Swiss luxury watchmakers have said they are seeking government support to cope with the drop in demand.
Bloomberg reported that Girard-Perregaux and Ulysse Nardin, owned by Sowind Group, are the first brands to confirm that they have turned to the government for financial assistance.
Under the Swiss short-time work program, the state pays up to 80 percent of employees’ wages directly to companies to compensate for the reduced hours. The aim of this benefit is to prevent permanent layoffs.
CEO and Chairman of Sowind Group, Patrick Pruniauxhas enrolled about 15% of its 320 employees in the government program, according to Bloomberg.
The luxury watch market has been struggling since its boom triggered by the pandemic.
The Swiss group Swatch, which owns the watch brands Longines, Omega and Tissot, recorded a decline in net sales of 14.3 percent in the first half of the year.
Meanwhile, sales at Swiss luxury giant Richemont fell 13 percent in the last quarter.
Both companies are struggling with a sharp decline in demand from China.
The declining demand for luxury watches is also causing concern in the secondary market.
Between January 2021 and March 2022, prices for used luxury watches skyrocketed as investors sought to diversify their portfolios.
But when the Federal Reserve began raising interest rates in March 2022, demand for expensive, high-value items like watches and jewelry fell.
Data from the WatchCharts Overall Market Index – which tracks the cost of 60 watches from the secondary market of the top 10 luxury watch brands – showed that luxury watch prices have fallen by almost 40% since their peak in 2022 through September 2024.
It’s not just the luxury watch market that’s affected. Luxury fashion companies like Burberry and Gucci have also reported declining sales in China.
