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Swiss Watchmakers Cautiously Optimistic for US, China in 2017

Luxury watchmakers have been grappling with a combination of weak demand in Hong Kong and the United States, and Chinese tourists avoiding Europe for fear of militant attacks.
By
  • Reuters

GENEVA, Switzerland — Swiss watchmakers expect to at least stabilise sales this year after two years of decline as the important Chinese and US markets show signs of turning the corner, executives said at an industry event on Tuesday.

Luxury watchmakers have been grappling with a combination of weak demand in their biggest markets, Hong Kong and the United States, and Chinese tourist shoppers avoiding Europe for fear of militant attacks.

Recent comments from executives suggest the worst may be behind them, however.

"We hope to see a year of stabilisation and consolidation," Nicolas Bos, chief executive of watch and jewellery maker Van Cleef & Arpels, owned by Richemont, told Reuters in an interview at an industry watch fair.

"Towards the end of last year things started to look a bit better," he added.

Richemont, which also makes Cartier jewellery and Vacheron Constantin watches, last week reported a return to sales growth in the final quarter of 2016. Richemont and Swatch Group shares have gained 14 percent and 11 percent respectively so far this year.

"In our business, uncertainty is the worst enemy. You don't buy exceptional pieces when you're not in the mood. In the United States, for example, the complicated period before the election had an immediate impact," Bos said, adding U.S. sales had picked up in December.

Exports of Swiss watches fell 10.4 percent in the first eleven months of 2016, but exports to mainland China returned to growth in July. December data is due on Jan. 26.

"The worst seems to be behind the Swiss watch industry," said Jean-Claude Biver, head of LVMH's watch business.

"Mainland China is likely to see a good progression in 2017, but Hong Kong won't rebound so quickly," he said, adding there was still excess stock at Hong Kong retailers. Fewer wealthy Chinese shoppers have been visiting Hong Kong since 2014.

By Silke Koltrowitz; editor: Alexandra Hudson.

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