LVMH Watch Brands Ready for Battle

In Miami, excitement filled the headquarters of LVMH's watch brands. Bulgari, Zenith, Hublot, and Tag Heuer, not to mention the two newcomers, Daniel Roth and Gérald Genta, all gathered for the 5th edition of the LVMH watch week held in the capital of Florida. It was an opportunity to showcase the group's ambitions and review the latest offerings from the watchmaking houses, even though Dior Horlogerie, Louis Vuitton, and Tiffany were excluded for the time being, but they could make a strong presence next year. "The idea," a group spokesperson confided, "is to show that brands are ready for battle in 2024, also to take advantage of a quieter media moment, and thus garner significant attention for our houses’ novelties."

A strategic niche in an event aimed at highlighting the creations of its manufacturers, all CEOs were present for the family photo, taken on the beach of a villa in Star Island, close to South Beach: Julien Tornare (Tag Heuer) from Zenith, Benoît de Clerck (Zenith) former head of Panerai, Jean-Christophe Babin (Bulgari), Ricardo Guadalupe (Hublot), and Jean Arnault (Louis Vuitton). His brother Frédéric, former CEO of Tag and newly appointed CEO of the watch division, was there, alongside Stéphane Bianchi, the very discreet head of LVMH's Watch and Jewelry branch (which includes Bulgari, specializing in jewelry). The group's watch division's strengthening is evidently on the agenda. "Our goals are very ambitious," Julien Tornare stated; "they aim to reach 1 billion in revenue. There is an impressive lineup of new products planned for 2024 and the coming years, all prepared by Frédéric (Arnault). We believe Tag has all the assets to ensure significant growth." Indeed, it is the most important brand in the segment, which has experienced spectacular growth under Bianchi's leadership. "When he took over watchmaking and jewelry, nobody wanted to go there," asserts a sector expert. "It was seen as a side issue, even worse, as a punishment. In the group, fashion is what matters and is strategic." As a result, colossal work has been deployed, and the brands have been radically transformed: products revamped, the launch of smartwatches, and retail and omnichannel restructured. "Six years ago," explains Frédéric Arnault, "the watch and jewelry division was fifth in the group. This year, it ranks second in operational results, behind fashion." Moreover, beyond instilling a new ambition in the division, Stéphane Bianchi successfully advised and guided Frédéric Arnault upon his arrival.

This year, Florida was chosen as the epicenter to consolidate a historical market, the United States, a sure value for the group and its watch division. As a high-end luxury destination, home to the Art Basel fair and host to a Formula 1 Grand Prix, Miami, a key market worth €10 billion for high-end watchmaking, was a natural choice a year after Singapore. "Today it is still the first market for Tag Heuer and where it experiences the highest growth. Hublot is also very strong there. Zenith, which arrived just twenty years ago, has ambitions and must continue to strengthen," says Frédéric Arnault. "The United States is one of the drivers of the Group's growth and its Houses." For now, depending on what one wants to include in LMVH's watch perimeter, the watch division accounts for around €2 billion (excluding Bulgari, Louis Vuitton, Dior, and Tiffany), which is quite little considering its estimated revenue of just Audemars Piguet, or Patek Philippe, barely more than double that of Richard Mille, and obviously far from Rolex, Richemont, or even Swatch Group. At the group level, jewelry weighs much more at €9 billion, and that's without counting fashion, which now exceeds €42 billion. At LVMH, it is said that "Frédéric Arnault is betting on the organic growth of the group's brands.”

But at this rate, catching up with the delay will be complicated unless an acquisition is made. Patek Philippe or Richard Mille are prospects the group is familiar with, but it assures that no process is underway. Not even for Breitling. Yet its roadmap is to counter its competitors and accelerate. Becoming the global leader in watchmaking will take time, acknowledges Frédéric Arnault. "We want to sell less in volume but better." In the meantime, the category shows good health, and the results or growth of Hublot, Tag Heuer, or Zenith are good. The demand is there, and prices continue to rise. The number of retailers has been reduced, with half of the doors closed to focus on its own distribution. Increasingly, LVMH aims to position itself as a high-end watchmaker with aspirational projects like Gérald Genta or Daniel Roth, which can fetch several tens or hundreds of thousands of euros per piece, but also diamond-set pieces like those at Zenith, which demonstrate the group's desire to offer high watchmaking.

This aligns with the concentration of the sector in the hands of the wealthiest consumers. The first element to attack a market is the desirability of the products and the quality of the experiences offered to customers. Because even if the luxury watch market is less buoyant than in the past and is normalizing, it has continued to grow and move upmarket in recent years. LVMH intends to take more than its share, particularly through industrial synergies, notably on movements, innovation, and also distribution. But it's still a bit early for Frédéric Arnault, who has just taken on his role, to establish a medium and long-term roadmap. We should know more in the coming months. On his skills and intentions, everyone in the group seemed reassured during this Watch Week, which LVMH wanted to be "complementary to traditional watch presentations like Watches and Wonders Geneva," in which it also participates. The idea was to demonstrate that its houses are complementary and particularly dynamic and innovative. "Strength and ambition," Frédéric Arnault summarized. "It's really interesting to see what we can do together, and this watch branch dynamic can lead to interesting synergies." "We're not fighting each other, there are real exchanges, and everyone has their roadmap," confides a CEO of the group. On the agenda were product presentations and meetings with distributors and media from around the world to discover the 2024 vintage watch novelties. "I am proud to see that this event has grown," said Frédéric Arnault during his informal opening speech. "It is very important for our watch brands to display the strength and ambition of the group in such an important category."

To do so, LVMH will have to invest, much like that which the group did with Tiffany, paying over €15 billion, not to mention the flagship store in New York, which, with its 10,000 square meters over ten levels, is the largest store in the world. With Dior and Louis Vuitton, the group has proven that it is capable of creating and staging real living spaces offering artistic experiences, restaurants, culture, and lifestyle. It remains to be done in watchmaking where the group is a challenger and not a pioneer, which is neither the position it prefers nor where it excels the most.