We love a good comeback story, and this year, all eyes are on Cartier. Between 2016 and 2018, the Swiss Richemont Group that owns Cartier launched a massive buyback initiative, buying over $500 million worth of stock back from retailers to protect the brand’s value and prevent deeply discounted prices on stagnant inventory. Today, the company consistently ranks among the top three brands in worldwide luxury watch sales, second only to Rolex and recently surpassing Omega. It’s a fascinating shift for Cartier, fueled by many factors, such as demand for vintage watches, nostalgic fashion trends, and a surprisingly strong luxury market. Let’s dive deeper into the triumphant turnaround of Cartier.
Why Did Cartier Buy Back Watches?
Sales of luxury items worldwide, in general, were waning when the Richemont Group initiated the multi-million-dollar buyback policy. Shares fell 4% in 2016, and the company experienced a massive plunge in profits. Many factors were at play, including unsafe travel conditions for tourists heading to the world’s premier luxury shopping destinations, such as Paris.
Additionally, China, once a big importer of luxury goods, had adopted a stricter stance on government corruption, including showering officials with expensive gifts such as Cartier watches. As a result, store shelves overflowed with inventory in many areas across Europe and China. Instead of leaving its stock and brand image at the mercy of the secondary market, Cartier opted to buy back excess inventory and recycle some of the watch parts.
Losses Before a Burgeoning Comeback
The effects of the buyback were felt in 2018 when stocks plummeted, with the Richemont Group reporting a significant loss in profits due to the millions of dollars spent reclaiming excess inventory. At the same time, the luxury market was rebounding, and Cartier was set up for future success by clearing out stagnant inventory. The brand also adopted a new sales strategy, focusing more attention and resources on e-commerce. And it couldn’t have come at a better time as sales for luxury goods would skyrocket in the wake of the global pandemic just a few years later. Online spending would also increase, which various outlets speculate was partly due to an influx of disposable income amid lockdowns. Cartier reported an impressive 30% increase in sales during the tail end of 2021. With the Cartier buyback now well in the rearview mirror, the brand can focus on its current lineup.
The 90s Fashion Boost
Cartier was one of the most prevalent watch brands of the 1990s, with models from the brand’s portfolio, such as the Tank Française and Panthère, gracing the wrists of countless celebrities, including Madonna, Pierce Brosnan, and Keith Richards. Much of that same aesthetic can be found in Cartier’s modern lineup.
The geometric-shaped cases and bold Roman numeral hour markers have since become synonymous with 90s watch fashion, which has made a big comeback in the fashion industry. The clothing industry embracing the distinctive charm of the 90s and 00s also supports Cartier’s impressive comeback.
Cartier’s Spot at the Top
That brings us to 2023. Despite global economic uncertainty as of late and many people worldwide cutting back on non-essential items, luxury brands continued to thrive in 2022 leading into 2023, including Cartier, which is now estimated to be worth well over $12 billion. The curious trend can be attributed in part to consumers justifying their watch investments as just that, sound, long-term investments. And they aren’t necessarily wrong, either, because many reports have shown that luxury watches continue to outperform the S&P 500.
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Changing Watch Trends
But what about current watch trends? When the Cartier buyback policy was initiated in 2016, stainless steel sports watches reigned supreme, backed by the affordability of steel and blockbuster releases such as the first ceramic bezel Daytona ref. 116500. At the same time, many of the biggest brands in watchmaking were embracing the growing vintage and heritage watch trend, which has, as a result, inspired another interesting fashion movement: men wearing smaller watches. And Cartier is at the center of it all with arguably some of the most attractive small-sized men’s watches on the market, from the classic Cartier Tank Louis striking a relatively svelte silhouette on the wrist at 33.7mm x 25.5mm x 6.6mm for the largest current-production mechanical model to the sleek Américaine with its stretched-out rectangular case. And the understated Tank Must line has been a Cartier sales winner among men and women as well.
The Richemont Group’s buyback program was risky and cost the organization hundreds of millions of dollars. Ultimately, the Cartier buyback proved worthwhile and accomplished precisely the intended result: protect the brand’s perceived value. The company now looks positioned to be a long-term winner as long as they continue to release quality products–and the retro 90s fashion wave hasn’t hurt either.