Daily Management Review

Is it Time over for Switzerland’s Luxury Watch Sales?


08/24/2016




Is it Time over for Switzerland’s Luxury Watch Sales?
Is this the end of the watch industry in Switzerland when it acts as a very reliable source of income revenue generation of re country?
 
Netting in a combined total of 1.5 billion Swiss francs ($1.56 bn) in sales of watches, exports of the country’s timepieces fell by 14.2 percent in July, compared to the same figures for July 2015. And this marked another weak month for the watch business of the country.
 
For a consecutive 13 months, there has been a decline in the number of watches exported from Switzerland, figures provided recently by the Federation of Swiss Watches showed.
 
The data doesn't bode well for Switzerland as the watch market is "pretty impressive as an overall contribution to the Swiss economy", said Antoine Lesne, Head of SPDR ETF Strategy at State Street Global Investors in a TV interview earlier in the week. Noting the first fall since 2009, the value of watch industry exports of Switzerland stood at 21.5 billion Swiss francs in 2015.
 
Decisions made by the Swiss National Bank could be partly responsible for the drop in exports of watches, Lesne said.
 
"The Swiss franc has appreciated quite markedly against the euro in the last 18 months since they de-pegged, so this is an example of a monetary policy decision translating on to the real economy," Lesne said.
 
The fact that many countries and their economies could be slowing down is also perhaps indicated by the prolonged dip in Swiss watch sales across the world, Lesne also argued.
 
US tops Hong Kong as biggest buyer for Swiss watches – be it luxury or otherwise. This happened after a massive 32 percent year-on –year drop in purchase of Swiss wristwatches in Hong Kong even as the country traditionally has been the largest buyer. This allowed the US to take over Hong Kong as the largest Swiss watch buying country.
 
With a fall of 14.7 percent, even the sale of Swiss watches in the US was dim compared to a year earlier. In 2015, the total sale of Swiss watches in the country recorded 178 million Swiss francs and this was also in line with the softer trend.
 
Amidst all the dampening data from Hong Kong and the US, the United Kingdom provided some relief for the Swiss watch industry. A country which has had recently undergone the ordeal of the vote to leave the European Union, with the overall sale value of Swiss watches rising 10 percent in July year-on-year, UK shone as one bright spot.
 
The cheaper pound led to a "fantastic sales" in his company's shop as foreign tourists took advantage, Swatch Group AG Chief Executive Officer Nick Hayek told the Financial Times in July.
 
By slumping more than 31 percent in July from the same month a year earlier, precious metal watches suffered a particularly steep decline in units sold, by materials. This piece of data was compounded with the data that there was a fall of 16 percent in the sales of timepieces priced at more than 3,000 Swiss francs.

(Source:www.cnbc.com) 






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