Swiss Watch Exports to China Contract 36% in June
This article was updated July 18 at 12:11 p.m. CET
PARIS — China and its current economic travails are weighing heavily on the Swiss watch industry, as its export figures from June showed.
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Foreign sales of Swiss timepieces fell 7.2 percent in the month, showing a “marked decline,” said the Federation of the Swiss Watch Industry, or FHS.
The picture for the first half likewise came out lackluster, with a 3.3 percent year-on-year contraction that saw a cumulated 12.9 billion Swiss francs, or $14.6 billion at current exchange rates, of watches shipped abroad for the period.
For the Swiss industry body, the underperformance of China and Hong Kong, respectively falling 36.5 and 23.1 percent, was “clearly lowering the average” for June. In the first six months of the year, both territories also declined by around 20 percent.
This underscored the impression that the party is over for luxury in the region, following a series of lackluster first-half earnings reports.
For Bernstein’s Luca Solca, June’s Swiss watch exports came as “no surprise given recent earnings reports and commentary from Swatch Group and Richemont,” with weaker wholesale growth impacting first-half results and tougher comparatives expected to weigh on the rest of 2024.
Swatch Group said its first-half revenues were hit by a sharp drop in demand for luxury goods in Greater China as well as Southeast Asia, due to the decline in Chinese tourists. Its sales for the period totaled 3.45 billion Swiss francs, or $3.86 billion, down 10.7 percent at constant exchange rates.
Likewise, lukewarm Chinese demand coupled with tough comparatives in the previous year dented fiscal first-quarter sales at luxury giant Compagnie Financière Richemont, parent of brands including Cartier, Van Cleef & Arpels and Dunhill.
The second half of 2024 is expected to remain challenging for luxury, with watches particularly under scrutiny given post-pandemic effervescence.
Earlier this week, China said its economy grew 4.7 percent year-on-year in the second quarter, missing analysts’ consensus forecasts.
While key economic directives and even stimulus plans are expected to come out of the country’s Third Plenum concluding Thursday, moves such as a major reform to consumption tax could potentially drive retail price inflation and further dent consumer confidence in the short term, according to a research note by Citi.