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.
Write to john.revill@dowjones.com