The CEO 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 polarized amid lockdowns last year. The largest privately-owned timepiece brands such as Rolex outperformed, whereas lower-priced brands such as Swatch suffered more, according to a March report by Vontobel. Tag Heuer ranked at 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 officer Frederic Arnault said in an interview with Bloomberg TV. When lockdowns were lifted last summer, demand recovered to “high levels.”
The 26 year-old executive, the fourth child of billionaire Bernard Arnault, became CEO of Tag Heuer a year ago. Four of the five Arnault siblings currently work at LVMH.
Arnault said 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.
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 has also been disrupted by the arrival of the Apple Watch in 2015. Tag Heuer retaliated with its own smartwatch the same year. Models for its connected watches start from $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”, 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.”
Last month, tennis star Naomi Osaka dropped out of the French open over a disagreement with the organizers about her participation in mandatory press conferences. She said she suffered from depression and social anxiety disorder. Those engagements exacerbate her condition, she said then. Tag Heuer had made Osaka a brand ambassador earlier this year.
“We support our athletes in victories and also in moments of difficulty,” Arnault said. “We’re looking forward for her to come back strong and we believe she will very soon.”
Osaka has also decided to skip the Wimbledon tournament to focus instead on the Tokyo Olympics next month.