May saw a decline in Swiss watch exports as China and Hong Kong’s demand for high-end, luxury watches continued to decline. According to the Federation of the Swiss Watch Industry, shipments decreased 2.2% in value to 2.3 billion Swiss francs ($2.6 billion) in May compared to the same month last year. The decline in real estate values negatively impacted consumer attitude, causing an 18% decline in wholesale value of exports to mainland China, which is the second-largest market after the US. shipments to Hong Kong, a major hub for watch trade, fell by 23%.
The most recent figures come after a period in which demand for expensive watches began to decline following the conclusion of the Covid lockdowns. Due to rising interest rates, uncertain economic development, and geopolitical tensions, consumers of luxury watches have cut back on their buying.
The Swiss franc’s persistent strength against other currencies, which has led to price rises in some regions and discouraged clients, is another issue that watchmakers are facing. Swiss watch exports are down 2.5 percent in the first five months of the year to about 10 billion francs overall, after setting another record in 2023.
The drop for the previous month comes after an unexpected climb in April, propelled by a US rebound. US exports in May remained unchanged. The decline in demand for watches in the mid-price range is highlighted by May’s results, according to Vontobel analyst Jean-Philippe Bertschy.
According to a research by Citigroup analyst Thomas Chauvet, the numbers may have an impact on growth projections for Richemont, the company that owns Cartier and Vacheron Constantin, as well as Swatch Group AG, which produces a number of brands, including Longines and Omega. “We see downside risks with Richemont and Swatch’s high exposure to a depressed Chinese consumer,” the Citi analyst stated.
Following the export data, Richemont shares saw a decline in Zurich trading; however, as the Swiss National Bank lowered interest rates, the shares recovered to show a small gain in mid-morning trading. Following the rate reduction, Swatch Group shares also reduced losses, trading down 0.3 percent by mid-morning.
Expensive watches that cost more than 3,000 francs had some resilience in their exports in May, rising 0.7% in value but down 4.9% in quantity shipped. To keep sales expanding throughout the slump, Swiss watchmakers, such as Patek Philippe and Rolex, have been making more costly watches and hiking their prices.
Watches with wholesale costs below 200 francs had a 1.2 percent value decline in shipments, fueled by Swatch Group AG’s partnerships with Blancpain and Omega. Shipments of watches with wholesale prices between 500 and 3,000 francs plummeted 16 percent.
