By Corinne Gretler
(Bloomberg) — Swiss watch exports had their biggest decline in six years in October, led by a 39 percent slump in shipments to Hong Kong, the industry’s largest market.
Shipments declined 12 percent to 2 billion Swiss francs ($2 billion), the Swiss customs office said in a statement Thursday. Adjusted for fewer working days, the drop was 7.6 percent. Exports to the U.S. dropped 12 percent, the Federation of the Swiss Watch Industry said on its website.
“2015 has been one to forget for the watchmakers,” said Jon Cox, an analyst at Kepler Cheuvreux in Zurich.
Watch shipments, which make up about a 10th of Switzerland’s total exports, have declined 3.2 percent in the first ten months of 2015. The industry is pulling back in Hong Kong, with TAG Heuer shuttering a store there in August, and has begun to cut jobs. Richemont, the maker of Vacheron Constantin and IWC timepieces, said on Nov. 16 that it’s cutting 85 positions at watch-dial maker Stern Cadrans, shifting some employees to other sites.
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“Hong Kong’s share is likely going to remain somewhere above 10 percent in the medium-term after being over 20 percent a year ago,” Cox said. “It is never coming back to where it was.”
The month had a challenging year-earlier comparison as exports rose 5.2 percent in October 2014, one of the biggest gains of that year.
The 11 percent surge in the Swiss franc from a year ago has eroded the industry’s profit margins. Competition from Apple Inc.’s smartwatch has also weighed on low-end brands of timepieces. Fossil Group Inc., a U.S. watchmaker, saw its stock slump 37 percent Nov. 13 after saying fourth-quarter sales may decline as much as 16 percent amid competition with wearable technology.
