- Shipments dropped 8.8% in August, following 14% slide in July
- Exports to the U.K. gained 24%, buoyed by weak sterling
Swiss watch exports fell in August as demand weakened from Japan to the U.S., extending the industry’s slump to fourteen months.
Shipments dropped 8.8 percent to 1.4 billion francs ($1.4 billion), the Federation of the Swiss Watch Industry said in a statement Tuesday.
The slowdown has spread from Asia to Europe and the U.S. in recent months, leading Cie. Financiere Richemont SA, the maker of Cartier and IWC Schaffhausen timepieces, to cut jobs, buy back unsold inventory from retailers and refocus on more affordable pieces. Richemont warned that first-half earnings will decline about 45 percent, following Swatch Group AG’s 54 percent drop in first-half profit. In Europe, terrorist attacks have cut the numbers of free-spending tourists who make up a big chunk of sales.
“We remain concerned about continued disruption in Hong Kong, while mainland China continues to show improving trends, albeit at the expense of weaker tourist demand in Europe and Japan,” Thomas Chauvet, an analyst at Citigroup, said in a note.
Exports to Hong Kong fell 29 percent, while shipments to Germany slid 15 percent, the federation said. The U.S. and Japan showed declines of 12 percent and 27 percent, respectively. Mainland China saw exports rise by 29 percent, helped by a favorable comparison base from a year ago. One bright spot was the U.K., where shipments increased 24 percent after the Brexit-induced tumble in the value of sterling.
Some brands have already increased prices in the U.K. by at least 10 percent, Citigroup’s Chauvet said, so the currency effect is unlikely to last.