Pricey Cartier Watches Take a Backseat to Chloé's "It" Bags

Richemont might be having a tough time selling the $10,000+ watches from its Baume & Mercier, Officine Panerai, Piaget, Cartier, and Roger Dubuis brands, but Chloé is proving a shining light in its portfolio. The Swiss-based conglomerate, which owns Azzedine Alaïa, Cartier, menswear brand Dunhill, Chloé, and a handful of watch brands, says Paris-based Chloé is central to recent demand. While consumers might be shunning pricey watches, they are increasingly snapping up $2,000 Chloé Marcie handbags and ruffled blouses.

Richemont’s sales of leather goods rose 11 percent in the year ended March 31 as Chloé’s handbags found fans among younger women seeking more affordable alternatives to the $10,000-and-up Hermes Birkin or less ostentatiously branded options than accessories from the likes of Chanel or Louis Vuitton, per Bloomberg. This recent report follows from an estimated three-year stretch of double-digit growth for Chloé.

The question is: Will the Paris-based brand be able to maintain its momentum under new creative direction? The breezy dresses and “it” bags borne by Clare Waight Keller – who served as the creative head from 2011 until early this year, when she announced she would leave for Givenchy – proved popular amongst consumers. They helped facilitate a much needed revamp for Chloé after years of financial turmoil on the heels of the 2006 exit of her predecessor Phoebe Philo, who took the helm of Celine.

Keller is being succeeded by Natacha Ramsay-Levi, a longtime right hand of Louis Vuitton creative director Nicolas Ghesquiere who will present her first collection during Paris Fashion Week this fall. Richemont is certainly optimistic. “Natacha is very respectful of the brand, but at the same time she has her own vision,” Chloe Chief Executive Officer Geoffroy de la Bourdonnaye told Bloomberg. “She’s determined to make an impact.”

As for Richemont’s watch business – which has been grappling with dwindling demand in its biggest markets, Hong Kong and the United States – the optimism is far more cautious. In May, Richemont reported that its full-year net profit cut by 46 percent as sales of high-end watches were way down.

The luxury watch sector has seen tough times since Chinese authorities banned giving expensive gifts as part of an anti-corruption crackdown in 2013, followed by democracy protests in 2014 hitting sales in Hong Kong. Nonetheless, Richemont chairman and controlling shareholder Johann Rupert said in May that he is confident of the longer-term potential for luxury goods because the Chinese would keep traveling and help revive European markets that suffered in the aftermath of militant attacks.