PARIS — Swiss watch exports to mainland China continued to accelerate in November, another sign that the slowdown in China’s luxury market may have reached a turning point.
Sales to the linchpin luxury region were up 7.9 percent year-over-year in November after growing 2.8 percent in October, the Federation of the Swiss Watch Industry reported Tuesday. At the same time, the decline in sales to Hong Kong narrowed dramatically, down 0.7 percent year-over-year in November after falling 21.5 percent in October.
“We do not give too much importance to monthly trends, yet the November data seem to suggest a turning point in Greater China,” Citi analyst Thomas Chauvet said in a research note.
The combined numbers for greater China show a 2 percent rise in November: the first growth in exports reported by the Swiss watch industry for this market since January 2015.
Offsetting the return to growth in the greater Chinese market, exports to the U.S. saw their second worst month of 2016 in November, falling 18 percent year-over-year.
Worldwide exports of Swiss watches at 1.9 billion francs, or $1.85 billion, were down 5.6 percent year-over-year in November after declining 16 percent in October, indicating that the industry may be starting to stem its losses in a tough climate for hard luxury.
Sales of watches priced for export between 500 francs and 3,000 francs grew slightly, while sales at both higher and lower price points fell.
The federation pointed out that the improvements may be attributed to the fact that November 2016 had one more working day than November 2015. The export data could also be distorted by inventory swaps, according to Chauvet, as old watches being reimported in exchange for new models are not deducted from the top-line export figures.
Despite the “noticeable rebound” in November, Chauvet wrote, “the [year-to-date] performance [down 10 percent year-on-year] reflects 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 FX volatility.”