The luxury watch industry is currently witnessing a pivotal transformation, particularly for brands like Ulysse Nardin and Girard-Perregaux, which have found themselves navigating through challenges stemming from a slowing market post-acquisition from Kering. CEO Patrick Pruniaux is strategically positioning these historic brands for renewed growth and independence, leveraging their rich heritage to foster a new future.
In recent months, the Swiss watch market has experienced a significant downturn following peaks in 2022 and 2023. Reports indicate a sharp decline in export values, with manufacturers halting orders and retailers facing increased unsold stock. This trend has been exacerbated by economic challenges in China, alongside a diminishing interest from both casual buyers and watch investors who previously engaged in speculation.
For Ulysse Nardin and Girard-Perregaux, the impact has been tangible, with the Sowind Group even making the difficult decision to furlough employees. The brand’s strategy has relied on government support to mitigate permanent layoffs. Yet, even amidst adversities, Pruniaux maintains a positive outlook. He asserts that while the market is undergoing normalization, the long-term prospects remain favorable. “Consumers still have a significant passion for luxury watches,” he stated during a recent interview with Business of Fashion.
The journey towards autonomy began two and a half years ago when Pruniaux acquired Ulysse Nardin and Girard-Perregaux from Kering, a move aimed at placing these brands at the forefront of the luxury watch market. Under Kering, the watchmaking division had been treated as a secondary focus when compared to fashion giants like Gucci. This management buyout has allowed Pruniaux to steer the company through its present turmoil with a more flexible approach.
Initially, the post-pandemic luxury watch market proved to be profitable, as demand surged and the industry grappled with supply constraints. For instance, Girard-Perregaux’s Laureato line became so popular that waiting lists formed, signaling a robust consumer appetite. However, the current landscape is starkly different, with the Federation of the Swiss Watch Industry reporting a drop in exports by 2.4% in value and 8.4% in volume.
While some brands have reported double-digit declines, Pruniaux’s leadership has kept the mood relatively stable. He highlights that revenue across both brands remains stable, with Ulysse Nardin experiencing modest growth. This has been achieved by focusing on the brand’s legacy while remaining debt-free and profitable—a feat that, in these challenging times, sets them apart from many competitors.
The historical significance of Girard-Perregaux since its inception in 1791 adds intrinsic value to its offerings. Yet, this reputation positions it uniquely. Straddling the line between luxury stalwarts such as Patek Philippe and niche high-end players, Pruniaux acknowledges that their craftsman approach can attract discerning customers who value quality over brand prominence.
Both Ulysse Nardin and Girard-Perregaux are forecasted to sell around 20,000 timepieces this year, with an estimated average price of 21,000 Swiss francs ($24,785), leading to projected turnover of approximately 420 million Swiss francs ($495 million) in absolute sales. However, Pruniaux remains unbothered by their relative sales volumes compared to industry giants like Rolex and Audemars Piguet, asserting their commitment to creating distinctive and exclusive products.
Craftsmanship and sustainability are pivotal elements in their strategic positioning. The brands benefit from an ultra-local supply chain, sourcing nearly all components within a 100-kilometer radius of their manufacturing headquarters. This not only enhances their commitment to quality but also caters to a growing consumer demand for sustainable practices in luxury goods. For example, Ulysse Nardin has introduced the Diver NET watch case, made of 95 percent recycled steel, signifying an alignment with eco-friendly initiatives.
Pricing strategy also plays a vital role in retention of customer trust. Pruniaux is conscious of the industry’s often unjustified price hikes and emphasizes fairness. By ensuring that customers feel they receive value for their investment, even years into ownership, he hopes to build lasting relationships with lifestyle-focused buyers rather than those merely interested in the status associated with high-end timepieces.
Looking forward, the potential for Ulysse Nardin and Girard-Perregaux rests with maintaining customer engagement. Although analytics and market insights from a large group like Kering can foster creative growth, Pruniaux embraces an independent, long-term view shaped by a family office approach rather than private equity short-termism.
Furthermore, there’s optimism stemming from changing demographics. The average age of watch buyers has noticeably decreased among both brands, trending towards audiences in their late 30s and early 40s—demonstrating that luxury watches still resonate with newer generations. The pandemic has invigorated interest in the craftsmanship and stories behind these timepieces, aligning perfectly with modern consumer values of authenticity and sustainability.
As Ulysse Nardin and Girard-Perregaux move further into their post-Kering identity, they embody resilience and strategic foresight. The next couple of years could ultimately define their trajectory within the luxury watch market as they aim to reclaim a position of prestige through innovation, tradition, and sustainability.
