The decline in watch exports loses momentum in July

Mainland China carried the slow recovery as most of the major European markets still show significant declines.

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The decline in Swiss watch exports, caused by the coronavirus pandemic, continued to slow down in July. Mainland China in particular carried the slow recovery as most of the major European markets still show significant declines.

Shipments abroad were down 17% to 1.58 billion francs, according to the monthly statement of the Federal Customs Administration (AFD).

During the month under review, “the drop was half as marked as in June,” said the Federation of the Watch Industry (FH) on Thursday.

The main markets have taken different paths. First outlet, China (+ 59.1%) posted a second consecutive month of very strong growth, illustrating the recovery of this market and the gradual repatriation of purchases made so far abroad.

The United States (-0.6%) was stable after three extremely negative months. The situation in Hong Kong (-42.9%), affected by Covid-19 and political turmoil, has not really improved, even if the decline has lost some force since April.

In fourth place, Japan (-32.1%), deprived of Chinese tourists, remained clearly in the red figures.

In Europe, the United Kingdom stood out with an advance of 2.5%, while Germany (-1.1%) is almost stable. Italy (-33.6%) and France (-30.6%) suffered heavy falls, in particular because of the absence of tourists from the Middle Empire.

All price categories lost ground, as did volumes (-35.6%). The cheapest watches suffered the most severe declines while luxury timepieces fared better.

Watches costing less than 200 francs (export price) fell 36.3% in terms of exported turnover, while those over 3000 francs limited the damage to -11.1%.

Slow ascent

From January to July, the fall in watch exports is now 32.8% with 8.4 billion francs in revenue. The Watch Federation is forecasting a 30% drop for the year as a whole.

The figures for July are somewhat better than expected by Zurich Cantonal Bank (ZKB) analyst Patrick Schwendimann. Thanks to the lifting of containment in most markets, the decline in watch exports should gradually decrease in the coming months, he writes while stressing that mainland China will support this positive trend in particular.

The Chinese, the main clientele in the luxury sector, are buying more products in their country now, with travel remaining very limited due to the coronavirus pandemic.

The slow recovery in exports could however be called into question if a second wave of the pandemic were to emerge, recalls the ZKB.

Today’s figures have not benefited luxury stocks. The Swatch bearer fell by more than 2.7% to 194.15 francs and the registered Richemont by 1.8% to 59.00 francs, in an SMI down 0.78%.

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