Barclays Capital has called time on two luxury watchmakers, downgrading Swatch (SWGAY) and Richemont (CFRUY) - and "hard luxury" as a whole - as industry overcapacity and high inventories offset "robust" consumption, particularly in China.

The investment bank is slightly more bullish on Richemont than on Swatch. It lowered its recommendation on Richemont from overweight to equal weight, while moving Swatch from equal weight to underweight.

Swatch, whose high-end brand portfolio includes Harry Winston, Omega, Breguet and Jaquet Droz, was down 0.41% in Zurich trading at 264.20 Swiss francs, giving it a market value of around Sfr14.5 billion ($15 billion).

Richemont, which makes Cartier, Montblanc, Baume & Mercier and Piaget watches, slid 1.25% to Sfr59.05, for a market capitalization of Sfr33.7 billion.

Swatch shares have fared much worse over the past year, falling nearly 28%, compared to Richemont's 14.5% decline over the same period.

Barlcays has a new price target of Sfr60 on Richemont shares (from Sfr65.00 previously) and Sfr230 on Swatch (from Sfr230.00).

So why is Barclays so down on the category?

The report cites a combination of weak trading, industry overcapacity and inventory building, leading to an 11.4% slump in Swatch exports in 2016 to July in the worst period since the financial crisis.

While analysts admit to finding trading weakness "somewhat perplexing," they note it could be a "category issue" with watches falling out of favor. "Without a significant pickup in demand we would expect continued margin contraction - hence our cautious view on the outlook," they warn.

On the bright side, they point to robust consumption, notably in China, "where consumer spend is encouraged as the economy rebalances to being more consumption driven."

When Geneva-based Richemont reports five-month figures on Sept. 14, Barclays expects continued high single-digit declines in organic growth despite the better performing jewellery and so-called soft-luxury operations.

Swatch, which is based in the city of Biel on Switzerland's French-German language border, in July posted its lowest first-half operating profit in seven years of Sfr353 million, down 53.6% from a year earlier.

Its earnings fell as slumping demand in Hong Kong and Europe - including France, where Tissot is the official timekeeper for the Tour de France bicycle race -- overshadowed double-digit retail sales growth in mainland China and southeast Asia.