Second open letter to Morgan Stanley, 9 March

Dear Ms Estridge, dear Mr Aubin,

Thank you for your response of 3 March 2026. We acknowledge your stated commitment to responsible and independent research. However, your reply does not address the substantive issues raised in our open letter, nor does it explain how a report containing such extensive factual inaccuracies and methodological inconsistencies could have been published under the Morgan Stanley name. These issues risk misleading investors, distorting the perception of the industry, and damaging brand reputation.

General assurances are insufficient to restore confidence in the integrity of the research process. We therefore outline below the key points that require clear and specific explanations.

Methodology and Data Sources

You state that your report is based on a broad range of public sources, including regulatory filings, company disclosures, industry data, and third party materials. None of these sources provide brand level turnover or unit sales information for Swatch Group brands. It is therefore unsurprising that your estimates deviate by up to 50% and 200% from actual figures.

To understand how such discrepancies arose, we request clarification on:

  • Which specific data sources were used to derive brand level turnover and unit sales estimates for Swatch Group brands.
  • Contrary to your statement to only use publicly available information, the report explicitly mentions information obtained from sources such as “public CEO statements,” “direct discussions with brands,” and “industry contacts”. How Morgan Stanley assesses and validates information obtained from these sources - given their inherently unverifiable nature.
  • Why the report uses point estimates, implying precision, despite relying on unverifiable inputs and speculative assumptions.
  • Why publicly available figures - such as the Group’s disclosed retail share - were not incorporated, even though they contradict the report’s assumptions.

Factual Errors and Accountability

Your report contains statements that are not only incorrect but materially damaging—for example, claims of double digit declines for some brands and the assertion that Longines became loss making.

To understand how such statements came to be published, we request:

  • The publicly available sources that you believe support these statements.
  • An explanation of how such statements passed internal review.
  • A description of Morgan Stanley’s process for correcting factual errors once they are identified and communicated.
  • Confirmation of whether you intend to issue corrections or clarifications to the market.

Internal Consistency and Quality Control

Your report contains internal contradictions that cannot be reconciled with any coherent methodology - for example, doubling Breguet’s implied retail price while keeping turnover unchanged, or halving unit sales from one year to the next without explanation.

We therefore request clarification on:

  • How Morgan Stanley explains these internal inconsistencies.
  • What quality control mechanisms exist to prevent such contradictions from being published, and what corrective measures will be implemented.
  • What plausibility checks are applied to ensure that for example implied average retail prices (such as Hamilton CHF 2’014 vs. actual CHF 741) are realistic and aligned with market reality—particularly given that retail prices are publicly visible on brand websites.

Conflicts of Interest and Transparency

Your response clarifies the separation between Morgan Stanley Research and Morgan Stanley Investment Management. However, the concerns regarding the external author (LuxeConsult) remain unaddressed.

We therefore ask:

  • What due-diligence process Morgan Stanley applies to external contributors to ensure independence and transparency.
  • Why the report does not disclose potential conflicts of interest of the external author, despite the report relying heavily on non public information attributed to discussions with company representatives.
  • How you reconcile the analyst certification in your disclosure section - which asserts that the companies and their securities in the report are accurately expressed - with the fact that estimated turnover for Swatch Group brands deviates between –53% and +47% from reality.

Market Impact and Responsibility

Publishing materially incorrect statements about brand performance and profitability - particularly at the scale observed in this report - risks misleading investors, damaging trust among customers and partners, and harming brand reputation.

We therefore ask:

  • How Morgan Stanley assesses the market impact of publishing such materially incorrect statements.
  • What steps you will take to mitigate reputational and commercial harm caused by demonstrably false statements in your report.

We expect Morgan Stanley to address the above points directly and in full. At the same time, we expect that appropriate steps will be taken to ensure that future publications meet the standards of transparency, methodological professionalism, and accuracy that investors and the broader public rightly expect.

Kind regards,

The Swatch Group Ltd