Swiss Watch Industry Faces Tough Times As Richemont And Swatch Groups Report Sales Declines

Richemont and Swatch Group, two of the biggest names in Swiss watchmaking, have both reported disappointing financial results this week, highlighting ongoing challenges in the luxury watch market. Richemont, which owns brands like Vacheron Constantin, Jaeger-LeCoultre, and Panerai, said its specialist watchmakers division saw sales fall 7% in its latest quarter or 10% after accounting for currency impacts like a strong Swiss franc and a weaker U.S. dollar. Swatch Group, home to Omega, Tissot, Blancpain, and Breguet, reported an 11.2% drop in sales for the first half of the year. A strong franc and weak demand in China hit Swatch particularly hard. This follows industry data showing Swiss watch exports fell by 5.6% in value and nearly 10% in volume in June. Analysts cite “luxury fatigue” and cautious spending as key reasons for the slowdown. 

Geopolitical tensions, China’s ongoing property crisis, and uncertainty in U.S. trade policies are all weighing on consumer confidence. Buyers are more hesitant when they feel unsure about the future. During the pandemic, demand for luxury watches surged, prompting brands to ramp up production and prices. Now, that demand has cooled, and consumers are more cautious. 

Swiss export figures show that watches priced above CHF 3,000- the core of the industry’s premium strategy- dropped by 9.2% in value in June. Four of the top five export markets, including the U.S., Hong Kong, and Japan, also showed declines. While total exports are only down 0.1% for the first half of the year (thanks to a strong April as U.S. retailers stocked up ahead of potential tariffs), the outlook remains uncertain if current trends continue.

The low level of orders in some cases, both from third parties and from the group brands, led to a decline in sales and strongly negative operating results in the production segment,'' Swatch Group says in the report. "The group deliberately refrained from laying off its qualified personnel just to mitigate the financial impact. The production companies also did not introduce short-time working,'' it adds.

As a response to the slowdown, many Swiss watch companies are using “short-time work” a government-supported program reducing hours and pay without layoffs. However, Swatch Group has not used this program, despite a sharp fall in earnings to CHF 68 million from CHF 204 million a year ago. Swatch says it prefers to keep its workforce ready for any rebound in demand, even as wholesale sales in China fell by 30%. The company remains upbeat, highlighting growth potential in the U.S., Japan, and India. Meanwhile, it plans to launch a new Swatch product this summer that will allow customers to design their own custom and unique Swatch watch using artificial intelligence. It remains to be seen whether the new Swatch can help drive a recovery in Swiss watch exports in the CHF 200 to CHF 500 category, which declined 24% in June. Interestingly, watches priced between CHF 500 and CHF 3,000, including brands like Mido, Certina, and Tissot, were the only segment to show export growth in June, rising 16%. Exports to mainland China also improved slightly, growing 6.1%, hinting at possible market stabilization.

Richemont’s report offered some bright spots. Its jewelry brands Cartier and Van Cleef & Arpels posted an 11% rise in sales, marking three consecutive quarters of double-digit growth. In watches, Richemont saw growth across most regions, especially the Americas, even as Asia Pacific and Japan remained weak. Overall, these results suggest the Swiss watch industry’s near-term fortunes depend heavily on the strength of the U.S. economy and consumer confidence.