How Hermès Grew Past Fashion Watches to Join Top Swiss Maisons

(Bloomberg Businessweek) -- It was a silly visual trick that turned Hermès International into a serious competitor in the watchmaking world. In 2011 the brand released Time Suspended, a mechanical watch featuring a fun little complication: Push a button, and the hour and minute hands would stop, effectively freezing a moment in time. A hand that kept track of the date slipped out of sight completely.

Hidden beneath the face of the watch, the timekeeping mechanism continued to work, but you could theoretically leave the hands locked in place as long as you’d like—a minute, an hour, a week—until you pushed the button again, returning them to the correct time, the watch as accurate as ever.

“We surprised everybody with that complication,” says Guillaume de Seynes, executive vice president of Hermès and a sixth-generation member of the luxury house’s ruling family. De Seynes says this proved to people what the watchmaking team at Hermès could do.

When his uncle, then-Chairman Jean-Louis Dumas, assigned him to the timepieces division in 1999, the brand had been doing a decent business, but it had been selling mostly fashion watches—beautiful trifles with clean lines that were worn for decoration and powered by batteries rather than clever mechanics. There was the Heure H collection, which boasted bold H-shaped cases, and the Cape Cod line, a preppy staple designed to look like a nautical chain.

De Seynes oversaw a strategy to expand into more serious watchmaking, which included the debut of the company’s first self-winding production watch, the Dressage, in 2003. Henri d’Origny, the mastermind behind the brand’s scarves for 50 years, designed it.

Three years later, Hermès bought 25% of the Vaucher Manufacture Fleurier SA (“manufacture” is watchmaking lingo for “factory”) in Val-de-Travers, Switzerland. It was an effort to more vertically integrate Hermès’s watchmaking business and to draw the prestige of making movements “in-house.”

And then came Time Suspended. After that, de Seynes says, finally “people looked at us in a different way.” A decade later the timepieces department at Hermès reached an even bigger milestone: In 2021 its sales broke into the top 20 group of Swiss watchmakers for the first time.

According to Morgan Stanley, the company surged 73% from the prior year, to €337 million ($368 million), and into the No. 19 position—behind Chopard and ahead of LVMH’s Bulgari. Hermès sold a total of 58,000 units last year, according to the same Morgan Stanley report. (Rolex, the No. 1 Swiss brand by revenue, sells about 1 million watches annually. Audemars Piguet, which is fourth on the list, sells about 45,000.)

For the past few years, and especially in 2021, the luxury goods industry across most categories has seen substantial growth. Shoppers who found themselves homebound for months because of the pandemic were more flush with cash than usual and more likely to spend money shopping online. The lifting of lockdowns led to global “revenge shopping” sprees. Sales of apparel, accessories, jewelry, and cars have been soaring.

But even in 2019 the growth of Hermès’s watch division had already started to outpace that of the Swiss industry as a whole. Annual sales in 2021 by the watchmaking unit grew faster than the rest of Hermès (73% vs. 42%, according to de Seynes), putting the division at 4% of the company’s revenue, up from its typical 3%.

The startling growth can be attributed in part to something not so revolutionary: Hermès is now making watches that people are very interested in buying. “For the past four or five years, they’ve been coming out with really well-designed pieces that the market really appreciates,” says Paul Boutros, head of watches, Americas at Phillips auction house.

Boutros has a prime vantage point across the watch industry from his position overseeing sales at one of the leading purveyors of pre-owned watches. He points to the Slim d’Hermès line, which the brand introduced in 2015, as “a fantastic, elegant watch with its distinctive font styling.”

The cost of an Hermès watch is also not outrageous, comparatively speaking. Slim d’Hermès pieces, which are round and feature a Bauhaus stencil-style font, start at $7,125. “They offer really interesting pieces for some very fair prices,” Boutros says. “The prices on the secondary market have risen over the past few years, which is just a sign of the increased interest.”

Although strengthening, Hermès timepieces are still a meager presence in the secondary market, where collectors fiercely compete over Audemars Piguets, Omegas, Patek Philippes, and Rolexes, driving pre-owned prices to twice or even three times the retail value.

In 2021, Hermès released the H08, a watch that displays the time on a square case with rounded edges. It retails for $5,000 to $9,000, depending on materials and bracelet choices. The H08 is a new base model off which designers can riff and innovate. “The whole quantity we had planned for the launch was sold out everywhere,” de Seynes says. “We could have sold a lot more.” New variations were showcased at the Watches and Wonders fair in April in Geneva, including one in blue-coated titanium.

A novelty for 2022 is the Arceau Le Temps Voyageur, a world timer that, in addition to displaying the time where you are, shows it in 24 cities around the globe. Many Swiss maisons make world timers, including Patek and more entry-level luxury brands such as Montblanc and Frederique Constant. But in Hermès’s spin, a small watch face can be moved around the dial to tell the time in other cities. Your “home time” is displayed in numerals at the top of the dial.

A small team designs these innovations in Biel, Switzerland, and is overseen by Philippe Delhotal, creative director of Hermès watches. He joined the company in 2009 after spending time at Swiss powerhouses Jaeger-LeCoultre, Patek Philippe, and Vacheron Constantin.

The background of the Arceau Le Temps Voyageur’s dial is a fantasy map of the equestrian world created for Hermès in a silk scarf—a connection between the idea of global travel and the company’s equestrian heritage.

“Traveling is part of the Hermès culture,” Delhotal says. “When you speak about traveling, you go back to the horse—before the car, it was the only way of traveling.” And the horse, of course, is central to Hermès’s identity.

The Arceau Le Temps Voyageur, which retails for $28,825 in platinum, serves as a bridge between the lower-price models and a small number of pieces that Delhotal creates each year to showcase painstaking handcraftsmanship, or metiers d’art.

These extremely limited pieces—which feature wood marquetry, engraving, painting, elaborate enamel work, and other techniques—take two years to make and can retail for as much as $50,000. The brand began the practice in 2008.

“We are a house of crafts,” Delhotal says of Hermès. “It was very important for us to be excellent in this field as well.”

This year, Delhotal’s team unveiled the Arceau Les Folies du Ciel, a watch with a hand-painted dial depicting a flying machine motif taken from a scarf that was created in 1984. Only 72 of the timepieces will be made, for top Hermès clients.

De Seynes and his two cousins, Executive Chairman Axel Dumas and Artistic Executive Vice President Pierre-Alexis Dumas, have overseen a slow escalation in prices for the timepieces. Ten years ago the entry price point for an Hermès Arceau watch was less than $1,000. Now it’s more than $2,000.

This increase comes at a time when cheaper traditional watches are losing ground to smartwatches, according to the Morgan Stanley report. Inexpensive brands like many of those in the Swatch Group are falling behind in terms of revenue, and pricier brands and models are getting stronger.

As for de Seynes, he often thinks about the Time Suspended watch introduced 10 years ago. The brand’s goals shouldn’t change much as time passes, after all. “I think that, as always at Hermès, it’s long term, which is important,” he says. “So in five years’ time we will continue the same strategy.” In other words, Hermès will appear to hold time in place while, behind the scenes, the work goes on.

Winding Through the Years

1975
The Kelly watch on this clasped bracelet takes the shape of a dangling lock, a motif familiar to anyone who owns a Kelly bag—the Hermès icon named after Princess Grace of Monaco.

1998
A double wraparound leather strap was added to the brand’s nautical chain-inspired Cape Cod timepiece, creating a lasting design flourish that eventually adorned the brand’s version of the Apple Watch.

2003
The Dressage is the company’s first self-winding production watch, made by Vaucher Manufacture Fleurier. It was dreamed up by longtime house designer Henri d’Origny.

2015
Set in a newly created, stencil-style font, the modern dial of the Slim d’Hermès signified a fresh look.

2019
Guest artist Ini Archibong designed the Galop’s case to look like a riding stirrup.

2021
For the Arceau L’Heure De La Lune, two watch faces rotate around the dial over the course of 59 days, covering and uncovering two stationary, mother-of-pearl moons. It’s one of the most innovative ways of displaying a moonphase on the market.

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