Luxury Watch Revival Cut Short as Iran War Adds to Sector’s Woes

(Bloomberg) — Before the war in Iran began, the Middle East was one of the few pockets of growth for luxury timepieces.

The region, accounting for about 10% of the global watch market, had partially sheltered the sector from a string of blows like the tariff turmoil, falling Chinese demand, a strong Swiss franc and soaring gold prices. With the Middle East now mired in conflict, Geneva’s flagship “Watches and Wonders ” fair opened this week to fears that the war would stamp out any signs of a nascent recovery.

It has been a “perfect storm financially for everybody in the watch industry,” Audemars Piguet Holdings SA Chief Executive Officer Ilaria Resta said in an interview.

In the broader luxury sector, the likes of LVMH Moët Hennessy Louis Vuitton, Kering and Hermès this week blamed the conflict for denting sales. The industry has long relied on the Middle East’s wealthy locals and tourists looking to shop there for a meaningful chunk of its revenue.

For Swiss watchmakers, for instance, the market in the Middle East expanded in 2025 even as their overall exports shrank 1.7% to 25.6 billion francs ($32.7 billion) — the second consecutive year of declines. Sales in the Gulf region touched 2.21 billion francs, with the United Arab Emirates alone accounting for more than half.

Now, faced with dimmed prospects in the region, the watch industry is looking for other potential growth areas, like the US, widely described by executives as a booming market, alongside India, where demand continues to expand.

Being geographically diverse has become key in the current geopolitical environment, Resta said, noting that Audemars Piguet is relatively insulated because of high demand in the US.

“We made it a very clear strategy not to be overdependent on one region,” she said.

Audemars Piguet’s Dubai boutique was closed for a day as a precaution for staff safety, but has since reopened. Its Tel Aviv store, meanwhile, is operating intermittently depending on conditions. Product flows to the Middle East have now resumed, Resta said.

While most major Middle Eastern watch retailers, including Ahmed Seddiqi & Sons, attended the fair, some warned their partner brands that orders could be lower this year.

Retailers in the region are operating at around 50% to 70% capacity depending on their location, Rahul Shukla, vice president and head of sales at Titan Co. Ltd., India’s biggest watch maker, said in an interview on the sidelines of the fair.

The war is further polarizing the sector by exacerbating the gap between high-end brands and mid-market, volume-heavy players, industry executives said.

“Some price points, including mid-segment and starting luxury, are suffering more than others,” Breitling AG CEO Georges Kern said in an interview.

While some, including Breitling, have adjusted the amount of timepieces sent to the region, Kern is off to Dubai next week to market his newly launched high-end watchmaker Universal Geneve, saying its clientele is more insulated.

The outlook on the Middle East’s eventual comeback remains positive, but the scale of its financial hit will depend on the conflict’s duration, executives said.

“There will be a slower period for sure; how the war ends will determine the region’s future,” said Dubai-based Bertrand Meylan, co-owner of H. Moser & Cie, which gets 6% of its business from the region.

For many, the bigger worry is the pain from the enduring strength of the Swiss franc, which crimps export revenue. The haven currency gained more than 2% against the dollar this month alone.

The woes of the sector are particularly hard on smaller manufacturers in the supply chain, like the movement makers that are critical to the industry. They face mounting financial stress and are increasingly being taken over. Some high-profile firms including LVMH, Moser and Audemars have already bought stakes in these companies recently.

“It’s certainly a period where there will be consolidation on the supplier side,” said Meylan.

–With assistance from Chris Miller.

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