Swiss Watch Exports Drop in May as China Slowdown Persists

Brands, Watches

Swiss Watch Exports Drop in May as China Slowdown Persists

Shipments to mainland China and Hong Kong fall sharply and demand for pricey watches has dropped since post-Covid boom...

Swiss watch exports continued on a downward trend in May as the global luxury slowdown takes hold.

After a small upward tick in April, exports were down 2.2 percent to 2.29 billion Swiss francs, or $2.57 billion at current exchange rates, the Federation of the Swiss Watch Industry said Thursday.

The industry organization pointed out Swiss timepieces shipped abroad had exceeded 10 billion Swiss francs, or $11.2 billion, for the first five months of the year, although it noted that this was 2.5 percent lower than last year’s figures for the same period.

“No place to hide but Japan,” declared Citi’s Thomas Chauvet in a research note, highlighting a general decrease in most of the major destinations for watch exports.

While the U.S. was almost flat, contracting only 0.5 percent, China and Hong Kong slumped 18 and 22.7 percent, respectively.

Chauvet noted that this could have negative effects on industry players heavily exposed to the Greater Chinese market, such as Compagnie Financière Richemont and Swatch Group.

In addition to a Chinese luxury consumer spooked by that nation’s cloudy economic outlook, this slump could also be caused by oversupply, which is a likely cause for sales declines at Chinese luxury malls, as suggested by a recent Bernstein report.

Among the other top 10 markets, Japan, the fourth largest, grew 5.8 percent, while France and South Korea recorded double-digit leaps. Exports to Singapore also rose in May, by 4.5 percent.

The U.K., Germany, the United Arab Emirates and Italy posted midsingle-digit declines.

Most affected by the general slump in foreign demand is the 500 to 3,000 Swiss francs segment, which fell 13.1 percent and 16.1 percent in volume and value respectively.

Meanwhile, the luxury segment of watches priced over 3,000 Swiss francs at export price contracted nearly 5 percent in units, but their value remained steady.

Looking at the breakdown by materials, only the “other metals” category progressed in May, gaining 5.9 percent in unit numbers and nearly 10 percent in exported value.

Exports of “precious metal” watches grew 1.6 percent, no doubt influenced by the continued rise in the price of gold.

Steel watches fell by 7.6 percent in terms of value, weighing down the general result, while on the other hand watches made from precious metals trended upward, rising 1.6 percent.

Overall, the number of watches leaving Switzerland in May fell by 60,000 units, or a 4.2 percent decrease, weighed down by steel watches that represent more than half of the units exported.

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