Affordable Luxury Supports Swiss Watchmakers

That tension is visible in the market. LVMH’s US-listed shares have climbed sharply from around $104 in late July to about $141, while Coach owner Tapestry and Richemont-backed Cartier’s parent have also recovered from earlier weakness, reflecting expectations that brand power can still translate into pricing power even in a slower environment. Yet technical indicators suggest the rally has become more uneven: LVMH’s recent drop has pushed its relative strength index into oversold territory, while Tapestry and Richemont remain above their 50-day moving averages, signaling steadier investor confidence in the more accessible end of luxury.

For watchmakers, the “affordable luxury” lane is especially important because it preserves the halo effect of Swiss heritage brands while capturing demand from consumers who may not be ready for the flagship price tier. That can be seen across the sector’s recent price action, with Richemont holding above both its 50-day and 200-day moving averages and its momentum still positive, suggesting investors see enduring demand for brands such as Cartier and its adjacent jewelry and watch franchises. LVMH, by contrast, has been more volatile, with its price slipping well below its 50-day average, a sign that even market leaders are not immune to a repricing of luxury growth expectations.

The macro backdrop is doing part of the work. Adalytica trade signals show extreme fear in both the S&P 500 and the US dollar, a reminder that risk appetite remains fragile and that foreign exchange moves can affect tourist demand and international purchasing behavior. A softer or more volatile dollar can aid US buyers overseas, but it can also complicate reporting and planning for globally diversified luxury groups. For Swiss watch brands, export-driven demand remains tied to travel, Asian luxury spending and the willingness of consumers to trade up, all of which are less predictable than they were during the post-pandemic rebound.

The bull case is that “affordable luxury” is not a concession but a growth engine: it helps brands acquire first-time buyers, retain aspirational customers and keep factory utilization healthy without eroding prestige. The bear case is that an overreliance on entry-level products risks diluting exclusivity and could leave brands exposed if the middle-income customer weakens further.

For investors, the key issue is whether affordable luxury can sustain margins while offsetting slower demand at the top. If it does, brands with strong pricing discipline, broad distribution and recognizable icons should keep outperforming. If not, the current rally in luxury names may struggle to extend beyond a sentiment-driven rebound.