Luxury watches are back, especially if they are encrusted with diamonds or endorsed by celebrities, living or dead. This holiday season, some of the richest Americans parted with more than $10,000 for a timepiece, joined by plenty of the only slightly more downtrodden, for whom a $1,000 watch was suddenly the gift to give.
While the luxury watch business - from jeweled timepieces by Tiffany and Harry Winston to sports models by Tag Heuer and Breitling - was hit hard after the Sept. 11 attacks, pollsters, retailers and watchmakers say this was the Christmas that brought the return of the buyer who wants more than just something to tell the time.
"Jewelry, especially fancy, high-priced watches, rose 35 percent over last Christmas," said C. Britt Beemer, chairman of America's Research Group, which polls both shoppers and retailers. "For corporate executives, C.E.O.'s and Wall Streeters, the watch is now as much a status symbol as the car they drive. It was the big gift they gave themselves this Christmas."
At Saks Fifth Avenue, $1,000 watches by Michele sold out - and did well throughout the country; buyers were attracted to the diamonds that circle the watch, the brightly colored starfish skin and alligator bands, and, of course, the low price - relative to the Cartier and Tiffany diamond-encrusted watches, that is.
The country's leading watch dealers said in interviews that consumers will want more watches with diamonds on the outside as well as more technically advanced sports watches like the Tiger Woods Link Calibre 36 by Tag Heuer, which sells for a cool $5,000 (and is sometimes sold out), and the Emergency watch by Breitling, complete with a beacon to summon rescuers. Buyers must sign a waiver absolving the manufacturer of responsibility if the beacon is set off accidentally and the Coast Guard responds en masse.
People are also requesting more "entry level" watches, which, dealers say, run from $295 to $600. And the more complications - industry code for elaborate functions like the emergency beacon - the better.
The watch industry is gearing up to give customers what they want.
Companies like Tag Heuer and Harry Winston are expanding both up and down the income scale. Tag Heuer is working with Mr. Woods to develop a new golfing watch (90 percent of golfers do not wear watches, Tag Heuer says) and has reintroduced the Monaco, the watch worn by Steve McQueen when he raced cars at Le Mans, which retails for as much as $12,000. Ten days before Christmas, it also introduced a line of less expensive watches called Formula One, with red, blue and black dials, for $600 to $800.
Harry Winston now sells what a spokeswoman called "classic, everyday watches" for $6,000 to $11,000. But Winston has not deserted its billionaires: it will introduce the Opus IV at the Basel Watch Fair in April. The price? Around $200,000. Not to be outdone, Louis Vuitton, which started making watches a year ago, is introducing the Tourbillon on Feb. 10, for roughly the same price.
Rolex, often called the Rolls-Royce of watches, has not made its reputation on new models - its traditional ones often have waiting lists. But a few months ago, even Rolex introduced a new limited edition, with a ring of green instead of black around the bezel. Cartier also came out with a new watch for the holidays: the $3,450 Roadster for women.
Watch retailers are definitely in good spirits these days.
"We had a very strong holiday," said Andrew J. Block, senior vice president for marketing at Tourneau, one of the country's biggest watch dealers. "I can't give you the numbers, but the increase was well above what the analysts were projecting: 3 to 5 percent. With some brands, the increase over last year was in the double digits."
Louis Fortunoff, an executive vice president at Fortunoff, said the fourth quarter was "driven by men's sports watches: Breitling, Tag Heuer and Omega." On the ladies' side, Mr. Fortunoff said, Baume & Mercier and Movado were the winners.
But Raymond Weil, another status brand, is still struggling, he said. "They didn't come up with any new styles, and what they had they didn't ship well; they weren't at the top of their game."
For Mr. Fortunoff, it is still a little too early to say the whole luxury watch business has turned the corner. "One quarter does not a turnaround make,'' he said. "But certainly there are signs of improvement, and more excitement.''
The experts, including company executives, wonder if there are already too many expensive brands, with more, like Burberry and Ferragamo, joining the crowd.
"There's a lot of new entrants," said Daniel Lalonde, president of LVMH Moët Hennessy Louis Vuitton's watch and jewelry division in the United States. "The barriers are not difficult. If you have cash, you can develop a brand name, and put some diamonds on it."
The dealers agree. "From Anne Klein to Zippo, the market is flooded with watch brands," said Mr. Block of Tourneau. "The competition is to get into the marketplace. I can't carry them all. I don't have unlimited space."
This year promises to be, if anything, more turbulent than 2003, with virtually every fancy watch company, every fashion designer, vowing to jettison watch divisions that do not make enough money.
The last week in December, LVMH, the world's largest luxury goods company, said it would sell Ebel to Movado for $47.3 million after a hard-fought campaign to bring this Swiss company, whose watches sell for $1,500 to $10,000, back to profitability. LVMH paid a reported 150 million euros for Ebel in 1999, beating the Swatch Group and other suitors. The signature watch for Movado, based in Paramus, N.J., is a bare black-faced watch embedded with a diamond.
"Ebel was a good brand with lots of name recognition, but like many brands that started to falter, Ebel had lost its DNA," Mr. Block said. "Ebel was a strong women's watch, but they started to get away from that - last year's big launch was a men's watch."
While Tag Heuer boasts of double-digit sales growth in North America over the last two years, the overall operating losses widened at the LVMH jewelry and watch group in the first six months of 2003. In dollars, the luxury watch group lost $47.1 million. But executives point to a turnaround: in the third quarter, the watch and jewelry segment of LVMH rose 8 percent from the period the year before, and executives predict the momentum will continue into 2004.
Zenith and Chaumet, also owned by LVMH, are being repositioned, with Chaumet going back to selling more jewelry, and Zenith returning to its expensive hand-crafted roots.
"The whole watch business has been very challenging for the past three years," said Mr. Lalonde of LVMH. "If you look at the expensive Swiss watch business, the sector has been in a decline."
In the last three years, to increase sales, Tag Heuer reduced the number of styles it offered: from more than 900 to 150, to foster a sense of rarity - something that Rolex has been able to do.
Dealers say another sought-after watch is the Panerai, an Italian naval watch with trendy, oversize cases, selling for an average of $4,000. Panerai is owned by Compagnie Financière Richemont, the world's third-largest luxury conglomerate, which owns Cartier, Baume & Mercier, Van Cleef & Arpels, Piaget and Jaeger-LeCoultre, among others.
Then there is Gucci, whose watches stumbled before regaining their place in the world of fashion watches: those bought more for their look and their name brand than for their insides. The watches regularly sell for more than $1,000.
While women's watches are often part of a interchangeable jewelry wardrobe, a watch may be a man's only piece of jewelry. And increasingly, men are fascinated by the craftsmanship; Patek Philippe, whose watches sell for $10,000 and up, do not come encrusted with diamonds. They are full of complications, which retailers say make men dream of a certain scene at, say, Jean Georges.
"When you go into a restaurant and the maître d' sees it, maybe he'll give you a better table,'' Mr. Block said. "He can't see the Porsche parked outside. He only sees the watch."
That's the same day that the new flagship store opens in New York City--which will be the largest Vuitton store in the world! I'm sure the launch coincides with that.
