The Tag Heuer Calibre Mikrograph

PARIS — Swiss watch exports declined 5.7 percent in September, when a steep drop in sales to Hong Kong and timepieces in precious metals negatively impacted the result, the Federation of the Swiss Watch Industry reported.

It marked the 15th month of falling exports, although the downturn flattened out in the third quarter.

In September, foreign sales of Swiss watches totaled 1.7 billion Swiss francs, or $1.74 billion, according to the federation. Dollar figures are converted at average exchange rates for the period in question.

“The September performance continues to reflect elevated inventory levels within third-party distribution in Asia and the cautious mood amongst watch retailers globally given political uncertainty/’Vox Populi’ risks, travel fears after repeated terror events in Europe, depressed oil prices and stock market and [foreign exchange] volatility,” Thomas Chauvet, luxury analyst at Citi, wrote in a research note.

Exports to Hong Kong declined 39.6 percent, its biggest contraction during the last 20 months, while sales to Italy, Germany and France were also substantially weaker.

For the second time in 2016, the largest market for Swiss watch exports was the United States, where business grew 4.7 percent. Japan was back in the black, with an 8.9 percent increase, following six months of falling sales, and the United Kingdom profited again from the Brexit vote, registering growth of 32.4 percent in its third month of steeply gaining revenues.

Exports to China remained stable, at minus 0.6 percent.

“Monthly data in Mainland China is very volatile, but we think sell-out trends there are encouraging and we expect improving trends in [the fourth quarter],” wrote RBC Capital Markets analyst Rogerio Fujimori.

Watch exports were down 5.9 percent in volume terms and 5.7 percent on a value basis.

Sales of timepieces in the precious metal and other metals categories dropped 14.9 percent and 21.5 percent, respectively, in value terms. While steel watches recorded a 1 percent increase and those in bimetal posted a 2.2 percent gain.

“All the price segments were affected by the reduction reported in September, but to varying extents,” the federation said.

Sales of watches with export prices between 200 Swiss francs and 500 francs, or $205 and $513, were the hardest hit – down 11.6 percent in value terms. On the other end of the spectrum were timepieces in the range of 500 francs to 3,000 francs, $3,076, which declined 1.4 percent.

“While domestic luxury demand in Mainland China and tourism into Europe have improved in recent months in soft luxury, it does not seem to be the case in hard luxury yet,” continued Citi’s Chauvet. “We remain concerned about Swiss watch industry revenue trends [being] still negative in a fixed-cost environment and continued disruption in Hong Kong [historically the industry’s largest and most profitable market], recording its worst monthly performance ever in September.”

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