The chief executive of Tag Heuer – the maker of luxury watches beloved by athletes – expects sales to recover to 2019 levels this year after last year’s pandemic shock.
The forecast of the brand owned by luxury group LVMH comes as the industry became more polarised amid lockdowns last year.
The largest privately owned timepiece brands such as Rolex outperformed, whereas lower-priced brands such as Swatch suffered more, a March report by Vontobel said. Tag Heuer ranked ninth in terms of sales in this same report.
“There was a demand shock with all the lockdowns throughout the world, there was a supply shock”, which weighed more on sales because of “long-lead times” in the supply chain, chief executive Frederic Arnault said in an interview with Bloomberg TV on Friday. When lockdowns were lifted last summer, demand recovered to “high levels”.
The 26-year-old executive – fourth child of billionaire Bernard Arnault – became chief executive of Tag Heuer a year ago. Four of the five Arnault siblings currently work at LVMH.
Sales of luxury watches have increasingly moved online, whereas demand has become more local amid a lack of international visitors in tourism hotspots such as Europe, Mr Arnault said.
Demand in China has been “very strong” for the past year, but the trend in Korea and Japan is currently “a bit more difficult,” he said. The US is “doing very well, the demand is extremely strong”.
Tag Heuer is performing “very strongly” with local clients in Europe, notably with British, French and German customers.
The watch industry was also disrupted by the arrival of the Apple Watch in 2015, but Tag Heuer retaliated with its own smartwatch the same year.
Models for its connected watches start ta $1,800, compared with $1,249 for Apple’s series 6 model with the premium Hermes leather strap.
The decision to launch a smartwatch was initially a “defensive move,” Mr Arnault said.
Tag Heuer is “convinced that traditional watches will keep strong desirability and have a bright future ahead, and we see smartwatches as a new business opportunity and it’s bringing new customers to the brand”.