The jewelry and watch division of LVMH achieved sales of $11.8 billion in 2023, marking a 7% increase in organic growth. The luxury conglomerate now boasts 10 watch brands, including TAG Heuer, Hublot, and Zenith, as well as fashion and jewelry brands such as Louis Vuitton, Bulgari, and Dior, all of which produce watches. Recently, the company appointed 29-year-old Frederic Arnault, son of LVMH’s Chairman and CEO Bernard Arnault, as the CEO of LVMH Watches, overseeing the TAG Heuer, Hublot, and Zenith brands. Analysts estimate that sales of these three brands amounted to around $2 billion last year. Frederic Arnault, known for introducing highly popular new models at TAG Heuer, is expected to bring his focus on innovation, cutting-edge materials, and creative designs to the wider brand group. Analysts suggest that LVMH may also pursue the acquisition of attractive brands should they become available. During LVMH’s Watch Week in Miami, the chief executives of the brands indicated that 2024 is shaping up to be a stronger year compared to 2023, when heightened interest rates and fears of a recession dampened demand. The executives expressed encouragement from the resilience of the American luxury consumer. According to Benoit de Clerck, CEO of Zenith, “It’s all about cycles, and the beauty of America is that the cycles are very short. We go through ups and downs and all that, but I can reassure you today Zenith is definitely on an upswing with good traction within the U.S. markets.” Sales of luxury watches are reflecting a similar trend to the broader luxury market, with the wealthiest consumers showing the most strength. Executives noted that the affluent are less impacted by rising rates and economic uncertainty, leading more brands to cater to the “super-spenders” and VIP collectors who continue to invest in the highest quality and craftsmanship. Jean-Christophe Babin, CEO of Bulgari, highlighted, “The high end has been really one of the main drivers of our growth. I think the wealthy more than ever are eager to invest in authentic, reputable and timeless brands.” Babin also reported a rising strength at the high end across Bulgari’s various businesses, which now encompass hotels, fashion, and fragrances. LVMH is also focusing on the fastest-growing segment of luxury watches: women’s watches. Despite women’s watches accounting for only about a third of total sales, the interest in luxury mechanical watches among women has surged due to increased exposure on social media and an expanding selection of models designed for women. The growing global population of affluent women – both self-made and inherited – is further fueling sales growth. Babin mentioned, “The trend is toward more and more feminine and more unisex watches. Women have increasing power, in terms of independence, autonomy and purchasing power. We think that will continue.” In the highly competitive luxury watch industry, brands must continuously innovate with materials, complications, and designs to gain market share and keep collectors engaged. TAG Heuer, with its roots in car racing, enjoyed significant success with its Carrera Plasma, featuring lab-grown diamonds. Its Carrera Plasma Diamant d’Avant-Garde Chronograph Tourbillon is priced at over $500,000 and has a waitlist of more than two years. TAG Heuer also unveiled a teal-green Carrera Glassbox Chronograph with a dial inspired by a shade of green used in auto racing in the 1920s and 1930s. TAG Heuer CEO Julien Tornare emphasized LVMH’s advantage over other watch brands and groups, citing its relentless focus on reinvention and desirability. Many of the LVMH brands are leveraging their storied pasts for new designs and models. For instance, Zenith launched its Chronomaster Triple Calendar, inspired by its rare prototype El Primero watch from 1970, and a new Chronomaster Sport in green, reflecting the popular color trend in luxury watches. De Clerck pointed out that part of Zenith’s appeal to younger watch buyers and collectors is its pricing strategy, delivering value while maintaining craftsmanship and complications. Simultaneously, many LVMH brands are introducing more expensive, limited editions, moving upward on the price ladder. Hublot recently introduced a $250,000 limited-edition watch, the MP-10 Tourbillon Weight Energy System, with only 50 units available, expected to sell out quickly. Ricardo Guadalupe, CEO of Hublot, highlighted, “We call it the art of fusion in watchmaking. We are connecting the tradition of watchmaking of over 400 years, with innovation. We do that through design, through materials, new mechanics and new ways of making movements.” — CNBC’s Crystal Lau contributed to this report.
