Swiss watch exports rose 2.7 percent in 2017, but ended the year on a weak note as sales of precious metal timepieces fell and revenues declined in markets including the U.S. and parts of Western Europe in December, the Federation of the Swiss Watch Industry said Tuesday.
In 2017 as a whole, the value of Swiss timepiece exports totaled 19.92 billion Swiss francs, or $21.25 billion.
“The situation of Swiss watch industry exports improved steadily in the course of 2017. After declining for two years and reaching a new threshold, demand gradually picked up again,” the federation said, referring to growth of 0.3 percent in the first half, versus 4.9 percent gains in the second.
“On the distribution side, a presumably tighter stock level was another factor conducive to recovery. A growing number of markets returned to growth, but several of them are still lagging behind,” it added.
The number of timepieces sold abroad was down by 1.1 million pieces, or 4.3 percent, to 24.3 million. “This was the lowest figure since the 2009 crisis,” the federation said.
The market continued to feel pressure at the lower-priced end from the Apple Watch, which has dampened demand for quartz watches. Revenues for that segment fell 7.4 percent, while mechanical timepieces were up 4.6 percent in sales terms and 3.9 percent on a unit basis.
Watches priced at less than 200 francs registered an 11.6 percent decline in value and were down 8.5 percent in volume terms.
On a geographic basis, sales in Hong Kong, the industry’s most important market, grew 6 percent, while revenues were up 18.8 percent in mainland China.
“Swiss watch exports to China have now posted double-digit rolling [last 12 month] growth for eight straight months. Hong Kong department store sales have also continued to improve, with November marketing the ninth consecutive month of growth,” wrote Sanford C. Bernstein & Co. LLC analysts in a note.
Exports to Singapore and to the U.K. were up 8.5 percent and 7 percent, respectively.
Sales in the U.S. declined for the third year in a row by 4.4 percent. “This market is proving slow to recover its taste for luxury products, at least through the traditional sales channels,” the federation said.
Looking forward to 2018, the industry is looking in better shape, the federation said.
“Development of digital communication and distribution channels, and the types of consumption favored by the Millennials will be priorities in 2018. In this context, watch industry export growth is likely to be comparable to that observed in 2017,” it predicted.
In December, Swiss watch exports increased 0.7 percent to 1.67 billion francs. This followed a 6.3 percent rise in November and a 9.3 percent gain in October.
The number of exported wristwatches fell 13.5 percent in the last month of the year, when precious metal watches registered a 4.7 percent sales decline and timepieces made of other metals posted a 7.4 percent revenue decrease.
On a volume basis, watches in the other materials category were down 27.3 percent.
“Sales of watches priced at less than 500 francs (export price) fell in December, especially in the less than 200 francs segment, where volumes were down by one-fifth,” the federation said. “The 500 to 3,000 francs range made significant gains, while the most expensive timepieces remained flat.”
Hong Kong had 11.8 percent growth, while other markets in Asia also showed strength. Sales to mainland China rose 12.3 percent, marking a sustained dynamic, while the 7 percent gains in Japan represented slower growth. With gains of 33.3 percent, South Korea placed eleventh worldwide for Swiss watch exports in the month.
The U.S. “still seems to be in the doldrums,” according to the federation, which said sales to the country were down 9.5 percent, their steepest fall since May. Sales to Western Europe, meanwhile, were varied, posting a 1.5 percent decline on average overall.