PARIS – Swiss watch exports faltered in February, after a slow January continuation to 2023’s record year.
Exports contracted in value, slipping 3.8 percent year-on-year to just above 2 billion Swiss francs. By volume, they were down 5.2 percent, according to figures released by the Federation of the Swiss Watch Industry on Tuesday.
The industry organization said it was the first significant fall “after two years of steady growth,” attributing the drop to an unfavorable base effect, and a steep drop in Greater China.
Monthly export tallies last recorded a decrease in August 2023.
Exports to China and Hong Kong, which rank second and third in market size, fell 25.4 and 19 percent, respectively. This suggests that the effects of China’s slowdown are reaching watchmakers.
Earlier in the month, the Chinese government unveiled a modest GDP growth target for 2024, which is expected to lead to experience-based consumption rather than purchases amidst weak consumer confidence and asset deprecation.
While other top markets including the U.S., France, Japan and the United Arab Emirates remained on a positive course in the mid- to high-single digits, the Swiss federation noted that this was not enough to compensate Greater China’s slump.
Across Europe, a market that weighs just above a quarter of exports, decrease was an average 3.5 percent overall.
RBC Capital Market’s director of luxury goods and premium market brands Piral Dadhania pointed out that while the two-year stack remained positive at 8 percent, it marked a deceleration from January’s higher level.
This “could read across incrementally negative for hard luxury stocks” such as Richemont and Swatch Group, he continued. “Conversely, we note the U.K. and to a lesser extent U.S. regional performance could be viewed as stable to incrementally less negative for Watches of Switzerland.”
Accounting for over half of the units exported, steel was the weakest category in February, with a 10.6 percent year-on-year decline, despite a moderate increase in numbers. Gold-steel timepieces and those made of “other materials” also saw a decline of nearly 5 percent each in value.
While the “Other metals” category leapt 17.5 percent, its modest market share of 10 percent limited its contribution.
All price ranges were affected with the month’s lackluster performance, with the biggest impact seen on the 500 to 3,000 Swiss francs category, which slumped over 12 percent in units and 14 percent in value.
With 80 percent of export turnover, watches above 3,000 Swiss francs at export price saw February out with a moderate 1.8 percent contraction in value and 6.1 percent volume decrease.
In January, the Federation of the Swiss Watch Industry said it expected lower consumer confidence and the strength of the Swiss franc to have a continuing impact, amounting to a calmer 2024 for exports and employment in the sector.
