Is the Swiss watch market entering a crisis?

The Swiss watch industry, which normally never experiences crises and represents 50% of the global turnover in the sector, is facing a unique period of uncertainty, marked by a significant slowdown in exports in February. As explained by Il Sole 24 Ore, after a period of steady growth lasting over two years, the numbers show a significant decline, raising questions about the stability and resilience of the market. According to data from the Fédération de l’industrie horlogère suisse, Swiss watch exports decreased by 3.8% in February compared to the previous year, amounting to 2.15 billion Swiss francs, equivalent to approximately 2.22 billion euros at the current exchange rate. This is the second time in three years that the sector has recorded a decrease in monthly exports. Furthermore, the total number of shipments from Switzerland saw a decline of 5.2%, dropping to 1.2 million units. The slowdown in sales to China and Hong Kong was one of the main factors contributing to this decrease: exports to mainland China plummeted by 25%, while shipments to Hong Kong decreased by 19%. However, the United States maintained its position as the primary destination for Swiss watches, recording a 5.5% increase in exports.

During February, the Swiss watch industry experienced a significant slowdown in exports. The performance of different markets, as reported by Il Sole 24 Ore, shows growth of 5.5% in US exports, 5.6% in Japan, 3.3% in Singapore, 8.9% in the United Arab Emirates, and 6.1% in France; however, this growth was offset by significant declines in mainland China (-25.4%) and Hong Kong (-19.0%). In the European context, most markets reported a decrease in performance, with variations ranging from -2.1% in the United Kingdom to -17% in the Italian market. Sales of watches valued at over 3,000 Swiss francs also showed a decline of 1.8% in February, which is significant considering that this segment represents about 80% of the total value of exports.

This decline has directly impacted the financial performance of major companies in the sector. Swatch Group suffered a 2.5% loss on the Zurich stock market, while Richemont recorded a decline of over 3%. The future prospects of the sector are a cause for caution among analysts. According to Pambianco, Vontobel has highlighted the significant challenges that Swatch Group's strong exposure in mainland China and in the entry-level and mid-range product segments could pose. The figures for 2024 exports, with four of the major markets in negative territory and six in positive territory, reflect a complex picture. While the United States maintains a leadership position, China and Hong Kong are experiencing fluctuations linked to their economic framework. It remains to be seen whether these fluctuations will be temporary or persistent in the coming months.