Geneva - Swiss watch exports fell in August, heading for the first annual decline in six years amid signs that competition from Apple’s smartwatch may be denting demand for low-end timepieces.
Shipments declined 1.6 percent to 1.47 billion francs ($1.5 billion), the Federation of the Swiss Watch Industry said on its website on Tuesday. Exports of watches with wholesale prices less than 200 francs fell 13 percent, while the 200-franc to 500-franc segment plunged 24 percent.
“I presume that the Apple Watch would put pressure on the low- and mid-tier segment of the Swiss watch market,” said Jon Cox, an analyst at Kepler Cheuvreux in Zurich. “Stock market volatility isn’t helping in China.”
Watch shipments, which make up about a tenth of Switzerland’s total exports, have declined 1.2 percent in the first eight months of 2015. Apple’s entry into timepieces has spurred less-expensive brands to develop their own smartwatches as they face the biggest threat. Movado Group Chief Executive Officer Efraim Grinberg said last month that the maker of $495 timepieces will start selling a smartwatch in the fourth quarter, joining other brands such as Frederique Constant and Mondaine.
Wealth destruction
The introduction of the Apple Watch, combined with a surge in the Swiss franc and a Chinese government campaign against extravagant spending, have clouded the outlook for Swiss timepieces. Wealth destruction caused by the Shanghai Composite Index’s 38 percent decline since mid-June may also be damping demand from rich Chinese.
Shipments to Hong Kong, the largest market, declined 18 percent, while China registered a 39 percent decline. The rest of the top markets increased more than 10 percent, except for Singapore, which was down 11 percent.
Swatch Group AG shares dropped 2.7 percent to 370.70 francs as of 10.28am in Zurich. Cartier maker Cie Financiere Richemont SA fell 2.1 percent to 74.10 francs.
“The development in the low- and mid-end is an issue for Swatch Group, whereas Richemont has with its high-end brands less of a negative impact from the August figures,” said Rene Weber, an analyst at Bank Vontobel AG.
High-end watches, wholesaling for more than 3 000 francs, gained 1.7 percent in value last month. The country’s largest watchmakers are closely held Rolex, Swatch Group and Richemont.
August had one more business day in 2015 than in 2014, and adjusting for that, watch exports dropped 5.6 percent in the month, according to Swiss customs authorities.
BLOOMBERG