Zenith Plans to Boost Swiss Watch Production as Sales Surge

(Bloomberg) -- Zenith, the LVMH-owned maker of 10,000-franc ($10,800) Swiss timepieces, plans to increase production after sales surged in the past three months.

The brand, known for making chronograph watches with in-house mechanisms, had a 50% jump in sales during the first quarter as demand rebounded in the U.S. and China, Chief Executive Officer Julien Tornare said in an interview. 

“Now it is a question of production -- this is my headache,” Tornare said. “Since we only make our own movements, the increase will take some time.”

Zenith, which once supplied movements - the mechanisms that power watches - to Rolex for some of its chronographs, aims to boost production by about 20% this year. It sold slightly fewer than 20,000 watches in 2021, which was a record year for the brand since being bought by LVMH in 1999, Tornare said. 

Zenith, which has enlisted Green Bay Packers quarterback Aaron Rodgers as a brand ambassador, has tripled sales in the U.S. and doubled revenue from China since 2019.  

Tornare said Zenith has found success with U.S. consumers by reducing the number of watch models it sells and introducing products that play up the brand's heritage and expertise in making chronograph models to compete with better-known Rolex Daytonas.

“We launched products that were a perfect match for the American markets,” he said. Rodgers is slated to visit the company's Swiss production facilities this spring, the CEO said. 

The U.S. overtook China as the top destination for Swiss watch exports last year as some brands including Zenith refocused marketing and promotions.

Read more: Less Bling, More Investing Drives U.S. Boom in Swiss Watches

The Zenith CEO said he expects sales in China to continue to grow despite lockdowns and store closures amid a surge in coronavirus cases and a shift in government policy to promote more economic equality.

“I am very confident on China,” Tornare said. “It's a question of time. They have such an appetite for luxury goods and Swiss watches.”

Zenith is trying to hire about 20 watchmaking technicians to its production facility staff of about 120 people in Le Locle, Switzerland. That's challenging as the market for skilled watchmakers and technicians is very tight, the CEO said.

Zenith will raise prices on some of its models by 2% to 3% this year, Tornare said.

While costs are increasing due to soaring energy and metals prices, the company hasn't been significantly impacted yet, Tornare said. 

“Costs are going up. That's for sure and that's something we are paying attention to,” he said.

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