By Andrea Figueras

Exports of Swiss watches plunged in December, reflecting a challenging time for the watch sector as demand for luxury goods falls.

The contraction in Swiss watch exports intensified in December with a decline of 5.4%, resulting in a total value of 2.0 billion Swiss francs ($2.21 billion), according to data from the Federation of the Swiss Watch Industry, known as FH.

The industry body previously anticipated a negative outlook for the rest of the year.

For 2024 as a whole, total exports reached 25.9 billion Swiss francs, down 2.8% from the prior year.

"The watch sector remains in a very difficult situation," Vontobel analyst Jean-Philippe Bertschy said in a note, adding that exports could experience a flat positive increase in 2025.

All of the top four export destinations recorded declines in December, FH said. The U.S. saw a slight downturn for the first time in six months, while Hong Kong moved up into second place, with a less marked decline than in the previous months.

China continued to perform very poorly and Japan reported a very significant reduction.

The U.S. market is concentrating all growth hopes, while the environment in China remains uncertain, Bertschy said. Companies will face an easier comparison base in China as the year progresses, but a strong recovery isn't expected there, the analyst added.

China, a country that once propelled high-ends brands, is suffering from an economic malaise, which has prompted consumers to save rather than spend money on luxuries, leading to a downturn in demand for pricey goods.

Given weakness in the Chinese market, the U.S. is seen as a potential bright spot for luxury names. Demand is expected to rebound helped by decreasing inflation, wealth creation, more disposable income and less uncertainty linked to the election.

Timepieces in all price segments experienced declines in exports, with those in the 500 to 3,000 Swiss francs segment recording the sharpest drop, FH said. Watches priced at more than 3,000 Swiss francs performed better, with almost stable export turnover.

The data comes as Omega owner Swatch Group reported weaker-than-expected sales and earnings for the year as a whole. The Swiss watchmaker anticipates an improvement in sales, operating results and cash flow in the year ahead, but noted that demand in China will remain restrained.

For its part, Swiss group Richemont reported better-than-expected sales for its fiscal third quarter, helped by strength in its jewelry division--housing heavyweight brands like Cartier and Van Cleef & Arpels--which offset weaker watch sales.

Write to Andrea Figueras at andrea.figueras@wsj.com

(END) Dow Jones Newswires

January 30, 2025 06:08 ET (11:08 GMT)

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