Swiss Watch Exports Continue Fragile Recovery in July

Retail and Consumer Confidence
23/08/2017 14:05

Driven by strong increases in exports to Hong Kong and China, and even modest 1.4% growth for the U.S., July marked the third straight month of growth for Swiss watch industry exports, according to the Federation of the Swiss Watch Industry FH. Their value was 3.6% higher than in July 2016 at 1.7 billion francs ($1.76 billion), although it bears noting that the comparison was hardly challenging, as Swiss watch exports fell 14.1 percent in July 2016. Watch exports totalling $212 million to Hong Kong represented a 16.8% increase, benefiting from a very favorable base effect (-33%) to achieve sustained growth and a further recovery of their medium-term trend. Exports to China grew 22% to $135.5 million, while those to the US reached $187 million.

Running against the trend for several months, there was a sharp decline (-18%) in the value of exports of watches priced at less than 200 francs (export price) in July, as the number of pieces (-14.7%) had a determining effect on the total. Andrea Felsted, in an op-ed for Business of Fashion, notes that "Swatch is at risk from the decline in demand for lower-priced timepieces as smartwatches gain traction." The other price segments reported growth, especially for timepieces priced above 500 francs. Of particular note was the increase in exports of watches worth more than $3,105 (CHF 3,000), offsetting the decline in cheaper goods. While the FSWI sees "stabilization" of the recovery, Felsted cautions, "don't get carried away thinking the sparkle is assured ... While the recovery is gaining pace it's still fragile, and demand is vulnerable to a fresh bout of nervousness among consumers or any events that deter Chinese tourists from travelling."