1. calibre11user

    calibre11user Jul 30, 2020

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    LVMH, the parent company of TAG Heuer, reported its 2020 first half earnings on July 27, 2020. As one would expect with global declines in consumer spending and GDP during this time period, revenue and profit at LVMH likewise sank dramatically.

    For LVMH as a whole, year-over-year revenue from 1H 2019 to 1H 2020 declined 27% while profit declined a dizzying 84%.

    Within the "watches and jewelry" group (in which TAG Heuer sits), revenue declined 38% y/y while profit declined more than 100% y/y from 357M euros in 1H 2019 to a loss of -17M euros in 1H 2020.

    Compare these results to 1H 2017, when both revenue and profit were up double digits.

    The earnings report comprises multiple documents that make mention of the individual watch brands (but only rather superficially). Below are direct quotes:

    The Watches & Jewelry business group saw its organic revenue decline by 39% in the first half of 2020. Profit from recurring operations came to (17) million euros. Confronted in January with the decline of the Chinese market, then with the closure of other markets from mid-March, Bvlgari quickly took advantage of the recovery in China in the second quarter. After the launch of the B.Zero1 Rock collection, the Maison unveiled a new line of Barocko fine jewelry through an augmented reality experience. After a year of renovation, Chaumet inaugurated its historic address on Place Vendôme in Paris and strengthened its presence in China. After a good start to the year, TAG Heuer and Hublot were impacted by the decline in orders from retailers. The new TAG Heuer smartwatch, which was one of the major innovations of the first half, has been a great success.


    In more detail:

    Store closures and the suspension of international travel due to the global health crisis affected the Watches and Jewelry businesses, leading to negative organic revenue growth of 39%. In this context, the Maisons took measures to reduce costs and preserve cash while doing their best to spur demand and develop alternative distribution methods such as digital channels and direct sales. Watch Week - an event held by Bvlgari, Hublot, TAG Heuer and Zenith in Dubai in January - was an excellent opportunity to present the Maisons' new collections to retailers and the media.

    Faced with the downturn in China starting in January, followed by the closure of other markets from mid-March, Bvlgari quickly capitalized on the recovery in China in the second quarter. A number of digital initiatives were developed. The Maison helped combat the pandemic by donating hand sanitizer to healthcare facilities in Italy, Switzerland and the United Kingdom, and launched the Bvlgari Virus Free Fund to support Covid-19 vaccine research being done by leading teams at Oxford University, Rockefeller University and Lazzaro Spallanzani Hospital. New designs continued to appear at a rapid pace, with the B.Zero1 "Rock" collection adding rings, bracelets, pendants and earrings, reflecting the brand's bold creativity along with other iconic jewelry models launched in the Fiorever and Bvlgari Bvlgari series. High jewelry featured the presentation of the Jannah Flower collection in Abu Dhabi and sales held in Taiwan and South Korea. The Serpenti Seduttori Tourbillon and Octo Répétition Minutes watch designs sparked a keen interest. A new marketing campaign was launched worldwide with Zendaya, Naomi Watts, Kris Wu and Lily Aldridge.

    In March, TAG Heuer unveiled the third generation of its smartwatch in New York. Performance, precision, innovative materials, a wide range of features and elegance are the defining characteristics of this product, which was met with great success, amplified by the more recent launch of the Golf edition. A new online store was launched in February. The Autavia collection was enriched with new models, as were the iconic Formula 1 and Aquaracer series. New directly operated stores were opened in Dubai (in February) and in Japan (in March). Together with Hublot and Zenith, TAG Heuer supported the fight against the pandemic by donating 150,000 protective face masks to Swiss hospitals.

    Hublot's most significant new additions included the Big Bang Integral, for the first time featuring an integrated metal bracelet, and the Spirit of Big Bang Meca-10, whose manufacture movement offering a 10-day power reserve was adapted to the "barrel"design. The marketing launch of the Big Bang e digital model was accompanied by the addition of an e-commerce function to the Hublot.com website. In Japan, which is now the brand's number-one market, a store was opened in the Hublot Tower in Tokyo. To mark Hublot's 40th anniversary, a #timetoreflect campaign began in May, retracing the origins of its iconic Big Bang Original, Classic Fusion and Spirit of Big Bang series, and celebrating its constant quest for innovation.

    Zenith launched its Time To Reach Your Star marketing campaign and a new website offering online sales. The Maison enriched its collections with the Defy Midnight women's model, the new Elite and the Chronomaster Revival, which celebrates its long tradition of watchmaking.
     
    Edited Jul 31, 2020
    Jim Dollares likes this.
  2. Hubert

    Hubert Jul 31, 2020

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    Brutal numbers, but keep close guard, because we are far from being out of the woods!
    [​IMG]
     
  3. Jim Dollares

    Jim Dollares Jul 31, 2020

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    I wonder how long they will continue with Zenith, I cant imagine that brand has been making any profits for a long time. Each year seems to be very vague info about that brand?

    Am I alone in thinking that they have totally failed in creating a clear definition of what Zenith is? To me it just feels like a bland brand that has no real identity.
     
  4. kappa_md

    kappa_md Jul 31, 2020

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    I think there’s still a niche market for Zenith. The appeal of the El Primero movement is still strong among watch enthusiasts and with the new Defy LAB (from TH factory) there is still some hope for the brand. But probably marginal sales if you compare TH and Hublot revenues with Zenith. TAG Heuer and Hublot are prominent in Formula 1 (Red Bull & Ferrari respectively) I don’t know where Zenith markets itself ::confused2::
     
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  5. Aquagraph

    Aquagraph Jul 31, 2020

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    Zenith are an odd one, I think JCB was pushing them in the right direction with the Defy, but it just doesn't seem to catch on. I'd wager most of their customers are 'enthusiasts' and I'm not sure there's enough 'enthusiasts' for a brand like that to keep going. Today everything is 'model' driven; Carrera, Submariner, Royal Oak. Zenith don't have one recognizable model and pictures of El Primero movements on Instagram really don't cut it.
     
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  6. kappa_md

    kappa_md Jul 31, 2020

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    Yes I agree. I just stick with TAG Heuer and I’m happy ::love::
     
  7. imagwai

    imagwai Jul 31, 2020

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    I really like Zenith. I would love an El Primero 38mm. So why have I never owned one? Can't really put my finger on it. Been tempted many times. I guess like so many great watches these days, the price is just slightly over what I'm willing to pay. Or rather there are other choices in the same price bracket that are equally or slightly more tempting. I am always on the lookout for a bargain, though,
     
  8. Jim Dollares

    Jim Dollares Jul 31, 2020

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    If I were in charge of LVMH I would probably make Zenith the high end dressy pieces, competing with Patek, Lange, some IWC's etc. Then LVMH would have

    Tag - sporty and motor racing
    Hublot - futuristic and daring with high hiphop factor
    Bulgari - high end but with a different focus on fashion and design
    Zenith - high end dressy for the rich man in a suit
     
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  9. Redwes25

    Redwes25 Jul 31, 2020

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    Feels like Zenith has lost there way for awhile now. Obviously some great vintage watches and they had some great models from the 90s and early 2000s using the El Primero - such as Rainbow on the sport watch category and Chronomaster T with the Moonphase on the dress watch side. Also, the Class isn't a bad model either on dressy side using that movement. You can pick a lot of these up used at pretty good prices (though hard to find a really good condition Rainbow Flyback). Now it feels like all they sell are bunch of Skeleton watches.
     
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  10. THJunkie

    THJunkie Jul 31, 2020

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    Those numbers are far worse than I expected. I fear when all this is done and dusted there will be fewer watch brands and most that remain will have a shrunken catalogue.
     
  11. THJunkie

    THJunkie Jul 31, 2020

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    more realistically - Zenith will probably go. They compete with both Tag and Hublot. But as you point out what do they actually stand for? And their watches as they are are always on huge discount sales so are obviously not valued in the market despite their great history. I really doubt anyone who isn’t a watch geek would not even recognise the name these days.
    Tag did bot have the prestige to build into what they wanted Hublot to be. And a bit like Man City bought its recent glory, Hublot bought its success in part through huge marketing budget. Zenith on the other hand seem lost. Far better business wise I expect to kill it off.
     
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  12. Redwes25

    Redwes25 Jul 31, 2020

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    Not sure it would be a huge loss if Tag has a few less watches in the catalogue...
     
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  13. THJunkie

    THJunkie Aug 1, 2020

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    yes they do seem to have a bewildering number of variations!