ZURICH - Demand for Swiss watches picked up slightly in October from the previous month as the pace of decline in exports slowed, pointing to a sluggish recovery reliant on sustained demand from Asia.
October exports slipped 23 percent year-on-year after falling 26 percent in the previous month, while the value of sales edged up to 1.3 billion Swiss francs ($1.3 billion) in October from 1.1 billion francs in September, the Federation of the Swiss Watch Industry said.
The data was weaker than expected. Shares in Swatch and Richemont, which have rallied recently, fell 2.6 percent and 1.6 percent respectively, against a near flat DJ Stoxx European personal and household goods index .SXQP.
The industry has seen exports drop 25.5 percent so far this year as consumers have stopped treating themselves to pricey accessories. However, there are signs that the industry is slowly starting to recover.
Richemont said last week it expects better Christmas sales this year after October sales in the Asia-Pacific region rose 11 percent, while LVMH is also predicting a better festive period for its brands that include Tag Heuer and Hublot.
We still believe that underlying demand is picking up in some of the major Asian markets, as highlighted by a number of players in the industry, and would expect demand to bottom out in most other markets over the next few months as destocking comes to an end, said Helvea analyst Alessandro Migliorini.
The Asian market was likely to absorb some of the excess stock in other countries, Migliorini said, adding that he was maintaining his buy recommendations on both Swatch Group and Richemont.
Exports to Hong Kong, the industry's biggest market, slipped 18 percent, while demand in the United States fell 38 percent, but more shoppers splashed out on timepieces in Singapore, where exports rose 5.6 percent. ($1=1.009 Swiss Franc) (Editing by Simon Jessop and Joel Dimmock)