External Content

The following content is sourced from external partners. We cannot guarantee that it is suitable for the visually or hearing impaired.

(Bloomberg) -- Cartier’s exhibit at Geneva’s luxury watch show is usually packed with lavish, gem-encrusted timepieces costing $100,000 or more. This year, most of the display cases in the 170-year-old jewelry maker’s main hall were filled with variations of one single model: the Panthere, which will go on sale in June for as little as $4,000.

Cartier’s subdued display illustrates the more sober mood of Swiss watchmakers as they showcase their wares at the fair this week. Vacheron Constantin said it’s holding back on store openings amid job cuts, while Panerai is cutting its distribution network by as much as 10 percent. The retrenchment has been welcomed by investors, who have driven shares of watchmakers higher this year on hopes the worst may be over.

“Everything is still fragile,” Vacheron Constantin Chief Executive Officer Juan-Carlos Torres said in an interview. “We’re more optimistic than last year, but not too much.”

The Swiss watchmaking industry is emerging from its longest slump since the 1980s, when competition from cheap quartz watches nearly drove it out of business. The country’s exports of timepieces dropped 10 percent in the first 11 months of 2016, with full-year figures expected next week.

A year after the industry fretted over the threat of the Apple Watch and smartwatches in general, that concern has been replaced by the fallout from anemic spending in China, tourists avoiding France in the wake of terrorist attacks and economic uncertainty in the U.S.

Parmigiani Fleurier, whose watches on average cost about 30,000 francs ($30,000), said it’s too risky to increase annual production because it wants to avoid job cuts should the recovery relapse. Normally the watchmaker produces no more than 4,000 pieces a year.

‘Good Signs’

“There are good signs of recovery, but it will not be easy,” said Flavien Gigandet, a member of Parmigiani Fleurier’s executive committee. “We’re very careful to adapt production to demand to ensure nobody has to leave the company. I’m not overoptimistic.”

The slump in demand led Richemont, which owns Cartier and Vacheron Constantin, to spend more than 200 million euros ($213 million) buying back unsold watches sitting on retailers’ shelves. The Swiss luxury goods-maker, which makes timepieces under 12 brands, also cut about 200 watchmaking jobs.

Richemont said last week sales of watches at its own stores have stopped declining after a four-year slump in Chinese demand clobbered the industry. That spurred speculation that the market may rebound once the dip in sales to third-party retailers reverses.

Richemont shares have gained 13 percent this year, while Swatch Group AG is up 8.9 percent, after three years of declines for both stocks. By reining in production, watchmakers are starting to adjust to lower demand, said Jean-Paul Jeckelmann, who helps manage $1.5 billion in equities as Banque Bonhote’s chief investment officer in Neuchatel, Switzerland.

“Capacities have been aggressively increased in the last few years and have to be absorbed,” he said. “We’re getting closer to equilibrium.”

‘Richest People’

Some watchmakers are looking to the U.S. to offset weak demand in Hong Kong. Christophe Claret, founder of the namesake watchmaker with average prices of 168,000 francs, said President-elect Donald Trump may spur demand by cutting taxes on wealthy Americans. Swiss watch exports to that market dropped 11 percent through November.

“In this country, you have the richest people of the world,” Claret said. “If they’re free to spend, they will buy more watches.”

The rebound depends on whether the biggest watchmakers manage to tame the glut in high-end timepieces, according to Vanessa Monestel, CEO of Laurent Ferrier, one of the industry’s youngest brands. Since it started in 2010, the watchmaker has produced fewer than 700 pieces that sell on average for 50,000 francs to 60,000 francs.

“The big turnaround, I really don’t see it, it’ll take time,” she said. “But if the inventory cleanup by bigger brands was done properly, then I can see some growth for the industry this year.”

--With assistance from Chris Rovzar To contact the reporter on this story: Corinne Gretler in Zurich at cgretler1@bloomberg.net. To contact the editors responsible for this story: Matthew Boyle at mboyle20@bloomberg.net, Thomas Mulier

©2017 Bloomberg L.P.

Neuer Inhalt

Horizontal Line

subscription form

Form for signing up for free newsletter.

Sign up for our free newsletters and get the top stories delivered to your inbox.

Click here to see more newsletters

swissinfo EN

The following content is sourced from external partners. We cannot guarantee that it is suitable for the visually or hearing impaired.

Join us on Facebook!