Swiss watch exports ticked up 12% in February compared to the same month last year, prompting shares in Richemont, Swatch and Watches of Switzerland Group PLC (LSE:WOSG) to all climb on Tuesday.
Barclays analysts pointed to recovering demand in China, which provided a “welcome boost” for the luxury space, though America remained the high-end watch makers’ key market.
Exports to the US were up 15.5% in February, also climbing 8.2% and 6.1% to China and Europe respectively, providing a “solid” outlook, according to the bank.
Swatch is highly exposed to China, Barclays noted, with recovery in the country set to “be key […] this year” if it is to achieve its “ambitious guidance” that 2023 could be a record year.
The bank added Swatch’s 2022 sales growth of 4.6%, below Barclays’ estimates, was likely driven by lower Chinese demand, as it continues to recovery from Covid- 19 lockdowns.
Similarly to Swatch, Richemont “was hit by the China weakness” last year, Barclays said, so the strong growth so far this year “is reassuring,” especially given “increasing questions around the sustainability of demand in the watches category”.
According to Barclays, eyes will be on Richemont’s final year results on May 12, where it will clarify how the demand for high-end watches is holding up.
Watches of Switzerland, meanwhile, continues to enjoy solid trends in the US and UK, analysts said.
Shares in the trio were all up, with Swatch rising 3.7% to CHF57.8 Swiss Francs, Richemont up 2.3% to CHF139 and watches of Switzerland 2.8% higher at 775.5p.