GENEVA — Swiss watch exports are expected to contract in 2009 as the global economic slump deepens.
This story first appeared in the March 26, 2009 issue of WWD. Subscribe Today.
As demand plummets in key markets such as the U.S. and Japan, industry experts and analysts project a significant decline in sales, from top-tier luxury to
“Nothing will improve before the first half of 2010 at the earliest,” said Christophe Laborde, an analyst with the Swiss private bank Bordier & Cie.
High-end luxury lines are holding up, but also will suffer if the recession continues, Laborde said.
The Swatch group said it “anticipates a challenging environment, particularly in the first months of the year 2009,” but it expects “the confidence at the international level can be restored in the second part of the year.”
Sales for the group in 2008 increased by 0.4 percent to $5 billion.
Jean-Daniel Pasche, president of the Federation of the Swiss Watch Industry, said declines in exports were expected to continue in the coming months. He stressed it was difficult to predict how exports will fare in major markets and would require more than a few months of export statistics to predict a trend.
Pasche said the high value of the Swiss franc against some other major currencies such as the dollar could also adversely affect export sales. But the higher value of the euro against the Swiss franc has helped deliver gains in major continental markets such as France, Italy and Germany.
Exports in February dropped 22.4 percent to $860 million compared with a year earlier.
The total was impacted by a 47.5 percent drop in exports to the U.S. and by important declines in steel and bi-metallic products, according to a statement from the Federation of the Swiss Watch Industry.
The $425 to $2,500 price segment suffered the biggest drop in sales, down by almost 50 percent compared to last February. Timepieces priced above $2,500 at current exchange fared better, down by 6.6 percent.
Last year, Hong Kong was the top export market with $2.2 billion, up 10.9 percent, while the second largest main market, the U.S., fell by 3 percent to $1.94 billion, and exports also contracted by 4.5 percent in the third largest, Japan, to $974 million.
Double-digit gains were notched in France, up 15.1 percent to $957 million and registered a 43.1 percent expansion in China, the seventh largest market for Swiss watches, to $700 million.
However, the counterfeiting of Swiss watches remains a “very tough issue,” Pasche said, noting the sale of fake watches on the Internet contributes to this problem.
The federation estimates the counterfeit trade in Swiss watches equalled about 6 percent of total exports last year.