Jean-Christophe Babin, the head of LVMH’s watch division, says he’s ready for a phased retirement and Jean Arnault would be an obvious candidate to succeed him as head of the unit that includes labels like TAG Heuer and Hublot.
Arnault, 27, who’s the youngest child of LVMH Moët Hennessy Louis Vuitton SE’s billionaire chief executive officer Bernard Arnault and looks after the watch category of the group’s biggest label Louis Vuitton, would be “the perfect person to take over that division,” Babin, 67, told Bloomberg News in an interview Wednesday.
“I no longer necessarily dream of flying 150 days a year,” said the father of six, who has run Bulgari for 13 years. “I’m at a crossroads in my life where I want a different balance from what I’ve got so far.”
Talking of his preferred candidate to succeed him, he said the young scion is “very clever” who “loves” and “understands watches.”
Jean Arnault joined Louis Vuitton five years ago as the director of marketing and development of its watch category. An engineer by training, with degrees from Imperial College London and MIT, he’s known for his keen interest in timepieces, even launching a Louis Vuitton watch prize for independent creators.
In December, LVMH announced Babin’s successor at Bulgari, with Laura Burdese set to become CEO on July 1 of the brand known for its Serpenti Tubogas watches that start from €7,600 ($8,886). There have been other management changes at LVMH’s watch division, including at the head of TAG Heuer, with a new CEO set to take charge on May 1.
If he is picked to take over from Babin, Jean Arnault would inherit a division that’s been struggling recently. The watch industry has been hit hard by the tariff turmoil, falling Chinese demand, a strong Swiss franc and the war in the Middle East. While jewellery-linked watch brands including Bulgari are better armed to take the hit, more mid-market segments brands are feeling the pinch.
“The game is tougher” for mid-market brands, Babin said. That explains why the Swiss watch industry has seen volumes drop- going from 25 million pieces annually to around 15 million in just 10 years.
He said the decline was triggered primarily by smart-watches, which heavily impacted timepieces priced below $1,500, even as those in the above-$10,000 corner continued to grow. The mid-market segment includes the likes of TAG Heuer and Zenith, which rely on less-profitable, wholesale networks that are “more cautious” in the current environment, Babin added.
While there is no portfolio restructuring planned for the group, industrial synergies are being developed between brands, including sharing certain movements while keeping signature parts exclusive.
LVMH’s watches and jewellery unit posted 7% organic revenue growth in the first quarter, but the jewellery brands led the growth with the watch category being negative, LVMH chief financial officer Cecile Cabanis said earlier this month.
Louis Vuitton’s watch sales were estimated at around 165 million Swiss Francs ($209 million) last year, representing less than 1% of brand revenue, according to a report by Morgan Stanley and LuxeConsult. LVMH doesn’t provide a breakdown of sales by brands.
The potential promotion of Jean Arnault would come amid ongoing questions regarding the future management of LVMH with Bernard Arnault turning 77 last month. At last week’s shareholders’ meeting, Arnault was asked by an investor how he saw the succession unfolding with his five children working at the luxury conglomerate. He dodged the question, saying shareholders approved lifting the age cap of the CEO role he holds to 85.
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