LVMH's jewelry and watch division generated sales of $11.8 billion in 2023, representing a 7% increase in organic growth. The luxury company now owns 10 watch brands, including TAG Heuer, Hublot and Zenith, along with fashion and jewelery brands such as Louis Vuitton, Bulgari and Dior, which also make watches.
Last month, the company named Frederic Arnault, the 29-year-old son of LVMH Chairman and CEO Bernard Arnault, CEO of LVMH Watches, which includes the TAG Heuer, Hublot and Zenith brands.
Analysts estimate that sales of these three brands reached about $2 billion last year.
Zenith luxury watch at Watch Week 2024 in Miami.
Frederic Arnault, who has launched a range of hugely popular new models at TAG Heuer, is expected to bring his focus on innovation, cutting-edge materials and creative designs to the larger brand portfolio. Analysts say LVMH may also continue to acquire attractive brands if they become available.
In interviews with CNBC during Watch Week LVMH in Miami, the brands' CEOs said 2024 is already shaping up to be stronger than 2023, when higher interest rates and recession fears depressed demand. Executives say they are particularly encouraged by the resilience of the American luxury consumer.
“It's all about cycles, and the beauty of America is that the cycles are very short,” said Benoit de Klerk, CEO of Zenith. “We go through ups and downs and all that, but I can assure you today that Zenith is definitely on an upward trend with good traction within the US markets.”
Zenith luxury watches at Watch Week 2024 in Miami.
Watch sales follow a similar pattern to the broader luxury goods market, with wealthier consumers remaining the strongest. The wealthy are less affected by rising interest rates and economic uncertainty, so more and more brands are catering to “super spenders” and VIP collectors who continue to spend on the highest levels of quality and craftsmanship, executives say.
“High-end products have actually been one of the main drivers of our growth,” said Jean-Christophe Babin, CEO of Bvlgari. “I think wealthy people are keener than ever to invest in authentic, reputable and timeless brands.”
Babin said he sees growing strength in high-end products across Bulgari's business, which now includes hotels, fashion and fragrances.
“We sold more high-end jewelry, more high-end watches, more high-end bags,” Babin said, showing off one of Bulgari’s $350,000 yellow gold Serpenti Secret watches.
Bulgari Serpenti Secret watch at Watch Week 2024 in Miami.
LVMH is also targeting the fastest growing segment of luxury watches: women's watches. While women's watches only account for about a third of total sales, women's interest in luxury mechanical watches has risen due to increased exposure on social media and a growing number of models designed for women. The rise in the number of wealthy women in the world – both self-made and inherited – is also driving sales growth.
“The trend is toward more and more feminine, unisex watches,” Babin said. “Women have increasing power, in terms of independence, independence and purchasing power. We believe that will continue.”
In the highly competitive world of luxury watches, brands have to constantly innovate with materials, complications and designs to gain share and keep collectors engaged.
Carrera Plasma Diamant d'Avant-Garde Chronograph Tourbillon at Watch Week 2024 in Miami.
TAG Heuer, which has its roots in motor racing, has had great success with its Carrera Plasma product, using lab-grown diamonds. The Carrera Plasma Diamant d'Avant-Garde Chronograph Tourbillon is priced at over $500,000 – and has a waiting list of over two years.
TAG Heuer also unveiled a teal Carrera Glassbox Chronograph with a teal dial, a nod to the shade of green used in motor racing in the 1920s and 1930s.
TAG Heuer luxury watch at Watch Week 2024 in Miami.
LVMH's advantage over other watch brands and collections is its constant focus on reinvention and desirability, said Julien Tournier, CEO of TAG Heuer.
“The Swiss watch industry has been a bit too conservative,” he said. “But at LVMH, we are driven to try new things, to move forward. I think if we want to remain attractive [a] “New generation, it is very important to show that we will work for the future and not for the past.”
Many LVMH brands are mining their historical past for new designs and models.
Zenith launched its Chronomaster Triple Calendar, featuring a triple calendar moon phase chronograph, inspired by the rare El Primero prototype from 1970. The company also launched a new Chronomaster Sport in green, the most attractive color for luxury watches in recent years.
Zenith luxury watch at Watch Week 2024 in Miami.
Part of Zenith's appeal to younger watch buyers and collectors is its price, De Klerk said. He said that while Zenith sells very complex watches, it tries to offer value, such as the Triple Calendar that sells for about $14,000 but is likely to be priced “thousands more” depending on the level of craftsmanship and complications required.
“We have a very good offer in terms of price versus the competition,” he said. “You get a lot of attention for the money, and we want to stay and keep that spirit.”
At the same time, several LVMH brands are moving up the price ladder, with more expensive limited editions. Hublot, known for its big, bold watches, has just launched a $250,000 limited edition watch, called the MP-10 Tourbillon Weight Energy System. Only 50 of the future watches will be produced, and they are expected to sell out quickly.
“We call it the art of fusion in watchmaking,” said Ricardo Guadalupe, CEO of Hublot. “We combine more than 400 years of watchmaking tradition with innovation. We do this through design, through materials, new mechanics, and new ways of making movements.”
— CNBC's Crystal Lau contributed to this report.
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