PARIS — Following a positive start into the year, Swiss watch exports declined 2 percent in February on the back of a sharp downturn in Hong Kong, one of its top markets.
Exports of Swiss timepieces for the month totaled 1.69 billion Swiss francs, or $1.69 billion, according to the Federation of the Swiss Watch Industry, releasing the data as the Baselworld fair kicked into high gear.
Hong Kong slumped 21.8 percent on the month, marking the region’s steepest fall in two years.
Exports to Japan declined 15.4 percent due to a negative base effect, while other geographies registered positive results: the U.K. up 54.2 percent; and Italy 17.6 percent.
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Unit sales of watches in precious metals fell 4.8 percent, the federation said, while watches in other metals posted a rise of 32.8 percent in volume terms.
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Timepieces priced at less than 200 francs, or $199, (export price) were the only category to report an increase in February, recording a 9.2 percent rise in value terms. Above 200 francs, all segments declined at roughly 4 percent in terms of both value and unit terms.
“The February data is difficult to read given distortion from timing of Chinese New Year, timing of price increases in Europe and a strong comparative in Japan but will on balance be taken as a negative in our view,” Citi analyst Thomas Chauvet said in a research note.
Chauvet remarked that he remained “concerned about continued disruption in the Swiss watch industry’s largest market, Hong Kong — and its spillover to Macau.”
Researchers at Barclays noted that the figures were “consistent with recent industry commentary on the challenging environment in Hong Kong with anti-Chinese sentiment,” which forced Swatch to close a store for the day last week. In combination with high rental costs these were “the most commonly raised headwinds,” they wrote.
“We expect some improvement in total Chinese spending in 2015 although we believe this will be driven by stronger tourism spending in Europe due to the weak euro while we remain cautious about the prospects for Hong Kong and Mainland China particularly in the watch industry where more destocking can be expected,” the bank added.
The federation had reported a 3.7 percent upswing in exports in January.