Swiss Watch Exports To The States Took A Time-Out

Swiss Watch Exports To The States Took A Time-Out
Paul Allison, CFA

6 months ago2 mins

What’s going on here?

The allure of Swiss luxury timepieces seems to be waning in the US, with April witnessing a slide in exports, according to recent industry data.

What does this mean?

Covid lockdowns left Americans with swollen wallets and a yearning for indulgence – and luxury wristwatches seemed to fit the bill just fine. The ensuing splurge on high-end timepieces vaulted the US to the top of the Swiss watch league, overtaking high-rolling China in 2021. But the hands of time took an unexpected turn this April, with Swiss watch exports to the US dialing back by 4.9%. That marked the first slowdown in over two years, sure – but it’s not all downbeat for Swiss watchmakers: overall exports rose by 6.8% in April, with shipments to China more than doubling compared to last year.

Swiss watch exports
Source: Federation of the Swiss watch industry

Why should I care?

The bigger picture: Worth watching.

Luxury spending usually manages to hold its ground amidst economic turbulence, and that’s mainly because high-net-worth individuals – who dominate demand for pricy stuff – are less troubled by economic downturns. But if this slight hiccup in US luxury watch spending morphs into a trend, it might signal a rough road ahead for the broader US economy. After all, if the uber-wealthy are nervous enough to start tightening their purse strings, it could signal some seriously stormy weather for the average Joe.

US luxury spending
Source: The Economist

For markets: Scarcity factor.

Investors have relied on luxury spending’s steady growth for years. But the sector’s an exclusive club, dominated by European behemoths and a few acclaimed boutique players. And members of that chic VIP list have stock prices that mirror their exorbitant offerings. This mightn’t worry investors who are playing the long game, provided demand – supported by things like strong stock markets – stands firm. But beware: in the nearer term, a luxury spending dip could leave those high valuations looking as inflated as a Birkin bag’s price tag.



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