Is the Luxury Watches Recovery on Hold Again?

Watches expert Robin Swithinbank weighs in twice a month with intelligence and insight on the age-old industry as it navigates the tension between tradition and reinvention.

When are watchmakers going to get a break? The eruption of war in the Middle East has cooled talk of a rebound for the Swiss watch industry, putting luxury watchmakers under further pressure as they head to their big annual Watches & Wonders show April 14 to 20.

“There is not a single day when we do not need to take into consideration a new external factor,” a beleaguered Swiss watch brand chief executive told me last week, capturing the mood – which is beginning to feel more like a permanent state-of-mind.

Just as the luxury watch sector appeared finally to be pulling out of a slump, hopes for a bounceback soon are being snuffed out by the war. The year started with increases in Swiss watch exports, with data from the Federation of the Swiss Watch Industry (FHS) showing export values up 2.8 percent across January and February. The trend is expected to reverse in March.

The crisis is another blow to an industry short on good news. The Middle East has been a rare source of growth over the past few years. Exports to the UAE were up by a third between 2021 and 2024, per FHS figures, and increasing again last year, bucking the industry trend. The UAE market now leads traditional stalwarts Italy and Germany.

It’s not that the industry viewed the Middle East as the solution to all its problems. The region’s growth, as impressive as it is, comes nowhere near offsetting the collapse of the Chinese market, nor does it compete with the US market, which has almost doubled in size since 2019.

The Middle East’s Long Term Promise

But a quick look at the money brands have poured into Abu Dhabi, Dubai, Qatar and Riyadh over the past five years points to the long-term promise they see in the region. They have invested heavily in boutiques, mall retailers, private clienteling and the biennial Dubai Watch Week.

A quick end to the war could help preserve that sentiment while a prolonged conflict risks adding more pain to the industry’s list of woes. Rising costs, tariffs, the soaring Swiss franc and price of gold have all taken their toll, with no sign of a let-up.

“I suspect president Trump will want to end the war sooner rather than later, so I remain cautiously optimistic on the sector,” said Bernstein analyst Luca Solca.

But after signs of life in the first quarter thanks to a moderate revival of Chinese demand, the threat of recession in the second half of the year is now a major concern.

Where are the bright spots? After getting caught off guard by a sharp downturn in China that began in 2022, brands will be careful not to put too many eggs in one basket – even if the US appears to offer some hope.

February exports to the US were up 27 percent year-on-year, one of the industry’s best months in recent times. But brand bosses know the performance could reverse quickly, as it did last year after each of President Donald Trump’s punitive tariff announcements, which sent watchmakers into a spin.

Recent export figures suggest the Chinese slump may have bottomed out, and there’s optimism for a country with a huge population and a healthy long-term growth trajectory. But few are expecting the recovery of the 1 billion Swiss franc ($1.25 billion) annual export value lost since 2021 any time soon.

A spike in exports to France in January and February – up 47 percent – meanwhile, has been dismissed by the FHS as a distortion that reflects “transit to other destinations,” as brands look for tax efficient routes to market.

Analysts forecasting a rebound only a month ago are less optimistic.

The moment is “probably one of the most challenging periods for our industry,” said Oliver Müller of watch industry consultancy LuxeConsult. He predicted the Middle East conflict will have “long-lasting negative effects on sales in the region.”

What to Expect at Watches & Wonders

At next month’s flagship annual fair in Geneva, brands are expected to put on a brave face, but executives will be craving reassurance and stability as much as positive critical and commercial reception for their new products.

Still, Geneva is expected to be heaving with brands, retailers, press and watch gazers for the event. Big names like Rolex, Patek Philippe, Cartier and Chanel are among 66 exhibiting brands, while dozens more are piggy-backing on the show with other events around the city, or hosting small-scale presentations in hotels rooms, boutiques or, in one case I’ve heard of, an underground wine bar.

I’ve seen a large number of pending releases under embargo, and a picture is forming of the mood inside luxury watchmaking. Some are real moonshots, but for most brands, the posture remains conservative, with less emphasis on colour than we’ve seen in recent years and few out-and-out design novelties. Instead, brands will go hard on the familiar.

Some plan to revive discontinued designs, but most will stick to the script by iterating on best-selling models. High-end pure players, meanwhile, are showing no signs of reversing the trend of the past decade – scaling back on volumes and up on value, targeting UHNWs with limited runs and the promise of exclusivity.

“What can we expect to see from brands in Geneva? More curating than disruptive product launches, with most brands probably betting on safe choices,” said Muller.

It’s not all bad – there will be winners.

But for brands selling watches in the low thousands of dollars, where margins are already pinched and the consumer is heavily impacted by rising energy prices, it’s an unsettling time. Likewise, those in the squeezed centre ground, like Omega, IWC, Hublot, Breitling and Panerai, will be praying for miracles. Omega, as part of Swatch Group, no longer participates in industry events and will not attend the Geneva fair, or any of the satellite events. Last week, it introduced a two-hand, time-only version of its long-serving Constellation line. It’s a handsome watch with impressive technical credentials, but visually safer than a reinforced concrete and steel door. It signals the creative conservatism we can expect much more of in the coming weeks.

Reasons to be positive? The chief executives I speak with never tire of the adage that people want what they can’t have – a mantra that for low-volume brands will always be true. A billionaire collector and watch brand investor told me last week he was sure people would still be wearing mechanical watches in 500 years-time. He could well be right.

But the industry is shrinking in size and increasingly defined by what I’m coming to see as a reverse democratization. The internet and then social media opened watchmaking to the masses, but the sector’s product is now moving out of reach and into the arms of a new super-elite. Whatever’s happening in the world, there’s a tension building here that the industry is going to have to deal with.