Swiss Watch Exports to U.S. Contract in April as They Double to China
PARIS — For the first time in more than two years, America’s appetite for Swiss watches lessened in April, the Federation of the Swiss Watch Industry said Thursday.
Despite the importance of the U.S. market, it was still a month of “continued growth,” said the organization, indicating exports had reached 2.06 billion Swiss francs mark (or $2.26 billion at current exchange rates) with a 6.8 percent rise compared to April 2022. Since January, they grew 10.5 percent overall.
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The export figures, based on foreign trade statistics prepared by the Swiss Federal Customs Administration, are based on export prices and the declarations made by exporting firms.
Bernstein analyst Luca Solca said April’s figures pointed to a “growth relay in luxury spending” between the U.S. and China.
The U.S. contraction, breaking a 27-month streak, comes as the Conference Board revealed that American shopping sentiment had modestly slipped in May, although remaining above economists’ projections. In March, RBC analyst Piral Dadhania had characterized the good results as a sign of “ongoing momentum in the Swiss watch industry, albeit with changing growth contributions toward the key Asian market, with ongoing U.S. normalization.”
Among the top 10 markets, Singapore and Italy also saw low- to mid-single-digit slumps, while the likes of France, Hong Kong and the U.K. grew 18.9 percent, 15.8 percent and nearly 9.8 percent respectively.
Boosting the month’s results is the 107.8 percent year-on-year increase in value seen in China, where shoppers have been returning to stores in droves since the end of pandemic-related restrictions.
“We think Hong Kong remains a crucial component of Chinese luxury spending thanks to a significant price gap relative to the Mainland,” said Solca, likewise attributing the “encouraging” 5.4 percent growth in Japan to “consumers [continuing] to adopt a more indulgent attitude supported by both locals and Chinese tourists,” albeit an effect that did not help Singapore, South Korea or Taiwan.
In terms of timepieces, April was noteworthy by the 18.8 increase in units in the month, driven by the “other materials” category while metals, precious or not, stayed near-flat.
This was driven mostly by the entry-level segment under 200 Swiss francs, in export rather than retail price, with single-digit contributions from the luxury segment at 500 Swiss francs and above. Solca attributed the growth at entry-level to “products in the ‘other materials’ category and the V-shaped recovery of the Hong Kong market as Mainland China reopened its borders.”
After a brief respite, the troubled 200 to 500 Swiss francs category slumped once more.
According to historical figures from the organization, while watch exports have continued to grow in value steadily over the years, the number of units has slumped, particularly as the production of lower-priced timepieces moved away from Switzerland.
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