Zenith, the Swiss watchmaker owned by luxury giant LVMH, has begun a staff consultation that could lead to job cuts as it pivots toward higher-priced timepieces. The brand says the move is part of a “strategic repositioning” aimed at the premium end of the market, with a focus on watches priced above 3,000 Swiss francs.
According to a person close to the company, the plan could result in up to 100 job losses at Zenith’s Le Locle site—roughly half of the workforce there—plus around 100 more roles across international operations, including sales and marketing. The consultation process is a standard step in Swiss labor law when companies consider restructuring.
Why Zenith is moving upmarket
Zenith is known for its mechanical movements, particularly its high-frequency calibers, which are prized by watch enthusiasts. The brand’s repositioning aims to leverage that expertise to compete more directly in the luxury segment, where margins are typically fatter and demand has been more resilient.
The timing reflects a broader slowdown in the Swiss watch industry. Inflation-weary shoppers have pulled back on discretionary spending, and competition from smartwatches has made mid-priced mechanical watches a tougher sell. Meanwhile, the very top of the market—pieces from brands like Patek Philippe, Audemars Piguet, and Rolex—has held up better, as affluent buyers remain less sensitive to economic swings.
For LVMH, whose Watches and Jewelry division reported 2025 sales of €10.49 billion and profit of €1.51 billion, the move is a reminder that even within luxury conglomerates, brands are being pushed toward higher margins when volume growth becomes harder to achieve.
What it means for investors
Zenith’s pivot above 3,000 francs is as much about profitability as it is about product strategy. By concentrating on higher-priced watches and trimming headcount, the brand aims to increase profit per watch while reducing the fixed costs it must cover each year. Together, these steps lower Zenith’s break-even point—meaning it can sell fewer watches without seeing profits fall as quickly when mid-market demand softens.
For LVMH’s Watches and Jewelry unit, the trade-off is clear: relying less on mid-tier volume can make margins steadier during a downturn, but it also increases dependence on the health of the ultra-high-end segment. If demand at the very top weakens, the impact on profits could be more pronounced.
Investors watching LVMH—whose shares are part of the broader luxury sector—will likely keep an eye on how this repositioning plays out. The company has been navigating a mixed environment for luxury goods, with some regions showing resilience while others, particularly in Asia, have been softer.
The job cuts at Zenith are relatively small in the context of LVMH’s overall workforce, but they signal a broader trend: luxury brands are increasingly willing to streamline operations to protect margins. Similar dynamics have been seen across the industry, as companies from Swiss banks to tech firms adjust their cost bases in response to changing demand.
For everyday investors, the key takeaway is that a brand like Zenith isn’t just selling watches—it’s managing a portfolio of price points and costs. When a company decides to move upmarket, it’s often a bet that the highest-spending customers will remain loyal even as the broader economy cools. That bet can pay off handsomely in good times, but it also concentrates risk.
As the consultation process unfolds, watch industry observers will be looking for signs of how quickly Zenith can execute its plan and whether other mid-tier Swiss watchmakers follow suit. For now, the move underscores the pressure on brands that sit in the middle of the market—caught between mass-market smartwatches and the ultra-luxury names that continue to command premium prices.
