High-end Swiss Watches Not Immune to Global Export Tumble in March

PARIS – On the heels of a busy edition of the Watches and Wonders convention, the Swiss watch industry woke up to a bad hangover with its March export figures on Thursday.

Exports in the month fell 16.1 percent year-on-year, remaining barely above the 2 billion Swiss franc mark, according to figures released by the Federation of the Swiss Watch Industry.

This contributed to a first quarter that contracted 6.3 percent against the same period in 2023, although it stayed above first-quarter 2022’s figures.

By volume, wristwatch exports in March were down 25.4 percent. This translated into almost 400,000 fewer watches leaving the country compared to March 2023, with all price segments affected by the decline.

While mainland China and Hong Kong – which slipped into the third and fourth markets by size for Swiss timepieces, respectively – were the largest contributors to the month’s contraction with their 41.5 percent and 44.2 percent tumble, most markets showed lackluster results in March.

At 150 million Swiss francs, exports to mainland China sank even below their March 2020 level, when the onset of the COVID-19 pandemic brought the sector to a near-halt mid-month, the Swiss organization reminded.

Despite the grim figures, Citi offered a glimmer of hope, noting that “the Chinese economy managed to have a solid start to 2024 despite [the] persistent property downturn, particularly on the investment side.”

Less affected than most were the U.S., still the top export destination for Swiss watches with a 17 percent market share, and Japan, which edged into second place for the first time. Other top markets, such as Singapore, the U.K., Germany and France, were in the low double digits of decline.

India, which is increasingly being viewed as the next growth engine for luxury and currently is the 21st market by size, was among the few territories that showed growth in March, with a 9.2 percent bump in exports heading to the country.

A breakdown by price categories highlighted that high-end watches, those over 3,000 Swiss francs at export value, were less affected. They contracted by 9.9 percent, while watches priced under 500 Swiss francs fell by less than one-fifth.

In its research note, Citi also noted that “with the high-end consumer relatively more resilient, we expect ongoing outperformance from the upper-end watch segment.” As luxury houses begin to report their first-quarter earnings, the bank highlighted Richemont as the most exposed group.

The mid-market segment of Swiss watches was most affected, with a decrease of 38.2 percent by export value and 41.6 percent in the number of units, supporting analyst predictions of tepid spending by aspirational consumers.

Looking at 2024, with macro headwinds “the worst in decades,” RBC Capital Markets said in 2023 average consumers have less residual income in their pockets due to higher inflation and interest rates, “which is likely to impact spending,” while the renewed popularity of traveling and dining out were all taking a toll on overall growth.

Save for the “Other Metals” category, which amounts to less than 10 percent of the overall tally, all others materials were in decline in March. Accounting more than a half of all watches, steel’s decline in volume and value of 23.2 percent and 28.2 percent, respectively, weighed heavily.

Double-digit decreases in the volume of watches leaving Switzerland in March affected all material categories, but bimetallic and “other materials” pieces held up better.

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