The future of watchmaking is a tale of two paths, and it's time to unravel this complex narrative. The storm may be easing, but it's far from over for the watch industry.
Let's dive into the world of luxury timepieces and explore the latest developments.
First, a quick overview of the key players: Richemont, LVMH, and Swatch Group. These giants of the watch industry have been navigating a challenging market, and their recent performances offer an intriguing insight. Richemont's watchmakers are on the rise, with a 7% increase in annual sales in 2025. LVMH's watch and jewelry division reported a modest 3% growth for the year, but there's more to the story. And Swatch Group? Well, they experienced a dip in net sales and profits, but there are signs of acceleration in the final quarter.
But here's where it gets controversial: the market remains subdued, and the big players are not holding back on marketing. This means the laggards face an uphill battle to catch up. And this is the part most people miss - the industry figures are not as clear-cut as they seem. None of the groups provide detailed performance reports for individual brands, leaving analysts and enthusiasts alike to speculate and fill in the gaps.
Richemont, for instance, found a buyer for its long-forgotten child, Baume et Mercier, and the group's figures might have looked even better without this burden. Cartier, part of Richemont's jewelry division, saw a healthy 14% growth, further highlighting the outperformance of Richemont's brands compared to LVMH.
TAG Heuer, on the other hand, is still awaiting a new CEO, while Hublot's revenues have taken a significant hit since the pandemic boom. But there's a silver lining: TAG Heuer's Formula 1 deal has boosted sales and footfall, a strategy that might just give them an edge.
Now, let's talk about Swatch Group. Despite a steep drop in net profits, the group projects very positive developments for 2026, likely due to the strong performance of Omega, one of the industry's top watchmakers. This could mean that the headaches at Tissot, Longines, and other high-end watchmakers might finally be easing, with signs of life at Breguet and Blancpain towards the end of 2025.
However, the fog of war still hangs over the industry. Four of the six largest Swiss watch companies are privately held, and their financial figures remain a mystery. Audemars Piguet, for example, reported a 10% increase in revenues last year, but without official results, it's hard to gauge the true picture. Analysts believe that Rolex, Patek Philippe, Richard Mille, and Audemars Piguet are pulling ahead, further distorting the data and leaving the rest of the pack to struggle.
The tariff situation adds another layer of complexity. Swiss watch exports in 2025 were down 4.5% compared to the record year of 2023, but the real question is: how much did tariffs inflate the results? Brands rushed to ship watches to the US to beat incoming tariffs, leading to a 4.6% increase in exports. But what about the sell-through? It's possible that US retailer inventories are overflowing, which could slow exports to Switzerland's largest market this year.
The export volume figures are even more concerning, dropping by almost 5% last year. This has a significant impact on industry suppliers, the unsung heroes who make the components for almost every Swiss watch. Many of these suppliers are struggling, relying on government support to stay afloat. The industry is bracing for closures, buy-outs, and big brands continuing their vertical integration strategies.
But there's a glimmer of hope on the horizon. The crises in the Chinese and Hong Kong markets, once the drivers of Swiss watch exports, seem to be easing. While it's unlikely these markets will rebound this year, the watchmakers are hopeful that the slump will subside. Meanwhile, the industry's focus is shifting to new markets like the UAE, India, and Spain, which are reporting meaningful growth. Even Saudi Arabia, which saw a 9% increase last year, is on the radar.
So, has the storm passed? Not quite, but it's certainly less intense. The watch industry is still navigating turbulent waters, and only time will tell if further improvement is on the horizon. For now, the CEOs might want to hold off on popping the champagne.
And in a surprising twist, Rolex, the establishment's favorite, has entered into a partnership with LIV Golf, the controversial breakaway golf league. This move has sent shockwaves through the golfing world, as Rolex has traditionally been associated with the sport's elite. Will this endorsement secure LIV's survival, or is it a risky move that might backfire?
Lastly, let's talk about The Honourable Merchants Group (THMG), the luxury group founded by former Audemars Piguet CEO François-Henri Bennahmias. THMG was expected to announce its watchmaking division this month, but the news has been put on ice. Bennahmias cited funding issues, suggesting that either the negotiations are tougher than expected or he's seeking additional funding. Either way, the future of THMG's watchmaking ambitions remains uncertain.
So, what do you think? Is the watch industry on the road to recovery, or are there more storms on the horizon? Feel free to share your thoughts and predictions in the comments below!
