This week, the war in Iran is taking a toll on the global luxury watch industry. With one of its fastest-growing regions facing instability, the watch industry is likely to shift production and allocation to more stable markets like North America if the war drags on.
The U.S.-Israeli war in Iran has already led to the most severe disruption of the global supply chain since the 1970s, and the effects on different sectors of the luxury and fashion industry are being felt.
This week, it was the luxury watch industry that began to show signs of affected sales, stock prices and future plans due to the instability the war has caused in the Middle East. EMEA has been one of the biggest growth drivers for luxury watches and major watch brands, and companies including Rolex and Watches of Switzerland have invested heavily in the region.
The United Arab Emirates, in particular, has become the eighth-largest market for Swiss watchmakers, with exports totaling nearly $1.7 billion last year. Dubai also hosts Dubai Watch Week, the second most important watch show in the world after Watches & Wonders in Geneva. But travel to Dubai is plummeting, and Bernstein Research estimates that luxury sales in the Middle East will be down 50% this month.
Swatch Group announced last week that the decrease in tourism to the region, as well as reduced foot traffic to its more than 200 stores in the Middle East, will likely weigh on upcoming earnings. CEO Nick Hayek said at a press conference on March 18 that the war in Iran will “certainly have an impact,” since Swatch Group attributes nearly 10% of all its sales last year to Saudi Arabia alone.
While none of the major watch companies have reported earnings in the month since the war began, you can already see an immediate impact on their share prices. European companies like Richemont and Watches of Switzerland have seen their share prices drop by 19% and 17%, respectively. Japanese luxury watchmakers like Citizen and Seiko also saw their share prices fall by 14% and 20%.
Watch retailers in the region are expecting demand for luxury watches to drop off over the next month in the region.
“Over the last few years, hubs like Dubai have seen a massive influx of wealth, with high-net-worth individuals snapping up primary and secondary residences. Geopolitical instability is going to put a hard stop — or at the very least, a tremendous slowdown — on that trend,” according to Eugene Tutunikov, CEO of the watch retailer SwissWatchExpo.
Tutunikov said that capital seeks safe harbors, and both watch brands and high-net-worth customers have invested in places like Dubai based on their perceived stability.
“Frankly, when someone is looking to purchase a $5 million luxury condo, the absolute last thing they want to factor in is the threat of a regional conflict or missile strikes,” he said. “Furthermore, even if the conflict were to resolve tomorrow, that kind of uncertainty has a long half-life; the memory will linger for investors and buyers alike.”
Swiss watch exports to the Middle East were growing as recently as February, when they rose by 9% compared to the previous February.
Tim Richardson, CEO and co-founder of the Swiss watch retailer Exquisite Timepieces, told Glossy that if the war drags on, a long-term shift to other regions “won’t be loud, but will be real.”
“The big Swiss brands typically don’t react dramatically; they adjust quietly and stay disciplined,” Richardson said. “First, they protect the brand. You’re unlikely to see discounting. Maintaining pricing and exclusivity is core to how these brands operate, even in softer markets.”
But Richardson said the biggest impact may be on how luxury watch brands manage their supply. Export data from the Federation of the Swiss Watch Industry for 2025 showed that there is still a healthy amount of luxury watches going to markets like the European Union and North America, both of which saw more Swiss watch exports than the Middle East. There are also other areas where those exports grew last year, like Eastern Europe and South America.
“The brands are going to manage their supply,” Richardson said. “That means tightening allocations into the region and avoiding excess inventory if demand slows, while redirecting product to stronger markets like the U.S.”
Stats of the week
Here are a few interesting data points from this week relating to the world of fashion.
- Rolex reached nearly $14 billion in revenue last year, while simultaneously cutting its allocation of watches to retailers by 2%, according to an estimate from Morgan Stanley.
- Oil prices are back to being over $100 per barrel. Prices have shifted wildly in the last few days over early reports that the U.S. and Iran had engaged in productive talks, only for Iran to deny the report days later.
- Global real estate firm Cushman & Wakefield reported that luxury store openings across Europe rose 13% last year.
- 66% of retail consumers begin a path to purchase outside of a retailer’s own channels, according to a report this week from supply chain and retail analytics company Manhattan Associates.
- Relatedly, according to SimilarWeb, 35% of U.S. consumers now say that AI search is the best place to start when shopping, compared to just 13% that say traditional search engines are better.
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