Watchmakers stockpile inventory ahead of Brexit

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Watchmakers stockpile inventory ahead of Brexit

Post by koimaster » May 7th 2019, 3:24pm

While Swiss watch exports to France are hampered by “yellow vest” protests, it’s a very different picture in the United Kingdom where brands are building stocks ahead of the country’s departure from the EU.

One country stands out among first-quarter figures for Swiss watch exports, and that country is the United Kingdom. Even the most seasoned industry observer would be hard-pressed to recall such an astonishing rate of growth. After climbing 23.6% in January, exports leapt 58.3% in February then shot up again by 76.4% in March! This gives a cumulative increase in value terms of 52% for the first quarter, a figure that rises to 62% for watches priced above CHF 1,500 (ex-works). The United Kingdom now ranks as the fourth largest market for Swiss watch exports after the United States, Hong Kong and China. France, still embroiled in the “yellow vest” movement, pales in comparison. Exports lost 5.4% over the first three months of the year on the heels of a flat second half of 2018.

“London is a "locomotive" for watch sales.”

The reason for this sudden surge is rarely out of the headlines: Brexit, and the spectre of a no-deal exit from the European Union that has haunted the business community throughout the first quarter. Watchmakers are among those making plans in the event of a disorderly departure, as Jean-Daniel Pasche, president of the Federation of the Swiss Watch Industry, confirmed at Baselworld: “Brands are seeking to guard against problems that may emerge, including new customs procedures or import backlogs,” he said. Hublot, for one, has chosen to boost inventory rather than take the risk of watches being held up at the border after the UK’s exit, acknowledging London as a “locomotive” for business, in the words of CEO Ricardo Guadalupe.

Remember Hong Kong?

Delays at customs are not the only question mark hanging over post-Brexit sales. Sterling is also a matter for consideration as brands anticipate currency effects: “A loss in sterling’s value could trigger a luxury spending spree,” commented Pasche. This is exactly what happened in 2016 when the United Kingdom’s decision to withdraw from the European Union was announced. Almost immediately, the pound fell by some 15% against the main currencies and foreign tourists took advantage of favourable exchange rates to snap up Swiss watches – a behaviour reflected in figures for that year. Whereas 2016 exports took a knock, falling 10% globally, shipments to the United Kingdom posted an increase of 3.7% for the year.

“Let's not forget the result of inventory stockpiling in Hong Kong.”

What will happen now that the UK has until October 31st to put an end to Brexit brinkmanship, bearing in mind that sales to end customers haven’t increased in line with exports? Figures from retail analyst GfK show that after gaining 7% in January then 5% in February, retail sales of watches in the UK were down 1.5% in value for March. Moreover, currency effects are unlikely to be of any benefit, with the pound gaining 4% against the euro since the start of the year. As inventory builds up at British retailers, it’s worth remembering the situation in Hong Kong only a few years ago when the market sat on piles of unsold watches, leading first to a sharp drop in exports (-23% in 2015, -25% in 2016) then to a wave of inventory buyback. Brexit clearly hasn’t finished making waves. ... of-brexit/


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Re: Watchmakers stockpile inventory ahead of Brexit

Post by Pubbie » May 8th 2019, 3:11am

The idea that foreigners may have trouble spunking their stolen sovereign wealth and other ill-gotten gains in fancy boutiques in London fills me with incredible disinterest.

I couldn't really give a fuck about Brexit. All I know is that whilst our government is beyond retarded, business has generally been getting on with handling the uncertainty, leaving the politicians to continue raping the country so hard in the ass, that the tip comes out the other side.

It anyone wanted to invade, though I can't possibly imagine why they would, now would be the time. It'll take you all of 24 hours to secure control. Politicians will bleat spastically, the populace will just whine and point fingers at each other with sour-looking expressions on their faces whilst posting frantically on social media, and self-defence is sooo 20th century so there won't be much of a coordinate response. Pile on!
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