You Don't Know What You're Talking About!

Yeah, right...

Courtesy of the FH

As sales continue to slump and jobs continue to be shed, reality continues to be avoided at all costs.

October is in the books, and insofar as the US and Canada goes, it is most likely that there will not be any further exports before the end of the year. 

I take no pleasure, no joy, and have very little enthusiasm as I write this because what it underscores is a certain intractability in the very people who got their companies into such a shitty situation, and will continue to do so because they frankly have no ability to see things in a different way. 
Bonuses, promotions, maybe a new car, they are made of Teflon, and they continue to walk between the raindrops of the toxic shit-storm they created.

But for the people who actually do the work?  Layoffs and terminations.  The people who work in the background as suppliers?  Sorry, we're not paying you, and good luck finding new customers as you write off our bad debt. 

And even for many of my colleagues.  Let's just say that adult sized Depends might be on several holiday wish lists.  Because brands are now finally admitting that they are feeling the pinch.  Advertising is going to be cut, and advertisers are now oftentimes not paying what they already owe.

Although I have no personal experience in the area, I have often heard in the literature of addiction that real change will only happen when the person is in so much pain that they cannot imagine any alternative but to change their behavior. 

So at the moment, it seems somewhat clear that for many of the brands they have achieved a new threshold for pain.  And continue to lack the imagination to conceive of alternative outcomes.

So once more, I turn to Moneyball for some common sense that the watch business could really use -

“There was but one question he left unasked, and it vibrated between his lines: if gross miscalculations of a person's value could occur on a baseball field, before a live audience of thirty thousand, and a television audience of millions more, what did that say about the measurement of performance in other lines of work? If professional baseball players could be over- or under valued, who couldn't?” 

― Michael Lewis, Moneyball: The Art of Winning an Unfair Game

Better, but not Good Enough

The results are in, and if we look at the graph we can see is that the needle moved just a tiny little bit north.  And that is good.  But when looked at holistically, it is clear that a massive turn around is not in foreseeable future.   The US posted an increase of 4.5%.  Now again, that is a good bit of news.

Courtesy of the FH

But, as always, we have to look at the entire picture.  And while the US clawed back some sales, Hong Kong dropped even further into the mire posting a loss of - 39.6%.

Now the other curious number is the incredibly fast paced growth of the UK market.  It is now up  +32.4%.  I'm a reasonable guy, but this type of growth is a little curious.  While it is entirely possible that such a large number of watches are heading to the UK from Switzerland, it does beg the question as to whether or not all of those watches are going out the front door of your friendly neighborhood retailer, or has the UK begun to emerge as the next grey market / trans shipping?  

Sales are good, they are important.  But in the mad dash to move units one way or another, a lot got pushed aside or brushed under the carpet.  And that is what led us to where we are now - an oversaturated marketplace with too many watches washing around and not enough people ready to buy them at the full price.

We shall wait, and we shall see.

Screaming Jesus on a Ferris Wheel! It's Not Getting Better

And the Butcher's Bill is in from the Federation of the Swiss Watch Industry, and the numbers are down again.  So despite Mr. Hayek's assurances that July would be better, it looks like it was not.

Now, is SWATCH Group the entire industry? Of course not. But they are the canary in the coal mine. And more to the point, it bears mentioning that short of a Lazarus-like recovery, things are not going to improve to the levels that would mitigate the losses already incurred by SWATCH Group and the other big dogs.  

Interestingly enough, the US is once again the number one country in terms of volume, representing 10.9% of the total export numbers.  But take that positivity with a healthy serving of salt, because the US numbers are - spoiler alert - down again.  The US drop is 14.5% as is the total for total wrist watch exports.  

Interestingly enough, the numbers in the UK are dramatically up +13.4%.  And startlingly, the numbers in Italy are also up as well - +9.9%.  

It bears mentioning that as the books close on July, we are now rapidly approaching the make or break holiday season.  This is usually the time when retailers are replenishing their inventory to prepare for the holiday onslaught.  But if the retailers I have been in touch with are any gauge on this, it is looking like a blue Christmas.

Numbers Don't Lie - Paying the Check

While we will wait for the results of December, it appears clear that 2015 was not what anyone was expecting.

Numbers don't lie.  And the simple truth is that at least per the FHS reports, the numbers for 2015 have not been good.  From December 2014 - November 2015 the export figures have dropped from 2% down to below - 3%

Courtesy of Federation of the Swiss watch industry FH

Now there is a very fascinating caveat that the Federation includes with these statistics that really bears greater consideration: