PARIS — Exports of Swiss watches fell 31.9 percent in June, the steepest decline since the beginning of the year, reflecting wilting demand for expensive timepieces amid the economic crisis.
This story first appeared in the July 22, 2009 issue of WWD. Subscribe Today.
In the first half of 2009, total watch exports showed a 26.4 percent drop, totaling 6.1 billion francs, or $5.7 billion at average exchange rates.
The Swiss watch industry has been in decline since the end of 2008, after five years of strong growth, with exports currently below 2006 levels.
“The lack of visibility and confidence makes all forecasting difficult,” the Federation of the Swiss Watch Industry stated.
In general, wristwatches selling for more than 500 francs, or $466, experienced the most severe declines. Products worth between 200 francs, or $186, and 500 francs were the least affected, with a decline restricted to around 10 percent.
Citigroup Inc. analyst Thomas Chauvet said in a research note that Swiss watch industry trends could remain weak for another few months, reflecting continued destocking among distributors, weak consumer demand, reduced travel flows and unfavorable comparisons with 2008 sales until September.
“We believe the end of the year could be a catalyst for Swatch Group and Richemont,” Chauvet said.
With the exception of South Korea, all major markets reported declines. Exports to the U.S. saw the worst drops, falling by 43.3 percent, while declines in the main European markets were more moderate.
The extent of the decline in the U.K. was mitigated by the weakness of sterling, with exports down 13.7 percent.
Several Swiss watchmakers have laid off staff as the global financial crisis hit demand for expensive timepieces. Last month, luxury watchmaker Zenith said it had begun consultations to reduce its 220-strong staff, while Geneva-based Franck Muller eliminated almost half of its 428-person workforce.