Luxury goods: Swiss watch exports declined 2.7% in September

News published on October Thursday 18, 2012
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Swiss watch exports declined 2.7% in September to CHF 1.7bn (after +13% in September and +15.4% in July). Over the first nine months, Swiss watch exports grew 13.8%. September’s decline was in the context of a tough comparison base, namely 21% growth in September 2011. HK (#1 market) and China (#3 market) declined significantly (-20.8% together in September), a consequence of the soft final demand in Greater China.

ANALYSIS
  • High-end segment continues to outperform. This segment (export prices above CHF3,000, i.e. retail prices above EUR7,000) was again the best performer with 3.7% increase in September in value and almost the same in volume. At the other end of the scale, the low-priced category, below CHF 3,000 CHF declined 10.7% in September. Total exports of finished watches declined 10% in volume terms, and 2% in value.
  • 20.8% decline in Greater China in September! Indeed, exports to Hong Kong (#1 market) were down by 20% (after+10% in August and -1% in July) after last year’s 44% growth in September 2011. China (#3 market) also posted a significant slowdown with a 27% decline. In September, exports to GC declined 20.8%. For the nine months ending September, exports to China & HK combined rose 11%. Exports to Singapore declined 21%.
  • Exports to the U.S. decreased 5% in September while European countries continued to perform well over the month: Italy: +24%, Germany: +31% but France a bit softer with +3%. This trend highlights the inflow of tourists from emerging markets, notably the Chinese clientele who buy more and more luxury products abroad, partly due to price differences (up to 50% compared to the prices in Mainland China).
Swiss watches exports since August 2007

INSERER DIAGRAMME

Source: FHS

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  • Although we anticipate a slowdown before the end of 2012 (+11% for FY12 vs. +14% over the 9M), figures for September show a significant deceleration that is surely higher than what the market was expecting. Swatch, Richemont and LVMH (to a lesser extent) will probably be under pressure today. Greater China accounts for 28% and 40% of Richemont and Swatch sales respectively.
NEXT CATALYSTS
  • October Swiss watch exports will be released on November 20th, 2012
Analyst : Loïc Morvan / 33(0) 1 70 36 57 24 / lmorvan@bryangarnier.com
Consumer Analyst Team : Cédric Rossi, Peter Farren, Nikolaas Faes

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