Interpreting the core data: the fate of jewellery and watches
The latest financial results (as of March 2025) of the Adventure Group reveal a divergence in the luxury market: while high-end jewellery remains strong, luxury watches are struggling.
Jewellery businesses (Cartier, Van Cleef & Arpels):
Sales: up 8% year-on-year;

Operating margin: maintained at a high 32%.

Keys to success:
Rejuvenation of design: For example, Cartier's Clash de Cartier collection has been well received by younger clients.

Material innovations, including the use of eco-friendly gold and lab-grown gemstones, are in line with the sustainability trend.

Specialized watchmaking divisions (Vacheron Constantin, Lange & Söhne, Panerai) 
Sales: down 13% year-on-year; 
Operating margin: only 5.3%, with profits plummeting by 69%.
Reasons for the challenge: 
Over-reliance on traditional high-priced watches with complicated functions failed to respond quickly to the impact of relatively inexpensive smart wearable devices and the light luxury trend in the downward trend of consumption.

 
Asian market collapse: Hong Kong's “survival between the cracks” 
Mainland China market 

Consumer downturn is evident: Richemont was forced to buy back distributors' inventories at a cost of more than €500 million.
Policy impact: the implementation of the “Anti-Corruption 2.0” policy indirectly impacted the high-priced gift market, leading to a significant reduction in demand for $10,000 Swiss watches.
Special characteristics of the Hong Kong market 
Rebound of the local segment: the proportion of local consumers recovered to 40% (compared to around 20% before the epidemic).
Lower spending power of Mainland tourists: per capita spending has fallen by 30%, and the old “three years on one order” phenomenon is now history.
Response Strategies 
Brands such as Panerai and IWC have set up “Entry-level Experience Zone” in their flagship stores in Central, offering affordable models ranging from HK$30,000 to HK$50,000.
Strengthen the second-hand watch certification business, borrowing the Rolex Certified Pre-Owned model to reduce the pressure on brands' inventories.
 

Global Market Insight: Why Japan stands out?
Exchange Rate Dividend 

The 25% depreciation of the Japanese yen against the euro has resulted in a 20% discount on the actual price of Swiss watches, attracting massive buying demand.
Tourism effect 
The Japanese government's “Tourism as a Nation” policy is paying off, with watches and clocks accounting for 18% of foreign tourists' spending in 2024.
Japan's department stores offer instant tax refunds and global insurance, further enhancing the shopping experience.

Implications for Hong Kong 
Hong Kong can learn from Japan's “Duty Free + Service” model and introduce services similar to instant tax refunds and high-end after-sales experience to attract international consumers.
 

Sales channel revolution: direct stores vs. distributors
Advantages of Everest direct stores 
70% of sales come from own channels, which helps control inventory and customer data, e.g. Cartier's “Personalized Customization App”.

Dilemma of Hong Kong dealers 
Transformation trend: 

Mergers and acquisitions (M&A) wave: Jewelry retail giants such as Chow Tai Fook acquire small and medium-sized watch and clock dealerships.
“Shop-in-shop” model: For example, Oriental Watch Co. cooperated with Richemont's brands and set up a special zone to reduce the pressure on inventory.

 
The strategic shift behind the personnel shake-up 
The recent personnel changes at the Richemont Group reflect a clear strategic shift: 

Laurent Perves, the new CEO of Vacheron Constantin: from LVMH's smartwatch division, heralding the launch of more traditional timepieces incorporating technology (e.g., the Traditionnelle line with NFC chips).
Emmanuel Perrin, CEO of Panerai: former director of e-commerce at Richemont, may push for an “online limited edition” model to avoid pressure on stock from dealers.
 

Tips for Hong Kong consumers:
1. Is it time to get a bargain?

There has been a surge in sales on the second-hand market. For example, the price of the popular 2020 AP Royal Oak 15500 has dropped by 40% from its peak.
However, it is important to be aware of the risk of a lack of liquidity, and to pay special attention to price trends when buying.
2. New watch strategy:

Keep an eye on production cuts announced by brands such as Lange & Söhne, which has announced a 15% reduction in production by 2025. Scarce models still have long-term appreciation potential.
3. Alternatives:

Jewellery watches from the haute horlogerie brand (e.g. the Cartier Tank) are a solid choice, as they are more resistant to damage due to their cross-category demand.

 
Structural adjustments are inevitable
The Group's current predicament epitomises the structural problems of the Swiss watch industry as a whole.

In the short term, the Group should rely on the cash flow of the jewellery business to survive and accelerate the liquidation of watch inventories.

The long-term strategy is to reshape the value chain from the 'cult of mechanical craftsmanship' to 'scene-oriented luxury', as demonstrated by HUBLOT's collaboration with Takashi Murakami to launch a co-branded timepiece.

In the Hong Kong market, breaking free from reliance on the mainland and focusing on meeting the needs of local high-net-worth clients has become the key to success.
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