Fears of a luxury slowdown are materializing. New data from the Federation of the Swiss Watch Industry shows that exports of luxury timepieces tumbled the most since 2020 as demand crashed in Asia.
Swiss watch exports dropped in March. Their value fell by 16.1% compared with the same month in 2023 to 2 billion Swiss francs ($2.2 billion). Cratering demand in China and Hong Kong caused most of the decline. Weakness was reported across all six main markets.
Exports to mainland China, the second-biggest market for Swiss watches, plunged 42%, the worst decline since March 2020, when the global economy began seizing up due to government-enforced lockdowns. Shipments to Hong Kong tumbled even more, down 44%.
"The negative trend is even worse than we expected and the decline in China is really worrying and probably indicates that inventories in the region were once again too high," Jean-Philippe Bertschy, an analyst at Vontobel in Switzerland, told Bloomberg.
Faltering demand for Swiss watches comes one day after LVMH Moët Hennessy Louis Vuitton, the world's largest luxury group, controlled by the family of billionaire Bernard Arnault, reported that "uncertain geopolitical and economic environment" has weighed on luxury spending.
LVMH shares in Paris are 10.5% below the peak put in early last year.
For a broader view of global luxury stocks, the MSCI World Textiles, Apparel & Luxury Goods Index also shows the index well below (-21%) the peak put in at the end of 2021.
A combination of China's slower-than-expected economic recovery and generational highs in interest rates across the Western world are some of the reasons why a global slowdown in the luxury market has materialized.
