PARIS – Swiss watch exports continued on a downward trend in May as the global luxury slowdown continues.
After a small upward tick in April, they 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 too 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.
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While the U.S. was near 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 on the Greater Chinese market such as Compagnie Financière Richemont and Swatch Group.
In addition to a Chinese luxury consumer spooked by economic downturn, this slump could be also 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 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 mid-single 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 gold.
Steel watches fell by 7.6% in terms of value, weighing down the general result, while on the other hand watches made from precious metals trended upwards (+1.6%).
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 over half of the units exported.