(Bloomberg) — The head of Swiss watchmaker Maurice Lacroix said the company is still for sale and has been profitable for three years as it focuses on its popular entry level-priced Aikon model and younger customers.
Owned by Zurich-based distribution conglomerate DKSH Holding AG, the brand was put on the block amid a watch sector downturn in 2015. It has yet to find a buyer.
Chief Executive Officer Stephane Waser said the brand had a record year in 2021 as its Aikon model remained popular with millennial-generation buyers looking for an accessibly priced luxury Swiss watch. As other brands have focused on increasingly pricey timepieces, Maurice Lacroix has zeroed-in on the more affordable segment.
Waser has overhauled Maurice Lacroix since taking over the top job in 2014, focusing on watches priced between 1,000 francs ($1,071) and 3,000 francs. The company also shifted to more online sales and marketing and began allowing for work from home back in 2017, well before the pandemic made such flexibility obligatory.
“We changed our whole company culture,” the CEO said in an interview. “We can’t sell to younger generations if we don’t understand what they do and how they behave.”
The decision to go down-market rubs against industry trends. As Maurice Lacroix has shifted to entry-level prices, rivals including LVMH’s Tag Heuer and Richemont’s Baume & Mercier have increasingly focused on more expensive models.
The recent rebound in Swiss watch exports is still being driven by the top end. In February, for example, shipments of watches costing more than 3,000 francs increased in value by 28% while watches priced at between 500 francs and 3,000 francs rose 16%. Those worth less than 500 francs rose by just 4.8%.
The stainless steel automatic Aikon timepiece shares 1970s-era design traits with Audemars Piguet’s iconic Royal Oak and Patek Philippe’s vaunted Nautilus, but at a tenth of the price. The timepiece accounts for about 70% of the company’s sales.
Maurice Lacroix is among the top 50 Swiss watch brands, with annual revenue of about 35 million francs and selling about 70,000 watches in 2021, according to Morgan Stanley estimates. For comparison, cult high-end brand F.P. Journe earned the same revenue selling just 900 watches last year.
Maurice Lacroix is now doubling down on its entry-level strategy. It’s launching a quartz version of the Aikon made from brightly colored recycled plastic made from a composite derived from ocean-waste. The Aikon Tide watches sell for about 700 francs and are being marketed with advertising materials featuring skateboarders, dancers, basketball players and parkour artists.
“This is where we are at home,” Waser said, noting that more than 30% of its sales are online.
The strategy has translated into profits for the past three years, according to the CEO. That’s taken pressure off the sales process which, while ongoing, isn’t particularly active or urgent for parent company DKSH.
“Business has been good for the past three years,” Waser said. “When you make black numbers, you don’t cost and you don’t disturb.”
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