Apple Watch

PARIS — Are luxury watches falling out of favor?

According to Barclays, which downgraded the hard luxury sector on Wednesday, they may be as the sector continues to endure tough times.

“Weakening sales on easing comps is a major cause for concern. While we believe this is destocking after a period of weak trading, we are concerned this is a category issue given that global consumption remains robust — especially in China,” the investment bank said in a research report. “The weakness has accelerated in 2016 — a surprise to us given that the anti-graft measures are now in the fourth year following introduction and any impact of the Apple Watch should have annualized from May.”

Richemont, which is due to issue a five-month trading update on Sept. 14, is expected to show an 8 percent decline in revenues, with its specialist watchmakers dipping 11 percent.

The dismal figures dovetail with weak data from the Federation of the Swiss Watch Industry — exports sank 14.2 percent in July to 1.54 billion Swiss francs, or $1.61 billion — and a 12.5 percent dip in first-half revenues at Swatch Group.

“Weak trading, overcapacity and inventory build a concern,” the report warns. “There has been a 21 percent increase in people employed in the Swiss watch industry due, we believe, to increased capacity,” the report adds, estimating production personnel has swelled 19 percent since 2010.

According to Barclays’ analysis, there has been no growth in total Swiss watch exports since 2012.

Top-end watches have seen slightly better growth with a 0.8 percent compound annual growth rate compared with all price points at 0.1 percent.

“The 200 to 500 [Swiss francs] category is the strongest category — interestingly this is the area most impacted by the Apple watch launch with 0 to 200 and 500 to 300 the weakest pricing points,” the report notes. “The countries where the Apple Watch was first launched and the effect on the lower pricing range since launch that shows a bigger impact at 200 to 500 level. It is anticipated that a new version of the Apple Watch will be announced shortly. Clearly this is an issue that is unli

kely to disappear although it is not obvious they compete for the same consumer.”