Swiss watchmakers see exports plunge amid pandemic

ZURICH, Switzerland – Swiss watch exports plunged by more than a fifth in March, the Swiss watch industry federation, FH, said on Tuesday, April 21, warning it expected the situation to deteriorate further in April.

Overall, Swiss watch exports fell 21.9% in March compared to a year earlier, to 1.4 billion Swiss francs ($1.4 billion, 1.3 billion euros) – with a range of markets seeing devastating declines, as economies worldwide have basically ground to a halt in the face of the COVID-19 pandemic.

Exports to Hong Kong, the sector’s biggest market, plummeted 41.3%, while exports to France fell 48%, and those to South Korea were down 46.2%.

Exports to Italy, one of the countries hardest-hit in the pandemic and which has introduced some of the strictest lockdown rules, saw the sharpest decline, plunging 57.6%.

Watch exports to China, a key market for Swiss luxury products, meanwhile saw a rebound of 10.5% in March after falling by more than half a month earlier, “probably in anticipation of the end of the crisis and going hand-in-hand with an increase in domestic consumption,” FH said.

Exports to the United States, the country currently hardest-hit by the pandemic with more than 40,000 deaths, also showed a perhaps surprising surge of nearly 21% compared to March 2019.

“Watches priced at over 3,000 francs grew strongly there, in a market that has been very dynamic since the beginning of the year, probably anticipating future shipping difficulties,” FH said.

The federation warned that the decline in overall exports, which covers watches sold to retailer inventories, was significant, but was “nonetheless lower than the drop in [consumer] sales in some of the main markets.”

“A deterioration is expected in April,” it warned.

Following the news, Swatch Group, which owns luxury brands like Tissot, Longines, and Omega, saw its share price plummet 6.3% in midday trading to 191.15 Swiss francs, as the Swiss stock exchange’s main SMI index dipped 1.9%.

In a note published earlier this month, Vontobel analyst Rene Weber warned that the Swiss watch industry was in for “the worst decline in more than 50 years,” and forecast that exports would contract by 25% this year.

He hinted though that that outlook could be optimistic, since it was based on the assumption that stores across Europe and the United States would reopen in May and June. – Rappler.com