Is the Watch Industry's Storm Over? A Complex Tale of Ups and Downs
The watch industry's fortunes are as unpredictable as the weather, with a mix of positive and negative trends. Here's a breakdown of the latest developments, offering a nuanced perspective on the market's health.
The Numbers Game: A Mixed Bag
- Richemont's Rise: Richemont's watch brands are shining, with a 7% annual sales increase. The acquisition of Baume et Mercier and strong performance from Cartier contribute to this success.
- LVMH's Plateau: LVMH's watch division grew by 3%, but this includes jewelry sales. The group's watch sales showed a positive turn in the final quarter.
- Swatch Group's Slump: Swatch Group's net sales dropped 1.3%, with net profits plummeting from CHF 219 million in 2024 to CHF 25 million in 2025. However, the final quarter sales accelerated, aligning with FHS data.
The Big Picture: Brand Disparity
The industry reveals a stark divide: stronger brands are pulling ahead, leaving weaker ones struggling. This disparity is further exacerbated by deeper-pocketed brands investing heavily in marketing.
Tariff Tactics and Export Figures
- Tariff Inflation: Tariffs have significantly impacted export figures. Exports to the US surged by 4.6% due to rushed shipments before new tariffs took effect. However, this may lead to slower exports this year as US retailer inventories swell.
- Volume Concerns: Export volumes dropped by 742,000 units, nearly 5%, hitting production levels similar to the Covid-era factory closures. This situation threatens suppliers and could lead to closures, buyouts, and vertical integration by major brands.
Market Shifts and Glimmers of Hope
- Chinese and Hong Kong Crisis Easing: The slump in these key markets is showing signs of abating, offering a glimmer of hope for watchmakers.
- Emerging Markets: The industry is diversifying its focus, with growth reported in the UAE, India, Spain, and Saudi Arabia (up 9% last year).
Rolex's Controversial Move: A Game-Changer?
Rolex's partnership with LIV Golf is a bold move. While it provides a vote of confidence in LIV's future, it also stirs controversy within the established PGA Tour and DP World Tour, both backed by Rolex.
The THMG Conundrum
The Honourable Merchants Group's watchmaking division launch has been postponed. This delay suggests challenges in funding acquisitions and investments, leaving the industry curious about THMG's future plans.
