Is the Watch Industry Weathering the Storm, or Just Changing Course?
The watch industry, a timeless blend of craftsmanship and luxury, is navigating turbulent waters. Recent financial reports paint a picture of both resilience and vulnerability. But here's where it gets intriguing: while some giants like Richemont are seeing their watch divisions climb, others like Swatch Group are facing headwinds. So, is the storm blowing over, or are we witnessing a shift in the industry's landscape?
Watch expert Robin Swithinbank, in his bi-monthly insights, dissects this complex scenario. January's financial results revealed a mixed bag: Richemont's watchmakers experienced growth, LVMH's remained stagnant, and Swatch Group's declined. Swiss watch exports, after four months of decline, saw a surprising December surge, ending the year with a 1.7% dip – not as dire as predicted.
And this is the part most people miss: This data suggests a widening gap between leading brands and their competitors. Struggling brands face an uphill battle, especially with a subdued market and well-funded rivals ramping up marketing efforts.
Industry transparency remains elusive, with major players like Richemont and LVMH grouping watch sales with other divisions. Richemont, however, boasts a 7% increase in specialist watchmaker sales, excluding Cartier's impressive 14% growth in its jewelry division, which includes watches. LVMH's watch and jewelry division saw a modest 3% rise, driven by Tiffany and Bulgari.
Tag Heuer, awaiting a new CEO, faces challenges despite a reported 15% increase in boutique traffic and 20% sales growth for its Formula 1 collection, thanks to its partnership with Formula 1. Hublot, meanwhile, has seen revenues plummet by roughly a third since the pandemic boom.
Swatch Group, heavily reliant on Omega, reported a 1.3% sales decline and a steep drop in net profits. While they project a positive 2026, brands like Tissot and Longines continue to struggle. Breguet and Blancpain show promising signs, with Breguet's GPHG award win hinting at a potential turnaround.
Here's the controversial bit: Four of the six largest Swiss watch companies are privately held, shrouding their financial performance in secrecy. Audemars Piguet's CEO hinted at a 10% revenue increase, but without official figures, analysts speculate that Rolex, Patek Philippe, Richard Mille, and Audemars Piguet are pulling away from the pack, further skewing industry data.
Tariff tactics add another layer of complexity. 2025 export figures, down 4.5% from 2023's record year, are likely inflated due to brands rushing shipments to the US ahead of impending tariffs. This could lead to bloated US retailer inventories and slower exports in 2026.
More alarmingly, export volumes plummeted by nearly 5%, reaching levels comparable to the Covid-19 shutdowns. This decline threatens suppliers, the backbone of the industry, many of whom rely on government support. Closures, buyouts, and further vertical integration by major brands seem inevitable.
A glimmer of hope emerges from emerging markets. While China and Hong Kong, once major drivers, remain sluggish, the UAE, India, Spain, and Saudi Arabia are showing promising growth.
Has the storm passed? Not entirely. While there are signs of improvement, the industry remains cautious. Champagne corks are unlikely to pop just yet.
Rolex Shakes Up the Golfing World
In a surprising move, Rolex, the epitome of golfing establishment, partnered with LIV Golf, the controversial Saudi-backed breakaway league. This endorsement is a significant boost for LIV, which has struggled to gain legitimacy despite its lucrative player contracts. The deal, however, strains Rolex's relationships with the PGA Tour and DP World Tour, both of which it also sponsors.
Is Rolex legitimizing a rebel league, or simply securing its position in a changing golfing landscape? This partnership raises questions about the future of professional golf and the role of established brands in shaping its trajectory.
THMG Hits Pause on Watchmaking Ambitions
The Honourable Merchants Group (THMG), founded by former Audemars Piguet CEO François-Henri Bennahmias, has unexpectedly delayed the launch of its watchmaking division. Citing a shift in focus towards funding, Bennahmias hinted at challenges in acquiring or investing in watch companies. Is this a temporary setback, or a sign of deeper troubles in the luxury watch market? Only time will tell if THMG's watchmaking dreams will materialize.
The watch industry, like a finely crafted timepiece, is a complex mechanism. While some gears seem to be turning smoothly, others are facing friction. As the industry navigates these challenges, one thing is certain: the future of watchmaking will be shaped by innovation, adaptation, and the enduring allure of timeless craftsmanship.
What do you think? Is the watch industry weathering the storm, or is it undergoing a fundamental transformation? Share your thoughts in the comments below.
