By
Bloomberg
Published
April 18, 2024
Monthly Swiss watch exports suffered their biggest drop since 2020 as demand for premium and luxury watches slumped in key markets including China and Hong Kong.
Exports fell 16% in value in March to 2 billion Swiss francs ($2.2 billion) from a year earlier, the Federation of the Swiss Watch Industry said Thursday.
Shipments to China, the second-largest market for Swiss watches, fell 42%, falling below levels seen in March 2020, when the industry came to a standstill due to pandemic lockdowns. Shipments to Hong Kong plummeted 44%.
“The negative trend is even worse than we expected and the drop in China is really worrying and probably indicates that inventories in the region were again too high,” said Jean-Philippe Bertschy, an analyst at Vontobel in Switzerland.
Shares of Swatch Group, which makes the Omega and Longines brands, hit a new 52-week low on Thursday, falling about 1% in Zurich trading. Shares in Richemont, owner of Vacheron Constantin and Cartier, also fell about 1%.
The sharp drop in exports highlights a global decline in demand for Swiss watches, which enjoyed an unprecedented boom starting in 2021 and lasting until mid-2023.
Higher interest rates, unstable economic growth, and geopolitical conflicts have led watch buyers to reconsider spending money on expensive watches.
The Federation said the number of watches shipped from Switzerland in March fell 25% to 1.1 million units as retailers withdrew their orders.
Shipments to the United States, which overtook China as the top market for Swiss watches in 2021, fell 6.5% in March.
The declines occurred in all price categories, with shipments of watches above 3,000 francs (representing more than 80% of the value of exports) falling by around 10% in value. Exports of watches priced between 500 and 3,000 francs fell by 38%.
Even the lowest category, watches priced under 200 francs, which include Swatch Group AG's popular MoonSwatch collaboration, plummeted 19% in March from a year earlier.
Demand for Swiss and luxury watches surged during the pandemic as consumers stayed home and, flush with cash thanks to government stimulus measures, rushed to buy top brands including Rolex and Patek Philippe.
Crippled by supply chain issues after halting production during lockdowns, many Swiss watchmakers were unable to keep up and most brands pushed up prices.
