At the Watches and Wonders event beginning Tuesday in Geneva, Hermès will introduce a new line of sports watches, powered by mechanical movements and aimed at women.
The French luxury brand, which makes its watches in Switzerland, hopes the new line called “Cut” will help fend off a downturn in Swiss watch exports, which fell 3.8 percent in February.
“In the market context, which is not as positive as last year, [the show] is a good opportunity to relaunch momentum,” said Laurent Dordet, chief executive of Hermès Horloger. Watches and Wonders expects 45,000 visitors to attend the seven-day show.
Hermès’ watch division has bucked industry trends before. During the pandemic-impacted year of 2020, the division reported 2.3 percent growth even as the wider market declined by 22 percent, according to the Federation of the Swiss Watch Industry (FHS).
Last year, Hermès continued to beat the Swiss market. In its full-year results published in February, watch revenues rose 23 percent to €611 million ($662 million), compared to 7.6 percent growth for the wider industry. The industry’s growth has sputtered in recent months after a multi-year surge during the pandemic pushed export values to a record, reaching 27 billion Swiss francs ($30 billion).
Hermès’ watches have been staple of bourgeois style since introducing signature models like the Arceau and Cape Cod in the 1970s. Recent growth — powered by more high-end models featuring mechanical movements or bejewelled embellishments — marks a new chapter. Since 2020, Hermès Horloger has tripled its revenues, according to its published results. Were its revenues to continue climbing at the same rate, the division could join the exclusive “billion Swiss franc club” —estimated to number just eight brands — within a few years.
The keys to Hermès recent performance? “Internalised production, new products and creativity have made us extremely reactive and reliable,” Dordet said. “Add the fantastic distribution network we have with Hermès and the global attractiveness of the brand, and all of this means we’ve had a good trend since 2020.”
The company now operates what Dordet called a “boutique mainly” distribution strategy, with around 100 points of sale including mostly Hermès boutiques, as well as a handful of strategic wholesale accounts and airport distributors.
Last year, Hermès reported overall revenues of €13.4 billion, up 21 percent at constant exchange rates year-on-year. Surging demand for flagship handbags Birkin and Kelly has led to long waits for sought-after styles, prompting many customers to curry favour with sales associates by buying into the brand heavily, across categories. (Some even claim they were pressured to do so, according to a recent antitrust suit).
Momentum around Hermès’ watch offer has seen it climb industry rankings: according to Morgan Stanley estimates, Hermès now ranks 16th among Swiss watchmakers by turnover, ahead of Tudor, Panerai and Van Cleef & Arpels, and only narrowly behind TAG Heuer. That’s compared to 26th place in the bank’s 2020 report. Morgan Stanley also places Hermès highest among multi-category luxury brands involved in watchmaking, ahead of Bulgari, Chanel, Montblanc and Louis Vuitton.
Much recent excitement around Hermès’ watch offer has been generated by H08, a sports watch designed by Hermès Horloger’s creative director Philippe Delhotal and introduced three years ago. The brand helped shift perceptions of Hermès’ offer, in which low-volume mechanical timepieces were largely overshadowed by quartz watches targeted to women.
“H08 is our first success in volumes in mechanical and more masculine watches, even though some women go for it,” said Dordet. “It’s a key pillar for us.”
Now, the more feminine Cut range — priced from $6,725 — is hoped to fuel the next chapter in the evolution of Hermès’s watch division. 36 iterations offered at launch include a bi-metal, diamond-set piece that tops out the collection at $21,900.
Dordet admitted taking on the women’s sports watch category, which is dominated by giants like Rolex and Omega, wouldn’t be easy. “It’s a very competitive segment,” he said. “We want to address and attack it with a watch that is clearly different from the competition, with a different style.” According to Morgan Stanley, Rolex accounts for almost a third of Swiss watch exports.
Sports watches are also key brand territory for rival French luxury house Chanel, which has recruited A-listers like Margot Robbie to promote its flagship ceramic diving watch, J12.
Dordet said Cut was distinguished by features such as its bespoke case shape (which is a sort of uneven octagon with rounded edges and sweeping cuts in its left and right case flanks), unique typeface and colourways. Hermès orange features heavily in the collection. “This is a sports watch in the Hermès way,” he said. “It’s not a performance watch taking you to the top of Everest or the bottom of the Mariana Trench, but it will accompany you all year long, including for sports.”
While Hermès is mainly targeting a female clientele with Cut, Dorset called it “a genderless choice.” “We don’t create for a gender. We think of a customer, but then we let the market decide,” he said.
In a 2021 interview, Dordet said he did not believe Hermès was a “first choice” watch among luxury watch buyers. But he said the division’s recent growth suggested his company’s watches were now more attractive to seasoned watch buyers than ever.
“I would not be so arrogant as to say Hermès is a first choice,” he said. “But what counts is that Hermès is 1712638858 part of the choice, especially among men and women who are buying two to five watches a year. We are convincing more and more people to try Hermès.”
Dordet said women still accounted for 80 percent of Hermès Horloger’s sales but that he expected the mix to even out. “The balance is historic,” he said, noting that Hermès’s men’s mechanical watch collection was introduced just 12 years ago. “We will balance in the coming years, because the growth in men’s watches is high.”
One industry expert said Hermès was bringing new buyers into the luxury watch space. “Hermès’s new sports watches cater to individuals who appreciate great design,” said Kristian Haagen, author of a number of books about watchmaking. “A design such as the H08 may not appeal to those who typically invest in high-end horological pieces, but the brand’s design history makes it attractive to many, particularly those with a penchant for luxury accessories like scarves and Birkin bags.”
In February, it was reported that Vaucher Manufacture Fleurier, the Swiss high-end watch movement maker that supplies Hermès with movements (including the H1912 automatic that will feature in Cut) and in which Hermès has a 25 percent stake, would be put up for sale by its majority shareholder, The Sandoz Family Foundation. Dordet declined to comment on whether Hermès might make a move for the company, but said for Hermès Horloger it was business as usual. “We are shareholders of Vaucher and with some rights on it, and with the firm ambition to stay in there,” he said.
Many in the Swiss industry have grown more sheepish in recent months regarding future sales amid reports of overstocking, and as demand cools from post-pandemic highs. But Dordet said the continued success of H08 and the arrival of Cut gave him cause for optimism. “I’m quite confident about this year,” he said, “even though it’s not as easy as last year.”
