Watch fair to reveal health of luxury industry

Thu Jan 12, 2012 6:09am EST
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By Silke Koltrowitz and Nathalie Olof-Ors

ZURICH (Reuters) - The Geneva watch fair, SIHH, the first major luxury goods industry gathering this year, will take the pulse of a sector which has sailed relatively unscathed through recent economic turmoil but could be facing dark clouds ahead.

Order levels, business updates from brands and fashion trends will be major talking points at the plush fair which runs Monday through Friday and regroups 18 participants, many of them brands owned by luxury goods group Richemont.

Richemont will open the ball on Monday by publishing a sales update with the focus on prospects, comments on margin pressure and any evidence that Asian demand might be slowing down or unable to offset sluggish sales in Europe.

"The latest data points from Greater China have suggested a slowdown in hard luxury sell-out (sales to end-customers) including the Chinese and Hong Kong retail sales data," Barclays Capital analysts said in a note.

The world's biggest watchmaker Swatch Group on Tuesday warned sales growth would slow to 5-10 percent this year compared with almost 22 percent in 2011.

Meanwhile, jeweler Tiffany said Christmas sales weakened markedly and lowered its full year profit forecast.

Swatch Group and Richemont shares shed around 15 percent of their value last year, underperforming a flat STOXX Europe 600 Personal & Household Goods index, as markets are pricing in a slowdown in luxury goods sales this year.

"We are quite optimistic for 2012 even though the watch industry might not have the same growth rates as the 19-20 percent increase in watch exports seen in 2011," said Jean-Daniel Pasche, head of the Swiss watch federation.   Continued...