The Swiss luxury watch industry challenges the franc’s strength, smartwatches, and inflation.

Swiss luxury watch brands face a fresh threat to profits – the surging strength of the Swiss franc versus the US dollar.

Top executives from companies like Oris, Doxa, and Maurice Lacroix say last year’s price hikes have been erased by the franc’s rise against the dollar in 2022. The currency reached about 0.88 Swiss francs to the dollar, wiping out marginal gains.

The timing couldn’t be worse, as demand for Swiss watches declines after a boom. With the US being the largest export market, the strong franc directly hits sales and profits.

“The decline of the dollar at 0.88 Swiss francs is a problem for us,” said Oris co-CEO Rolf Studer. The brand’s $4,979 ProPilot Kermit watch has become a bestseller in America.

With Swiss inflation still elevated, the central bank is expected to raise interest rates. This could drive the franc even higher versus the dollar in the coming months.

To preserve margins, Swiss watchmakers will likely consider further price increases. But additional hikes risk denting demand among American consumers facing economic uncertainty.

The surging Swiss franc has emerged as a dual profit threat between slowing sales and the currency squeeze. The deep ties to US consumers make the dollar’s slide uniquely problematic for Swiss watchmakers.

Let me know if you want me to modify or expand on this draft blog post covering the strong franc’s impact on the Swiss watch industry.