Swiss watchmakers expect challenging U.S. market this year

Silke Koltrowitz

BASEL, Switzerland, March 23 (Reuters) - Swiss watchmakers

expect the market to stay challenging this year with the United

States, their second-biggest market, showing no signs of

recovering, executives told Reuters at an industry fair in

Basel.

Swiss watchmakers are grappling with declining sales in

their biggest markets -- Hong Kong and the United States -- and

have been hit by tourist shoppers avoiding Europe for fear of

extremist attacks.

The trend for shopping online has also kept buyers out of

stores, said Efraim Grinberg, chairman and chief executive of

Movado Group Inc. (MGI).

"We see a significant retail shift, especially in the U.S.

The acceleration of the digital shift over the last five years

has led to less traffic to retailers," he told Reuters in an

interview on Thursday.

"You're seeing some adjustments, but they'll take time to

materialise. Retailers have to up their game to make venues more

exciting and there's also a shift to online sales," he said,

adding he didn't see that resolving very quickly.

Shipments of Swiss watches fell 8 percent in January and

February, dragged down notably by a 12.4 percent decline in the

United States, where shipments also dropped 9 percent last year.

U.S.-based MGI, whose brands include Swiss labels Movado and

Ebel, on Monday reported a decline in sales and profits for the

fiscal year to Jan. 31 and said it expected a mid single-digit

drop in sales this year.

Ricardo Guadalupe, head of LVMH's Hublot brand,

said U.S. sales were flat for the brand so far this year.

"The Americans don't have the same luxury watch culture,

it's not like in China where people love mechanical watches," he

said.

Laurent Dordet, at the helm of Hermes' watch

business, said sales were improving at Hermes boutiques, but

multibrand retailers were still facing difficulties in many

markets, notably the United States, due to excess stock.

Industry major Swatch Group gave a more optimistic

forecast last week, forecasting a 7-9 percent rise in sales for

2017.

(Reporting by Silke Koltrowitz; Editing by Victoria Bryan)