Swiss Watches Slows Down

According to the latest data published by the Swiss Watchmaking Federation, the Swiss watch exports fell 1.4% in August from the same month last year. It is a very important fact, as it anticipates a decline in demand for such products. The figures leave no room for doubt: the fall is mainly due to the declining demand in China, affected by slower economic growth and government measures against corruption. Sales in mainland China fell 38.5% year-to-year, by far the worst of all geographic regions. Also in Hong Kong –common destination for the Chinese- we saw a sharp decline of over 18%.

These data dragged the industry average. Perhaps most worrying it is that these figures reflect a worsening trend in the month, so the end of the crisis does not seem to be close. In other markets things look much better, although this is not enough to offset the balance. Exports to the US increased 11.5%, while the Japanese market grew 13%. Germany and France also grew, 14% and 11.5% respectively, thanks to the economic recovery.

By category, the watches of the high-end class, the top products, were the only ones able to maintain the growth pace. The other segments posted declines in both units and product value, with the worst results for the segment of watches between 200 and 500 Swiss francs (between €185 and €460).

The most affected brands by the news have been the owners of major brands such as LVMH (Tag Heuer, Zenith), Richemont (Cartier, Vacheron Constantin, Roger Dubuis, Jaeger-Le Coultre) and Swatch, which lost between 3% and 4% on the stock market after this information was published. Beyond the past poor outcome, the worst is that the trend is still downward, at least until the situation in China and other emerging markets will stabilize and allow sales in these countries to recover.

Disclosure:  The author is not responsible for the views expressed in the article. The text was written freely expressing ideas, without receiving any compensation. The author has no business relationship with any of the companies whose shares are listed in this article.