Swiss luxury watchmakers Hublot and Zenith, both part of French group LVMH, expect sales to rebound in 2021, after a difficult 2020 and a challenging start to the new year, their chief executives said on Monday.
Swiss watchmakers’ sales slid last year as stores were affected by pandemic-related closures and as tourism, an important driver of the luxury watch business, collapsed.
Some companies, which have a strong presence in mainland China, have benefited from a rebound in demand, such as Richemont, which returned to growth in the final quarter of 2020.
“For Hublot, we expect 15-20% sales growth this year … In China, we still have a lot of potential, we expect very strong growth of 30-50% there,” CEO Ricardo Guadalupe told Reuters in a phone interview during LVMH watch week.
Physical watch fairs have been cancelled again in 2021, so that LVMH’s watch brands are showing off their luxury timepieces virtually this week.
TAG Heuer, the group’s biggest watch label, is not taking part, but its new CEO Frederic Arnault said in a video message the brand had been “very resilient” last year.
Hublot’s Guadalupe said sales growth in the final quarter had been better than in the third for LVMH’s watch and jewellery business overall as well as for Hublot. LVMH, the world’s biggest luxury goods group, is due to publish full-year results on Tuesday.
Guadalupe said growth at Hublot had come from mainland China, while Macau had also improved since October. Hong Kong was still difficult, due to the political situation, but Japan and the Middle East were doing well, he said.
Zenith CEO Julien Tornare said the brand’s successful turnaround was interrupted last year by the pandemic, but Japan, China and the United States should fuel growth this year.
Tornare said problems in Hong Kong, formerly the No.1 market for Swiss watches, would not disappear with the end of the pandemic and were a major headache for watchmakers.
Meanwhile, Guadalupe said Western Europe remained difficult due to the lack of tourists. Store closures related to COVID-19 restrictions are currently hitting sales in Switzerland, Germany, the Netherlands and the United Kingdom.
He said the brand was looking to further streamline its distribution network in the coming years, but would open four new stores in second-tier cities in China this year.
A monitoring system helped Hublot to avoid excess stock build-up at retailers, but in some hard-hit areas, such as cruise ships, the brand was ready to take back unsold timepieces, Guadalupe said.
Online sales of Hublot watches, which cost 18,000 euros ($21,864.60) on average, are still small and are expected to reach 2-3% of total sales this year. Zenith, whose watches cost 10,000 Swiss francs on average, sold about 5-6% of its watches online last year.