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Swiss luxury watchmakers are turning to the government for financial aid to help them weather a downturn in demand.

Girard-Perregaux and Ulysse Nardin have become the first brands to confirm they’re using a state program to retain jobs and avoid permanent cuts. Sowind Group, which owns the two manufacturers, has put about 50, or 15%, of its 320 workers on so-called short-time work or furlough, according to Chairman and Chief Executive Officer Patrick Pruniaux.

“It’s a small watch crisis so far, slightly disconnected from the economy,” Pruniaux said in an interview at the Geneva Watch Days show last week. “This year is a challenge,” he added.

It follows similar moves by watch suppliers, which opted to take advantage of the government support to help navigate the industry slowdown after manufacturers cut orders.

Under the program, the Swiss state pays up to 80% of workers’ salaries as companies eliminate shifts and work hours in line with a drop in demand for their products. It’s designed to prevent permanent job cuts for manufacturing industries, such as watchmaking.

Around 40 companies in the canton of Jura, a hub for watch component makers, submitted applications for short-time work compensation during the summer, Pierre-Alain Berret, head of the Jura Chamber of Commerce and Industry, told newspaper NZZ last month. The applications represented a significant increase from the start of the year when just five companies had applied.

Swiss watchmakers are suffering from a sharp decline in demand, especially in China, following an unprecedented boom during the post-pandemic era when consumers rushed to buy pricey timepieces. After three straight years of record exports, wholesale watch exports have fallen by 2.4% in value in the first seven months of the year as consumers refrain from splashing out on expensive watches.

The drop in consumer demand has hit brands making slightly less expensive watches the hardest, while top-selling brands such as Rolex and Patek Philippe have been more resilient.

The slowdown has also affected Richemont, the group behind Vacheron Constantin and IWC, and Omega owner Swatch Group AG, which have both seen sales dive in China.

Sowind’s Pruniaux said there are few signs of improvement from the Chinese economy, meaning the industry might only see a partial recovery in 2025. Sowind’s sales will likely be flat or will fall slightly in 2024, he said. That compares with growth of just under 10% last year and a near-doubling of sales in 2022.

Sowind was part of Kering SA until a management buyout in 2022. Its brands produce high-end watches, with some rare Girard-Perregaux models setting buyers back as much as $500,000.

Brave face

At Geneva Watch Days, the heads of some of the biggest brands were putting on a brave face amid the current pullback.

Breitling AG CEO Georges Kern said some suppliers and watchmakers were making drastic moves in response to the slowdown.

“Some suppliers took six, seven or eight weeks of holidays,” he said. “The talent is to balance and manage your growth both when it’s going up and also when it’s going down,” he said. Breitling expects to increase sales slightly this year, he added, citing a recent improvement in the US.

Jean-Christophe Babin, the CEO of LVMH-owned jeweler Bulgari, said he expects the crisis in China to persist for months. But Bulgari’s focus on the less volatile women’s watch market and the fact that, unusually, the brand makes the majority of its own cases, dials and movements allows it to adjust production and ride out the slowdown, he said.

Rolf Studer, CEO of Oris, said the independent brand known for its diving watches is hoping to contain a sales decline this year to single digits as the drop in demand is being made worse by the continued strength of the Swiss franc. This squeezes profit and increases relative prices for already nervous consumers.

“You’re not going to buy a mechanical watch if you think your next year won’t be as good financially,” Studer said.

The going is so good at European luxury empire Hermès that even distant relatives of the brand’s original founder are landing seven-figure fortunes.

Wilfried Guerrand sits on the executive committee of Paris-based Hermès, acting as the managing director for métiers (which loosely translates to trade), information systems and data.

He is also a distant descendant of one arm of the Hermès dynasty, and this year has gifted 450 shares to each of his four children: Sixtine, 25, Stanislas, 20, Mathias, 19, and Albane, 18 according to regulatory filings seen by Bloomberg.

Over the past five years the share price of Hermès International—which makes famously coveted handbags including the Birkin and Kelly—has spiked 226% to more than €2,000 a share at the time of writing.

This means that the total value of the stock donated to Guerrand’s offspring is just shy of €3.9 million ($4.3 million).

As a result, the Gen Z quartet became millionaires in a matter of months, courtesy of their father’s donation.

Guerrand first joined Hermès almost 30 years ago, having studied at Neoma Business School, the London School of Economics and NYU Stern.

He was handed the reins of Hermès Femme—the women’s collections—in 2012 and now directs the brands envied ready-to-wear, silk, jewelry, and fashion accessories specialists, as well as overseeing IT and data.

According to exchange filings viewed by Bloomberg, Guarrand owned 10,147 Hermès shares at the end of last year, meaning he sits on assets worth more than €21.6 million ($23.9m).

The Hermès brand—launched by harness-maker Thierry Hermès in the late 1830s—now spans three notable surnames with more than 100 people in its lineage.

Those three surnames are Dumas, Guerrand and Puech—the latter of which counts Nicolas Puech among its members.

Puech was valued by Forbes in 2024 at $13.6 billion and made headlines when he announced he wanted to gift his fortunes to his gardener.

Since then, Puech launched legal proceedings against his former wealth manager after Puech claimed the money had vanished, and he had no idea where to.

While Puech is a family member who has become estranged from the Hermès brand, other descendants still helm the business.

Executive chairman Axel Dumas is a sixth-generation member of the family that founded the fashion house, and has held the position since 2013.

Hermès did not immediately respond to Fortune’s request for comment.

Europe’s luxury dynasties

The Hermès family and its sprawling offshoots—estimated to be worth $151 billion—aren’t a unique case in Europe.

In fact, a significant group of billionaire Gen Z and Millennial nepo babies of the continent have inherited their wealth thanks to the fashion world.

For example, three of the six Del Vecchio children appeared on Forbes‘ billionaires list for 2024: 19-year-old Clemente, 22-year-old Luca, and 28-year-old Leonardo.

Each has a fortune of $4.7 billion courtesy of their 12.5% stake in Luxembourg-based holding company Delfin, run by their late father, the senior Leonardo del Vecchio.

Likewise, Germany is home to 29-year-old Sophie Luise Fielmann and her $2.7 billion fortune—who appeared on the list for the first time courtesy of the majority shareholding position she has in her late father’s business, eyewear company Fielmann AG.

Hermès success

Unlike many of its competitors, Hermès has continued to perform despite a general downturn in demand for luxury goods.

In its June half-year report, the brand announced revenue of €7.5 billion, up 15% at constant exchange rates.

Demand across regions showed “remarkable momentum” despite the “challenging context,” Hermès added, with the exception of Asia, where demand in China has dipped.

Sales in Japan, Europe and the Americas continued to be “robust.”

“The solid first‐half results, in a more complex economic and geopolitical context, reflect the strength of Hermès’ model,” Dumas said. “The group is confident in the future and is continuing to invest, to pursue its vertical integration projects and to create new jobs, while remaining true to its values.”

The narrative is at odds with other luxury brands, which, in addition to seeing a downturn in demand in China, are also blaming a lack of consumer confidence for falling sales.

Luxury hotels investing more in branded merchandise is a tantalizing source of additional revenue but also a savvy

I was on vacation a couple of weeks ago on Mykonos when I spotted a 30-something tourist carrying two bags. One was Dior; the other was a brown tote from the Four Seasons Astir Palace in Athens. I immediately started doing the math: The Dior tote sold for about $3,000, or roughly as much as a two-night stay at the Four Seasons in peak season this summer.

Later that day, the woman next to me at a seaside bar in Little Venice dressed down a sundress with a cap from Hotel du Cap-Eden-Roc, a top resort in the south of France, 1,200 miles away from Greece.

Back in London, I started seeing hotel merch even on the tube. Among all the designer backpacks and Daunt bookshop totes, commuters were also carrying bags from the One&Only and the Newt in Somerset.

Wearing swag from a beloved property had suddenly become the hottest fashion flex.

Luxury hotels are investing more in merchandise, whether it’s a branded pink and green $218 nylon tote from the Beverly Hills Hotel, an $88 baseball cap from Le Bristol Paris or even $770 silk pajamas from the Peninsula London.

It’s a tantalizing source of additional revenue, but according to Barbara Czarnecka, associate professor at London’s South Bank University Business School, it’s also a savvy marketing play. “It is making consumers feel like they will somehow join the club if they buy a product branded by a luxury hotel.”

In other words, these fashionable accessories function the same way a concert T-shirt does: It reminds you of a fun time while also signaling your status-symbol values. Long after the Instagram stories from that epic European summer vacation have faded, the merchandise will keep telling everyone that you’ve been to a top hotel—or at least bought the T-shirt.

Over the past decade, fashion influencers have cycled through various “-core” trends. Normcore was a reaction against maximalism and branded fast-fashion labels. Gorpcore drew inspiration from sporty, utilitarian clothing, bringing the great outdoors in. And who could forget last summer’s bubble-gum-pink Barbiecore?

Let’s call this current moment “resortcore.”

Aman, considered by many to be the most luxurious hotel company in the world, says its e-commerce business has doubled in size over the past year. Among other items, its online shop sells a $2,700 monogrammed “A” tote bag. Mandarin Oriental offers a cotton-and-leather bag with the group’s signature fan embossed on it for £126 ($166). The Hotel Eden in Rome hawks a handmade yellow canvas bag inspired by the city of Rome for €450 ($500).

“Merchandise is a status symbol for a lot of people, depending on whether the hotel is an upscale or meaningful destination,” says Leora Lanz, associate professor at Boston University’s School of Hospitality Administration. She says hotel swag gives off a sort of “if-you-know-you-know” quality, especially for millennial and Gen-Z consumers.

Jennifer Alfano, a New York stylist who writes The Flair Index newsletter, agrees. “Our souvenirs are different now,” she says. “It’s harder to find unique things when you’re traveling—everything gets a little ubiquitous. This is a way to bring something back that you can’t find anywhere else.”

Hotels have been selling merchandise in shops on-site for years, of course. But the recent push into e-commerce was partly fueled by the extended closures during the Covid pandemic, when brands were looking for ways to connect with guests who couldn’t visit in person.

But once guests piled back into hotels at the end of the lockdowns, the trend morphed from mere memento to statement maker.

Stephanie Phair, the former chair of the British Fashion Council, says she’s seen more luxury brands expand into hospitality partnerships. “People have been wanting to put their money into travel and experiences post-Covid,” she says. “So fashion brands and hotels have been thinking, ‘How do we capitalize on this now?’”

Luxury loungewear company Olivia von Halle recently launched a capsule collection with the Peninsula London that includes £620 silk pajamas inspired by the hotel’s sweeping views over Hyde Park. American fashion brand Frame teamed up with the Ritz Paris; Hailey Bieber has been spotted wearing its baseball cap.

In July, Paper London partnered with Four Seasons Hampshire, selling items like stylish £150 sweatshirts and bags that go with the country-chic vibe of the resort. “Despite this being our inaugural venture into the hospitality branded merchandise realm, several styles from the collection sold out within the first few days,” says Philippa Thackeray, founder and CEO of Paper London.

The five-star Paris hotel Le Bristol also launched its first clothing line this year. The collection includes €150 leggings adorned with the crest of the hotel alongside matching tops.

Valentina de Santis, the Italian hotelier behind the celebrated Passalacqua and Grand Hotel Tremezzo, both in Lake Como, has started collaborations with fashion designer Emilia Wickstead and Italian luxury brand Brics. On her e-commerce site, Sense of Lake, de Santis sells pieces inspired by the gardens and shoreline of Lake Como, such as a €550 carry-on with a vintage-looking print of the hotel’s facade on the front. She expanded the product line less than a year after winning the inaugural best hotel in the world award at the 50 Best Hotel awards in 2023.

“We created the boutique as a promise both for our guests to take unique memories away with them and for every traveler that wanted to begin dreaming about Lake Como,” de Santis says.

This team-up just makes sense, says fashion executive Phair. “Passalacqua speaks to everything that’s beautiful and refined about the Italian lifestyle on Lake Como, and Emilia Wickstead speaks to the same audience. It’s a perfect collaboration in this way,” she says.

There’s even a growing secondhand market for these items. Katherine Hughey runs the retailer Alabaster Jones, which sells vintage coasters from the Ritz London for $250 and tote bags from the Beverly Hills Hotel. She says that interest in hotel merchandise in particular has risen since she started her business in 2017. “We do market research—a lot of these hotels are just extremely popular,” she says. “The pieces make great conversation starters.”

Phair says she thinks this trend will continue, as fashion brands try to reach their audience where they’re at—and for many of those clients, where they’ve been this summer is at many of these luxury hotels. “Fashion is one of those categories that really crosses over,” Phair says. “It’s been in sports, music, and now it’s moving into experiences and hotels.”

Total orders rose 2.9%, contrasting with economists’ expectations for a 1% drop

Orders at German factories rose unexpectedly in July, adding to the previous month’s rise and offering a rare bright ray for the troubled manufacturing sector.

Total orders rose 2.9%, according to figures put out Thursday by Germany’s statistics agency Destatis. That contrasted with economists’ expectations for a 1.0% drop, per a poll of estimates compiled by The Wall Street Journal. It adds to a 4.6% increase in June.

However, stripping out large-scale orders, July’s total was a little lower on the month. Overall orders were boosted by a near doubling in orders for transportation equipment such as military vehicles, ships, trains and aircraft, but excepting cars and other automotive vehicles.

“New orders were up 86.5% on the previous month [in this segment] due to several large-scale orders,” Destatis said.

An uptick in orders bodes a little better for production in the following months. Output from Germany’s factories is still struggling to get back on its feet after recent years’ energy shock, with demand limping and competition rising from the world’s other manufacturers. Production figures for July will be set out Friday, with economists sketching a slight decline on the month after June’s increase. Further ahead, the sector remains set for sharper contraction, according to a closely-watched survey of manufacturers.

Luxembourg-based group says it generated €9.4bn from exiting investments in first half

European private equity group CVC Capital Partners reported a jump in activity in its first results since going public in April, with more new investments and more exits from previous deals.

The Luxembourg-based group said it generated €9.4bn from exiting investments in the first half, up 108 per cent. It also spent 63 per cent more of its investors’ cash — €13.4bn in total — in the first six months of this year compared with the same period last year.

The results from CVC are the latest sign that the private equity industry is emerging from a two-year downturn in which higher interest rates made buying and selling companies harder.

In the second quarter, Apollo, Blackstone, KKR and Ares invested a combined $162bn, as conditions for the industry began to brighten.

CVC, which manages €193bn across investment strategies ranging from buyout to credit, twice postponed its listing before going public in April. Its shares have climbed 15 per cent since the IPO.

Established more than three decades ago by a group of former Citibank executives, CVC is one Europe’s largest private equity firms. Its portfolio of investments includes Lipton Teas, the Six Nations rugby tournament and Spanish football league La Liga.

Last month, the firm was part of a consortium that agreed to buy UK investment platform Hargreaves Lansdown for £5.4bn. 

Despite the pick-up in activity, the buyout industry is sitting on more than $2tn of dry powder — capital that has been committed by investors but not yet deployed by private equity firms, according to data provider Preqin.