PARIS — Financial markets have been riding a roller coaster and analysts are predicting continued turbulence, but the economic turmoil isn't affecting Switzerland's high-end watch trade.
Business continues to boom at a record-breaking pace, according to executives and retailers, who said their biggest challenge is to produce enough to satisfy lusty demand.
"We have seen a tremendous increase in our business," said Andrew J. Block, executive vice president of watch retailer Tourneau. "We have more concern about the brands' inability to deliver enough products to sustain the market demand than an economic slowdown."
For the month of September, the most recent data available, Swiss watch exports accelerated 16.7 percent, driven by the high end, according to the Federation of the Swiss Watch Industry. Over the last 12 months, exports of Swiss timepieces have improved 15.2 percent.
The last few years have been incredible for luxury watchmakers, from Cartier to Patek Philippe. New wealth markets like China, Russia and the Middle East are generating double-digit growth, and sales in the U.S. have reached record levels, too.
But as the U.S. stock market falters and the fallout from the subprime loan meltdown proves deeper than initially feared, some analysts wonder whether the party is beginning to wind down.
In a note to investors coinciding with the release of Hermès' third-quarter sales, HSBC analysts predicted watches are more susceptible to slowdown than the rest of the luxury sector.
"Our scenario remains a gradual [luxury] slowdown (inevitable after three exceptional years) with a higher momentum risk on the watch segment," HSBC said.
But most of the main players shrug off warnings like that as unlikely. They also said the diving value of the dollar and yen against European currencies has had little impact on business.
"So what if the dollar and yen are weak?" asked Cartier International president Bernard Fornas. "We don't see any reason for the boom to cool. When you see the figures of the Swiss Watch Federation, you see there is no slowdown. There's a lot of cash in the world. It's a reality. Some people are getting richer, with petrol nearing $100 a barrel and gold at $800 [an ounce]. There's liquidity. The high end is selling better than lower-priced items."Audemars Piguet recently launched a watch with brand ambassador Shaquille O'Neal costing $27,900 in stainless steel and $75,800 in white gold.
"All the timepieces were sold out by the time we had the official launch event in Miami," said François-Henry Bennahmias, president of Audemars Piguet. "We definitely haven't seen any warning signs for now. But that doesn't mean that we are not aware of and preparing for a potential slowdown."
Jean-Marc Bories, general manger of Breguet and the senior vice president of Swatch Group in the U.S., said there has been no fallout from market turmoil.
"Like most prestige items, watches at this price point are somewhat immune to momentary blips in currency or economy," he said. "Breguet is demonstrating record-breaking growth this year and under greater demand than ever."
Severin Wunderman, owner of Corum, also said he had no bad news to report. "We are still under big pressure to deliver," he said, adding, though, that he is concerned about the low value of the dollar.
"I personally feel that there will be reactions in the U.S. market, as no one has yet readjusted prices due to the dollar's slide. As most big players have prepurchased gold, diamonds and currency to cover sales this season, if the dollar doesn't rebound there will be many companies who will not survive. The watch industry has a very big failure rate."
In honor the @CFDA’s announcement of @iamnaomicampbell receiving the Fashion Icon Award at the 2018 #CFDAAwards, which will take place on June 4, here’s a #tbt of the supermodel on @michaelkors’ runway in 1991. #wwdfashion #wwdarchive (📷: George Chinsee)
“I was making the guacamole when my scout saw me,” says model @stuckinteenage on being discovered just six months ago while working at @chipotlemexicangrill. Since then Williams has signed with @dnamodels, walked in her first show at @calvinklein and landed on the cover of @vogueitalia – a high point of any model’s career. To read @lisajlockwood’s full interview with the model on her experiences thus far, head to WWD.com – link in bio. (📷: George Chinsee)
“I love the idea of dialogue, period. It’s where I’ve always gotten my inspiration from: hearing other women speak, their journeys and their paths,” said @hereisgina, who delivered the keynote speech during @sxsw for @createcultivate in partnership with @fossil. For her two panels, Rodriguez chose female empowering, female-led and female entrepreneurs to focus on. Head to WWD.com to read more about her thoughts on Time’s Up, growing up in a family of women and why we “need a girls’ club.” #wwdeye #sxsw (📷: @jgreenery)
Leading luxury brand are shaking things up to keep up with streetwear. Case in point: the arrival of @mrkimjones as artistic director of @diorhomme. Jones, who succeeds @Kris_Van_Assche, is seen as one of the handful of designers who can actually straddle the luxury and streetwear worlds — which could lead to even more changes at established brands. What could this mean for the rest of the menswear landscape? Head to WWD.com to find out what experts predict #wwdfashion (📷: @franckmura)
“It’s like buying groceries. You’re going to buy the best mango, the best mozzarella, the best things. You have to, or others are going to take it all,” said @gabrielahearst on why she uses only the finest fabrics. Last week, Hearst received her first @cfda nomination for Womenswear Designer of the Year, and earlier this month she opened a permanent showroom in Paris. To read @jessiredale’s interview with the designer and find out why this is shaping up to be a big year for her, head to WWD.com. #wwdfashion (📷: @francoisgoize)
“It’s an interesting thing, playing a younger version of your mother. It’s an interesting concept. I adore my mom and love her in every capacity, but it was just something that had never crossed my mind,” says @anniemstarke on playing a young Joan Castleman in “The Wife.” The same role will be played by her mother Glenn Close. Read more about her growing up in the film industry as the daughter of producer John H. Starke and Close and what she has planned for the future #wwdeye (📷: @nataliamantini)
@asics is launching a new streetwear sneaker inspired by its latest ambassador, @steveaoki. The Hyper-Kenzen x Aoki, which will launch at @footlocker stores exclusively tomorrow, is a slip-on style that incorporates the brand’s proprietary Gel technology through beads integrated into the midsole for comfort and endurance. Read the full story on WWD.com.