange rates comparable to those seen last year, but that this would be difficult at the current exchange rates.

"In local currencies, everything is going well. All markets are strong, Asia, but also America," Hayek said. "At comparable exchange rates (to 2010), we can get close to 7 billion franc sales, at current exchange rates that will be difficult," he said.

"The franc is clearly overvalued at the moment, it has to come down," Hayek said.

The Swiss franc has hit record highs against the euro and the dollar in recent sessions and the Swiss National Bank has warned the Alpine economy could slow as a result of the franc's strength.

Demand for luxury goods has picked up around the world and Swatch Group's upbeat comments on strong demand in Asia and America echoed those made by luxury goods executives at the Reuters Global Luxury and Fashion Summit last week.

Swiss watch exports rose 32.1 percent in April, with China up 44.4 percent and exports to Hong Kong soaring 53.9 percent.

Hayek also said the group was currently looking to hire 800-1,000 people in Switzerland at the moment.

Finding qualified staff is crucial to keep up with the red-hot demand from Asia.

Independent watchmaker Patek Philippe is looking to hire 50 people this year to reinforce its production unit in Geneva after taking on 160 last year, a spokeswoman told Reuters.

At 1209 GMT, Swatch Group shares were trading 1.1 percent firmer, outperforming a 0.8 percent rise in the STOXX European personal and household goods index.

(Editing by Greg Mahlich and Jon Loades-Carter)

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