Swiss Watch Exports Expected to Follow Negative Trend, Particularly in China

By Andrea Figueras

Exports of Swiss watches recorded a slight rebound in August, but the negative performance of the past months is expected to continue, notably in the all-important Chinese market.

Total exports of timepieces amounted to 1.95 billion Swiss francs ($2.3 billion), 6.9% higher compared with the same month last year, according to data from the Federation of the Swiss Watch Industry, or FH. This follows the slight uptick from the previous month but is still a sign of a downward trend recorded since June last year.

Despite the increase in August, the trend is still negative, as is the outlook for the rest of the year, the industry body said Thursday.

"Firms in the sector are lamenting the lack of visibility in the medium term, which is prompting them to be more cautious going forward or even, in some cases, cutting back," FH said.

Growth during the month was driven by watches priced at more than 3,000 Swiss francs, while the other categories reported declines.

Swiss watch exports this year will be driven mainly by Rolex and a few other independent brands at the high-end segment, Vontobel analyst Jean-Philippe Bertschy said in a research note. This reflects the broader trend in the luxury industry, as wealthier consumers have continued to splurge on luxury goods, while less affluent shoppers have cut back on spending, pressured by inflation and price increases.

For the other brands, 2024 represents a sharp reset and normalization of growth after the postpandemic boom, Bertschy said.

Regionally, exports increased in most markets, with growth reported in countries such as the U.S. and Singapore and the United Arab Emirates.

Japan recorded an increase of more than 14%, while China saw a 5.9% decline. This also mirrors a trend seen in the luxury sector. A number of luxury brands including LVMH Moet Hennessy Louis Vuitton and Gucci owner Kering flagged steep sales drops in China in the second quarter, but saw sharp increases in Japan, as tourists took advantage of a weak yen.

In China, which has been a growth driver for luxury companies, the sluggish property market and uncertain macroeconomic outlook continue to hurt consumer sentiment, prompting consumers to save rather than spend their money.

The forecasts for both China and Hong Kong--which also posted lower exports--remain very negative for the next few months, the industry body said.

The FH's outlook comments come just months after Swiss watchmaker Swatch Group reported a decline in sales for the first half due to a sharp drop in demand for luxury goods in China. It also noted that the Chinese market is expected to remain challenging until the end of the year.

Cartier owner Richemont, which is positioned in the high-end segment, also flagged a steep sales drop in China for its fiscal first quarter, reflecting a low level of consumer confidence.

Write to Andrea Figueras at andrea.figueras@wsj.com

(END) Dow Jones Newswires

September 19, 2024 05:58 ET (09:58 GMT)

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