LVMH ticking along into an uncertain year

The watch industry has kicked off proceedings for 2024 with cautious predictions for growth in what is shaping up to be a more challenging environment for luxury.

LVMH watch chief executives at LVMH Watch Week, from left, Benoit de Clerck (Zenith), Julien Tornare (Tag Heuer), Frederic Arnault (CEO of LVMH Watches), Jean-Christophe Babin (Bulgari), Jean Arnault (director of watches for Louis Vuitton), and Ricardo Guadalupe (Hublot).

The watch industry has kicked off proceedings for 2024 with cautious predictions for growth in what is shaping up to be a more challenging environment for luxury.

Luxury conglomerate LVMH staged its annual watch fair last week, held this year among the palm trees on Miami Beach’s Star Island, to launch an array of new novelties across its six watch brands – Hublot, Tag Heuer, Zenith, Bulgari and the two newest additions, Gerald Genta and Daniel Roth. The latter two sit under the La Fabrique Du Temps Louis Vuitton umbrella, and represent a revival of two revered watch brands.

The event also allowed Frédéric Arnault, former chief executive of Tag Heuer and second-youngest son of LVMH scion Bernard Arnault, to make his first major public appearance in his newly created role of chief executive of LVMH Watches.

In this position he will oversee Tag Heuer, Zenith and Hublot.

The appointment triggered a round of executive musical chairs to install former Zenith chief executive Julien Tonare in the top job at Tag Heuer and Benoit De Clerck to move from Richemont’s Panerai to Zenith.

Arnault told industry publication Vogue Business the change represents “an effort to give more strength to our watch brands and the watch category overall inside the group”.

So-called “hard luxury”, such as watches and jewellery, is becoming an increasingly important facet for the luxury industry as growth slows following several boom years post pandemic. Still, the most recent results from LVMH – a bellwether for the industry – posted 10 per cent growth and prompted shares to soar as soft optimism returned. The resilience of this particularly pointy end of the sector was strengthened with the Federation of the Swiss Watch Industry reporting Swiss watch exports increased 7.6 per cent to 26.7 billion Swiss francs ($47.3bn) in 2023 compared to the year prior. However, as speculated in industry publication Watch Time, the figures may represent supply finally meeting demand. Add a cooling secondary watch market after several frenzied years, global tensions and China’s sluggish pandemic recovery and it makes sense that key watch chief executives are expecting a more tempered 2024.

As Hublot chief executive Ricardo Guadalupe points out, global instability, political tensions and terrible world events tend to be the enemy of luxury.

“You have to be in a good mood to buy luxury products in general because you don’t need them,” he says. Still, while he expects more consolidation of growth this year, he says Hublot will continue to invest in big ideas and creativity in watchmaking.

Proof of this could be seen in its launches this year, which included a wild MP-10 Tourbillon Weight Energy System Titanium timepiece that reinvents the idea of how to tell the time (it has neither hands nor dial), new additions to its proprietary material Saxem Big Bang Unico range and high-end, full pave bejewelled watches.

Julien Tornare at Tag Heuer says focusing solely on numbers isn’t his key objective in this new role. Though as he noted, under predecessor Frederic Arnault the brand weathered 2023’s challenges better than many with increased sales. Instead, he says, it’s about ensuring the brand’s desirability and longevity are held in stead.

“For me, more important than (the) number is how you reinforce the brand equity. Because brand equity is going to be the guardian for the long-term, continuous growth of the brand … I’m personally, obviously a brand equity guy. I have to deliver numbers, don’t get me wrong, but I will make sure that the priority is that. And I think LVMH is a company that gives you the opportunity to do it and build it for the long term,” he says.

Tag Heuer was one of several watches to lean into green being the absolute colour of the season, adding a striking teal edition of its buzzy Carrera Chronograph “glassbox” with its signature domed sapphire case, and another with a tourbillon. The brand also extended its smartwatch offering, with new dials for the Connected timepiece that mimic a mechanical watch face.

Green watches could also be found at Zenith, which like other brands continues to lean into the legitimacy of its heritage – it was the first to launch a modern chronograph watch with the El Primero chronograph calibre.

This season it updated a rare prototype from 1969, an El Primero chronograph with a moonphase and calendar calibre. The new Chronomaster Triple Calendar, in a well-balanced 38mm size, represents, as new chief executive Benoit De Clerck notes, good value for money when it comes to investing in a complicated watch.

It’s something he sees as important given how consumers are more clued up on watches than ever, with social media and blogs expanding watch knowledge and culture. Customers expect more (and more value) from a watch than ever – which can be helpful for brands in tolerating headwinds.

“The internet has definitely democratised knowledge and … we see it every day in our boutiques. They come with a printout or a screenshot … The internet has made it definitely on that front easier for us to communicate and to convey the value of the brand,” he says.

Bulgari also expressed its heritage, refining the Bulgari Bulgari watch (and adding a mechanical calibre) it first launched in the mid-1970s and that gained popularity in the ’80s.

Chief executive Jean-Christophe Babin says growing in tougher conditions comes down to consistency. This is something the Roman jeweller exemplifies with focus on its best known collections such as the Serpenti, which celebrated 75 years in 2023. “In our case, obviously in difficult times, gaining market share takes more in terms of consistency, in terms of focusing on icons,” he says.

A focus on higher-end timepieces such as gem-set pieces, and with complications, fits with industry-wide moves toward higher prices and fewer volumes. It also shows how luxury brands are increasingly courting those at the very top of the market rather than the aspirational entry-point ones.

Another side-effect of increased watch knowledge is increased watch connoisseurship. The relaunch of Gerald Genta and Daniel Roth fits here. In recent years Louis Vuitton has increased its purview on watches under the direction of Bernard Arnault’s youngest son, Jean, director of watches at Louis Vuitton.

La Fabrique Du Temps watchmakers Michel Navas and Enrico Barbasini, who founded the manufacture in 2007, both worked with legendary designer Gerald Genta. Genta is the designer of some of the world’s most famous watches and is sometimes described as the “Picasso” of watches. They consider it an honour and a calling to be carrying forth his legacy, and that of revered watchmaker Daniel Roth. “We are the two last watchmakers (who worked) with Mr Genta … so for us, it’s so exciting,” says Navas.