Tourbillons Fly for Swiss Watchmakers

Lily Templeton
·4 min read

PARIS — Switzerland’s luxury watchmakers are flying high.

Boosted largely by a strong appetite for high-end pieces in the U.S. and ongoing, albeit slower, demand in China, Swiss watch exports continued their uptick in December, capping off what the Federation of the Swiss Watch Industry described as “a record year.” Numbers outpaced pre-pandemic levels by a long stretch, particularly in the latter part of the year.

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“The continuing strong trends should be seen as a positive, confirming the recovery of the watches market,” said Barclays analyst Carole Madjo in a research note.

Exports of Swiss-made timepieces grew 8.5 percent in December to 1.91 billion Swiss francs, or $2.08 billion at current exchange, compared with the same month in 2019, the industry body reported.

“The return to pre-crisis levels during September and positive performance in the fourth quarter produced the best annual results for the sector, at 22.3 billion francs [$24.23 billion], 2.7 percent higher than in 2019 and a 0.2 percent improvement over the 2014 record,” the federation stated.

The strong results in December were to be read in the context of much tougher comparisons than those for November, when exports increased 8.7 percent on 2019, Madjo said.

The numbers confirm the uptick reported by some of the segment’s biggest players in recent days.

“The trend of the industry is positive, and one of the reasons is that money is still there, as is the client’s desire to acquire beautiful objects, especially when they have less opportunity to travel and live experiences,” LVMH Moët Hennessy Louis Vuitton-owned Zenith’s chief executive officer Julien Tornare told WWD ahead of LVMH Watch Week, which ends Friday.

Last week, Compagnie Financière Richemont reported sales for its specialist watchmaking arm rose 29 percent to 977 million euros in the three months to December, compared with the prior-year period, and by 19 percent compared with two years ago. The division saw double-digit growth in most regions and watch maisons.

Swatch Group, with its portfolio across price points, said its sales in the fourth quarter exceeded 2019 levels, without releasing numbers. Its full-year sales were still down 7.4 percent on 2019, however.

“Swatch Group’s high-end watch brands are performing well, however, it continues to face structural headwinds for its entry and mid-price watches,” said RBC analyst Piral Dadhania when the company’s numbers were published Tuesday.

This ties in with the numbers that came out of Switzerland Thursday. Despite value growth, volumes were still significantly down on 2019. For the year as a whole, 15.7 million watches were exported from Switzerland — a 23.8 percent decrease compared with 2019.

In December, demand for watches made from precious metals and steel was particularly strong, the organization said, and timepieces priced at more than 3,000 Swiss francs, or $3,260, saw the strongest growth, up 14.8 percent compared with 2019. In the 500 to 3,000 Swiss francs, or $543 to $3,260, price bracket, the value of exports also gained, by 6.3 percent, despite a slight contraction in volume. Exports of watches costing less than 500 Swiss francs, or $543, dropped 26 percent, however.

The growth has been driven not only by the top end of the market, but also by particularly strong demand Stateside — the largest market worldwide for Swiss watch exports. Numbers there in December were up a massive 44 percent on two years ago, capping off a bumper year.

Exports to China, up 9.1 percent, slowed mainly due to a negative base effect, the federation said, but remained strong. Singapore, the U.K. and the United Arab Emirates all grew, while Japan, Germany, France, Italy and South Korea declined. This was an indication of “a level of ongoing instability in the market across Asia, Europe and America, with growth driven by just a small number of countries,” the federation stated.

Demand is not expected to wane any time soon. Swatch Group, for example, said it anticipates double-digit growth in local currencies this year, and that it is seeing no signs of a slowdown in China, despite broader reports of an economic slowdown there due to measures to counter the pandemic and anti-corruption initiatives on the part of the Chinese government.

Certain players are cashing in, as witnessed by Kering’s announcement on Monday that it was selling off its luxury watchmaking activity — an area where it had failed to gain critical mass in the face of its larger competitors — to its management.

“Kering is probably making the most of a recovering watch market to exit a category where it was suffering, given its smaller relative position to bigger competitors in this space,” wrote Bernstein analyst Luca Solca.

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