By Silke Koltrowitz
ZURICH – Swiss watchmaker Zenith, owned by French luxury giant LVMH, expects to post double-digit sales growth in the first quarter, but is carefully watching the implications of the crisis involving Russia, its chief executive said on Thursday.
“Every time there is geopolitical instability in the world it leads to a context of anxiety that is not good for business,” Julien Tornare told Reuters in a phone interview.
“Purchasing power, the price of petrol, the price of gas are worries for people and the mood may not be as good as we had hoped,” said Tornare, who has been leading the brand since 2017.
He said, however, that most markets, in particular the United States, were still doing well, and he was confident the brand would achieve double-digit sales growth in the first quarter and was also aiming for that for the year as a whole.
Rival Swatch Group confirmed on Thursday it expects double-digit sales growth this year and no material impact on business from the crisis triggered by Russia’s invasion of Ukraine.
Tornare said Russia was not a key market for the brand, even though it had a long history there. “When the situation allows it, we’ll redeploy means to develop that market,” he said.
Its parent company LVMH temporarily closed its 124 boutiques in Russia on March 6, saying it would continue to pay the salaries for its 3,500 employees in the country.
He said new lockdowns in China to rein in COVID-19 were a concern, but China remained an important growth driver in the longer term. “We had a good start in China in January. February and March were a bit more quiet.”
Tornare said the brand wanted to absorb part of the higher costs for energy and raw materials, but would raise prices globally by 2% to 4% on certain collections within the next weeks. The average price is currently at 10,000 euros ($11,087.00), 30% higher than when Tornare took over as CEO.
Based in Le Locle in western Switzerland, Zenith is known for its El Primero watch mechanisms launched in 1969 that only survived the arrival of battery-powered quartz watches in the 1970s because a foreman hid the tools and plans in an attic at the factory against management orders. Modernised versions of the El Primero still power Zenith watches today, notably its Defy collection.
($1 = 0.9020 euro)
(Reporting by Silke Koltrowitz; editing by Jonathan Oatis)
