(Bloomberg) -- Swiss watchmakers warned of a worsening outlook for the industry, even as exports rose last month on demand for expensive timepieces made of precious metals.
Exports increased 6.9% by value to about 2 billion Swiss francs ($2.4 billion) in August from a year earlier, the Federation of the Swiss Watch Industry said in a statement Thursday. Even so, the prospects for the industry are “still negative, as is the outlook for the rest of the year,” it said.
The export figures highlighted the diverging fortunes of Swiss brands, as demand for mid- and entry-level-priced watches fell sharply, while more costly timepieces fared better.
“The high end of the watch sector continues to do well,” said Vontobel analyst Jean-Philippe Bertschy. “For the other brands, 2024 represents a sharp reset and normalization of growth after the post-Covid boom.”
Exports of watches priced at wholesale above 3,000 francs showed gains last month, rising nearly 5% by volume and 15% by value. Those priced below that level dropped 14% by value and 11% by volume. Total exports by units fell 10%.
The monthly figures underscored the severity of a China-led slowdown that’s rippling across the industry. Exports to the country, the second-biggest market behind the US, slumped almost 6%, while shipments to Hong Kong slid 11%, as a downturn in real estate values weighed on sentiment.
Watchmakers are “lamenting the lack of visibility in the medium term, which is prompting them to be more cautious going forward or even, in some cases, cutting back,” the Federation said.
The Federation and a group representing horology workers warned this week of a significant drop in demand that’s hurting Swiss watch brands and putting jobs at risk. They called on the Swiss National Bank to take steps to weaken the strong franc, which has pressured the industry.
Some major brands are already using the government supported “short-time” work program to furlough employees as orders drop. Sowind Group brands Girard-Perregaux and Ulysse Nardin, for example, have put about 15% of workers on furlough, the company’s chief executive officer told Bloomberg News last month.
Components makers, which supply the industry with parts for movements, watch cases, dials and bracelets are suffering even further with companies taking extended summer holidays and putting staff on reduced work furloughs.
--With assistance from Allegra Catelli.
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