Cartier faces watch challenge

Models display pieces from Cartier High Jewellery during a private gala dinner in Shanghai in this 2007 file photo.
Models display pieces from Cartier High Jewellery during a private gala dinner in Shanghai in this 2007 file photo.PHOTO: REUTERS

ZURICH/HONG KONG • The gold and diamonds of Cartier jewellery are so popular with women that the brand, founded in Paris in 1847, is finding it difficult to market watches to men.

The world's biggest jewellery and watch brand in combined sales generates over two-thirds of profits for Swiss parent Richemont, but watch revenues have dwindled while jewellery sales have boomed.

Like other high-end watchmakers, Cartier is suffering from a drop in demand in big markets such as Hong Kong, China, Russia and the United States. But some of its problems are specific to the brand, setting up a challenge for Mr Cyrille Vigneron when he takes over the leadership next month.

Improving Cartier's image as a watchmaker in China, where wealthy women love its red boxes but men prefer pure watch brands such as Rolex or Patek Philippe, may be on top of his to-do list.

Richemont said last month that watch sales were down mid-single digits in the six months to September. It had reported a similar decline for Cartier watches in the full year to March.

Watch exports from Switzerland, where Cartier and other watches are made, fell 3.2 per cent in the first 10 months of this year.

Some analysts estimate that the high-end watch market in China is down 60 per cent since its 2012 peak, partly due to the government's crackdown on the tradition of gifts-for- favours, which often involved watches. The strong franc has also made Swiss exports more expensive.

Exane BNP Paribas analyst Luca Solca said Cartier also "has not been the strongest innovator in recent years".

Many of its new watches have been based on existing versions, with innovation focused on the most expensive models.

In January, it unveiled its first new model in eight years, the Cle watch. The company is also a relative newcomer in "in-house" watch movements, the mechanisms that make a watch tick and are beloved of collectors.

While Omega's name is omnipresent at the Olympic Games and each new James Bond movie, and Rolex cultivates its image as a sports brand, Cartier relies on its signature panther and other more traditional attributes.

Richemont thinks Mr Vigneron, a music composer and guitar player who was rehired after heading LVMH's operations in Japan, is the right man to lead Cartier back to growth. "He is known for thinking out of the box," said one Cartier employee based in London.

REUTERS

A version of this article appeared in the print edition of The Straits Times on December 10, 2015, with the headline 'Cartier faces watch challenge'. Print Edition | Subscribe