PARIS — Exports of Swiss watches jumped 9.3 percent in October, with growth led by Hong Kong and China, the Federation of the Swiss Watch Industry said on Thursday.
Sales of Swiss watches totaled 1.85 billion Swiss francs, or $1.86 billion, a brisk performance despite persistent declines in exports to the U.S.
The federation signaled a “very favorable base effect” for the period and said the monthly performance confirmed the industry’s improvement, with growth over 10 months reaching 2.4 percent.
“This confirms our expectations of a gentle recovery rather than any V-shaped restocking cycle,” noted Luca Solca, managing director at Exane BNP Paribas, in a note to clients.
“October and November are typically the two biggest months of the year for Swiss watch exports, hence it is encouraging to see positive trends for the industry in the most critical period of the year,” said Rogerio Fujimori, analyst at RBC Europe.
The fastest growth came from Japan, where exports leapt 21.7 percent, but the federation noted a “declining medium-term trend” in that market. Exports to China were up 18.2 percent, while Hong Kong, the industry’s largest market, clocked a 15.8 percent increase.
The U.S. market showed ongoing weakness with a 7.3 percent decline over the period. Growth in Europe overall was 5.9 percent, dragged down by a 0.7 percent decline in Italy, while a 1.2 percent increase in the U.K. showed exports “continued to run out of steam” in that country, the federation said.
Considered an important barometer for luxury goods, Swiss watch sales are closely eyed for signals about the broader health of the market for high-end goods. Optimism in the watch industry has increased in recent months following a difficult 2016, when exports dropped nearly 10 percent.
Exports of watches worth between 500 Swiss francs and 3,000 Swiss francs grew the fastest, up 20.3 percent in terms of value, while watches priced between 200 Swiss francs and 500 Swiss francs climbed 10.4 percent. The priciest range, above 3,000 Swiss francs, rose 6.3 percent. Meanwhile, timepieces priced at below 200 Swiss francs dropped 3.4 percent.
“We believe the data is, on balance, positive for Swatch Group,” Fujimori added. The analyst noted the growth for those segments was “the strongest growth rate we recall in quite some time,” and added that it was a good sign for Swatch Group’s biggest and most profitable brands: Omega, Longines and Tissot.
Ongoing weakness in exports of cheaper watches — the under 200 Swiss franc range — could prompt the resurgence of “Apple Watch fears,” Fujimori added, referring to industry concern that Apple’s connected watch will steal business for lower priced watches over the longer term.
The analyst estimates that the lower price range accounts for around 15 percent of Swatch Group revenues, mostly the Swatch brand and a third of sales at Tissot, but that the decline in Swatch brand exports year-to-date has been narrower than other Swiss low-price brands and fashion watch brands like Fossil.