Zenith Management Proposes Laying Off Half of Employees, Going Upscale

Le Temps reports that LVMH-owned luxury watchmaker Zenith is planning a shift toward lower-volume, higher-end products, with a proposed restructuring threatening approximately half of the 200 jobs at its Le Locle manufacture, plus another 100 in its (soon to be shrunken) international sales network. The scope of Zenith’s expected layoffs hasn’t yet been finalized.

Why is Zenith Proposing Layoffs?

Benoit de Clerck, who has been CEO of Zenith since January 2024, cited six things in particular:

• Widespread struggles in the mid-range luxury watch market (roughly $9,000-$18,000)
• American tariffs
• Strong Swiss franc
• Declining sales in Asia
• Several successive years of losses
• The appeal of moving upmarket, given the success of their $50,000+ G.F.J. line

Zenith has weathered layoffs before. There was a bit of a luxury watch bust in 2008, and in 2009, Zenith reduced their Le Locle workforce from about 270 to 180. According to a transcript obtained by Le Temps, de Clerck intends to rehire as many affected employees as possible at other LVMH-owned watch brands.

Doesn’t Zenith Make Movements for Other Brands?

Zenith, as the maker of the legendary El Primero chronograph movement (which powered some of the first automatic chronographs), supplies movements to numerous other brands like Hublot and Tiffany & Co., and apparently Zenith’s order book as a third-party supplier is full through 2027. They also used to supply brands like Rolex and Parmigiani Fleurier.

It wouldn’t surprise me if Zenith’s role as a chronograph movement provider grew to exceed their significance as a standalone brand. That’s not a knock on the brand, but more of a comment on the significance of producing such a well-respected chronograph movement.

Are the Zenith Layoffs a Sign of Mid-Tier Luxury Watch Troubles?

Well, the luxury watch market is definitely changing, and the mid-level brands don’t seem to be doing as well as the most expensive luxury watch brands are. We can tell you that once-obscure ultra-high-end independent watches are incredibly hot right now. Six-figure watches seem to be selling faster than ever. But the Breitling/IWC/Zenith tier is a competitive one, indeed. Girard-Perregaux and others of that ilk are trying to move a tick upmarket as well.

Zenith’s Place in the LVMH Hierarchy

Since Frédéric Arnault took over as CEO of LVMH’s watch division in 2024, basically all 9 of their watch brands have gone upmarket. That’s especially true of Louis Vuitton and Tiffany & Co., which have moved way upscale from mall-tier fashion watches to horologically-credible $40,000+ pieces.

Almost every brand under the LVMH umbrella has wild six-figure offerings at the tip of their catalog, but here’s roughly how the LVMH watch brands stack up in order of entry-level to most exclusive:

• TAG Heuer
• Dior
• Bulgari
• Hublot
• Zenith
• Tiffany & Co.
• Louis Vuitton
• Gérald Genta
• Daniel Roth

But it seems LVMH is trying to inch Zenith a couple spots towards Daniel Roth. Zenith already does some wild stuff in the six-figure range like the Defy Zero G:

It would be a bit of a shame if Zenith abandons the under-$20,000 segment entirely, as they’ve made some really great watches at fairly reasonable prices over the years. Even a solid ceramic Zenith with a skeletonized movement can be had for about $15,000.

To me, it seems like the microbrand market is surging right now, and I see no reason why a lot of small-batch $5,000-$6,000 chronographs couldn’t have El Primeros in them someday. Maybe Zenith will stay in the mid-tier market as a supplier in that manner, and the layoffs will be minimized. Or perhaps they’ll just fully commit to ultra-upscale watches. We’re into those, too. Either way, we’ll keep you updated!