BASEL: A consulting-firm study released Tuesday painted a bleak picture of the Swiss watch industry, with four-in-five executives saying they are pessimistic about the outlook for an industry that is as synonymous with the Alpine economy as chocolate, banking and skiing.
“According to the vast majority of watch executives surveyed, the downward trend in the Swiss watch industry will continue over the next 12 months,” according to Deloitte’s annual study of the Swiss watch industry. The survey found that 82% of watch executives expect a negative outlook for the coming year, up from 41% in 2015 and 19% in 2014. Only 2% had a positive outlook.
“Weaker foreign demand poses the key challenge at the moment—and the industry believes this will remain in the next 12 months,” the report said. The results were based on an online survey of over 50 watch executives between May and July, as well as personal discussions and consumer surveys.
The results come amid a challenging time for Swiss watch companies, underscored by a pair of profit warnings in recent months from marquee companies: Swatch Group AG—owner of many luxury brands in addition to its cheaper plastic watches—and, more recently, Cartier parent Cie. Financière Richemont SA.
Watchmakers have been hit by a series of shocks in recent years such as weaker global growth that depresses incomes, an anticorruption drive in China, terror attacks in shopping and tourism hubs such as Paris and new competitors, particularly smartwatches.
Swiss companies have the added headwind of a strong franc, which depressed revenues when they are translated back into the Swiss currency. The franc soared in value in January 2015 after the Swiss National Bank abandoned a cap on the franc’s value against the euro. Although it has weakened somewhat since, the currency remains very high by historical standards.
