Slight easing for the Swiss watch industry in August
Published: Thursday, Sep 19th 2024, 12:50
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The Swiss watch industry is struggling with adverse conditions: while demand for Swiss timepieces has fallen significantly in important Asian markets such as Hong Kong and China, the strong franc is putting additional pressure on the market environment. Nevertheless, the situation appears to be easing somewhat in view of rising export figures.
Both July and August are not among the industry's strongest months in terms of sales. As a result, watch exports measured over the course of the year are still down on the record year 2023. In the first eight months, they fell by 1.4% to 17.1 billion Swiss francs.
Outlook remains bleak
Exports continued to recover in the month under review following a slight increase in July. Nevertheless, the trend is still negative and the outlook for the industry has hardly improved, the watch association notes. In the medium term, visibility is low for companies, which means that they are tending towards caution in their planning, which is also leading to job cuts.
On Tuesday, the association drew attention to the tense situation and called on politicians and the Swiss National Bank (SNB) to take measures to help strengthen the competitiveness of the watch industry. In an interview with the news agency AWP, association president Yves Bugmann did not want to interpret this as a call for help. "But we want to raise awareness among politicians and the public," he said.
Strong US demand
However, demand for Swiss watches remains strong in the USA, the largest sales market. Exports there climbed by 7.6% in August and increased by a good 5% over the course of the year. And in markets such as Japan (+14%), the United Arab Emirates (+27%) and Italy (+18%), orders rose by double digits.
On the other hand, exports to the important Asian markets of Hong Kong (-11%) and China (-5.9%) remain under pressure, as in previous months. However, the decline has slowed, according to the press release. Exports to both markets have fallen by around a fifth since the beginning of the year.
Demand for expensive watches remains high. Those with an export price of CHF 3,000 or more recorded a 15% increase in the value of exports. In contrast, watches in the mid-price segments remain under pressure, for example at prices of CHF 500 to CHF 3000 (-16%).
Watch stocks on the road to recovery
On the Swiss stock exchange, the recently battered shares of watchmaker Swatch Group (holders: +4.7%) and also those of the Richemont Group (+1.5%), which includes well-known luxury brands such as Cartier, Piaget and IWC, were among the biggest winners on Thursday lunchtime. However, analysts warned against overestimating one month's performance.
The August figures were probably also positively influenced by some independent brands such as Patek Philippe, Audemars Piguet and Rolex, wrote ZKB. These brands could still work off the waiting lists of customer orders. Accordingly, the total export figure probably does not reflect the business performance of Swatch and Richemont in the watch business. Both groups had recently reported a clear decline in watch sales.
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