Swiss Watch Exports Rise 13.2% in October

By John Revill

ZURICH--Swiss watch exports beat expectations of a decline to return to growth in October, underlining the resilience of the luxury sector amid the global economic slowdown.

The latest data from the country's customs office showed that watch exports rose 13.2% in October to 2.12 billion Swiss francs ($2.25 billion).

Analysts expected a decline in October, following a fall of 2.7% in September, the first dip in watch exports since December 2009.

Luxury goods have enjoyed spectacular growth rates in recent years, long defying a cooling of the world economy.

Even as demand from European consumers for pricey watches slowed this year, exports to top tourist destinations in the region held up as Chinese shoppers flocked to Paris and Rome to buy items like designer handbags and watches.

The picture changed in September, when China's economy started to show signs of cooling and a once-in-a-decade leadership change led to new scrutiny on how the powerful spend their money.

Analysts expected a decline also due to a destocking effect - retailers selling off some of their supplies of watches before ordering new ones.

"Demand in China and Hong Kong has been much weaker, and the watch exports to these markets has been weak in recent months as the retailers sell off their inventories," said Patrik Schwendimann, an analyst at Zuercher Kantonalbank.

In Switzerland, Swatch Group AG (UHR.VX), Compagnie Financiere Richemont AG (CFR.VX) and privately-held Rolex SA have been the main beneficiaries from the boom in the luxury goods industry.

Analysts expect growth next year, with watch exports returning to their long term average growth rate of around 5%.

One segment has been shielded from the downturn: Watches that sell for 9,000 Swiss francs ($9,500) and more.

"European demand for high-end watches is still booming due to tourists, while the U.S. market is catching up in our view," said Thomas Chauvet, an analyst at Citi.

Watch aficionados who buy timepieces in this price category so far haven't been affected as much by the economic slowdown, said Patrick Hasenboehler, analyst at Bank Sarasin.

"If you want to show your wealth as a man, a watch is the only way to do it," he said. "And when you buy an expensive watch, it has to be Swiss," said Mr. Hasenboehler.

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