The Truth About Watches has been reporting on the impact of the Coronavirus outbreak on the watch industry since it first reared its ugly head in December. HoDinkee’s been predictably silent on the subject – given their closerthanthis relationship with the main playas. Post Baselworld cancellation, HoDinkee can’t ignore the story. They’re ridiculously late to the party, but they brought some interesting info . . .
Swiss sources describe the situation as “very challenging.” No one knows how long the coronavirus crisis will last or how bad the situation in the markets will get. Many firms have cut budgets. Some have curtailed travel. Some have laid off workers. And there is a sense in the industry that there will be corporate casualties.
One firm, RJ Watches (formerly Romain Jerome) declared bankruptcy last week. “There will be more,” a Swiss watch CEO told me. One estimate making the rounds in Switzerland is around 30.Â
Challenging? And there I was thinking that the Brits were the masters of understatement. Or is HoDinkee Executive Editor Joe Thompson simply spinning a Swiss watchmaker’s “we’re f*cked” into something more palatable?
Hang on. Do HoDinkee’s Swiss sources even exist? The article’s reliance on anonymous sources and non-specified estimates rumors is, at best, lazy journalism. At worst, incredible.
The problem is that the epidemic has struck what was the roaring engine of growth for Swiss luxury watch sales, mainland China and Hong Kong.Â
Hong Kong and China together account for nearly one-quarter (23%) of Switzerland’s total watch exports, which last year were valued at CHF 21.7 billion.Â
Missing from this account: the coronavirus’ impact on the entire Asian market – which accounted for roughly half of all 2019 Swiss watch exports. Singapore retailers, for example, aren’t selling Swiss watches at anywhere near the pace they did before Coronageddon. Even without context, HoDinkee’s coronavirus coverage finally gets real.
There is no official data yet about the impact on sales, but expert estimates of the impact on the luxury goods industry – including watches – are dire. Credit Suisse, for example, estimated in a Feb. 24 note to investors that Richemont Group sales in China would fall 80% in February and March. It noted that one-third of Cartier stores in China are closed, and the rest are open from noon until 5 PM instead of the normal 10 AM to 10 PM.
Jean-Christophe Babin, CEO of Bulgari, is the rare Swiss watch executive to comment on the record about the situation. Bulgari has 51 stores in Greater China. Half of them were closed, he told CNN, and the rest were operating on short time.Â
And . . .
Chinese tourists have been a boon to Swiss watch sales in Paris, New York, London, Tokyo, and other top tourist destinations. (Including Switzerland: 70% of retail watch sales in Lucerne, for example, are to Chinese tourists, sources say.) It’s a big business, and the coronavirus scare has slowed that business to a trickle.Â
And there you have it: HoDinkee’s coronavirus coverage finally acknowledges that their friends in the watch industry are in deep sh*t. (What a difference three months makes.) Despite virtually unlimited resources to pursue the coronavirus story, HoDinkee will not risk its profitable relationship with the watch industry to offer anything other than manufacturer-approved PR puff pieces.
The Truth About Watches will continue to do its thing. If you can help with intel, please email robertfarago1@gmail.com. As always, watch this space.