Swiss watch exports fell in May as a slowdown in demand for premium and luxury timepieces in China and Hong Kong continued.

Shipments dropped 2.2 percent by value to 2.3 billion Swiss francs ($2.6 billion) in May from a year earlier, the Federation of the Swiss Watch Industry said Thursday. Exports to mainland China, the second-biggest market behind the US, skidded 18 percent by wholesale value as a downturn in real estate values battered consumer sentiment. Shipments to Hong Kong, a key watch-trading hub, plummeted 23 percent.

The latest numbers follow a period that has seen demand for pricey timepieces wane after a spike when Covid lockdowns ended. Premium watch buyers have reined in spending amid higher interest rates, shaky economic growth and geopolitical conflicts.

Watchmakers are also suffering from continued strength of the Swiss franc against other currencies that has spurred price increases in some markets and deterred customers. Following another record in 2023, Swiss watch exports are down 2.5 percent in the first five months of the year to about 10 billion francs in total.

The decline for last month follows a surprise increase in April, driven by a US revival. May exports to the US were flat.

May’s results underscore the collapse in demand for watches in the mid-price segment, Vontobel analyst Jean-Philippe Bertschy said.

The figures could weigh on growth forecasts for Cartier and Vacheron Constantin owner Richemont as well as Swatch Group AG, which makes the Omega and Longines brands among others, Citigroup analyst Thomas Chauvet said in a report.

“With Richemont and Swatch’s high exposure to a depressed Chinese consumer we see downside risks,” the Citi analyst said.

Richemont shares traded lower in Zurich immediately following the export report but rebounded to show slight gains in mid-morning trading after the Swiss National Bank cut interest rates.

Swatch Group shares also pared loses after the rate cut to trade down 0.3 percent by mid-morning.

Exports of expensive watches priced above 3,000 francs showed some strength in May, gaining 0.7 percent in value while falling 4.9 percent by number of units.

Swiss watchmakers including Rolex and Patek Philippe have been raising prices and producing more expensive timepieces to keep sales growing amid the downturn.

Shipments of watches with wholesale prices between 500 francs and 3,000 francs fell 16 percent, while watches with wholesale prices of less than 200 francs, driven by Swatch Group AG’s Omega and Blancpain collaborations, fell 1.2 percent by value.

By Andy Hoffman

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