PARIS — Diamonds and Formula One racing may seem a strange mix for a winning recipe, but the two successfully have combined for Swiss watch firm Tag Heuer.
The brand, closely associated with motor racing and high-precision wristwatches (Steve McQueen wore a Tag Heuer in the 1961 racing movie "Le Mans"), has grown into a serious player in diamond-dappled women's timepieces, too.
Sales of women's watches have doubled in recent years, thanks to vigorous efforts at the LVMH Moët Hennessy Louis Vuitton-owned brand to develop the segment, including a redesign of all of the women's watches. Tag Heuer also has reaped benefits from high-profile advertising campaigns featuring actress Uma Thurman and tennis sensation Maria Sharapova.
The U.S., where Tag Heuer has logged consistent high-double-digit growth across all categories, has driven the boom in women's. Now, worldwide president Jean-Christophe Babin said the company is stepping on the accelerator elsewhere around the globe. Women's watches generate 50 percent of the growth for the brand, he said.
"We hadn't really addressed women," said Babin, adding that about one-third of Tag Heuer's sales in value terms come from women's products. "To reach 40 percent for women's could be an interesting level."
Babin said the company, without abandoning its core men's market, would plan more events catering to women and ramp up advertising, as well. Last year, for example, the firm was host for a photography exhibit in Manhattan called "Strength and Beauty Embodied by Avant-Garde Women."
With women accessorizing more and more, Ulrich Wohn, Tag Heuer's North America president, said he saw no reason why the company shouldn't continue to gain traction with them.
"Watches are the new handbag for a lot of women," he said. "When a bag has a six-month shelf life, a watch seems that much more attractive because it lasts."
Wohn said American women, in particular, continue to be attracted by the trend for larger men's-style watches, which benefits Tag. "They love diamonds, too," he added, pointing out that watches with diamonds were selling best.
Babin said the average price of a women's watch from Tag Heuer is $2,300, about $400 more than the average for a men's timepiece, the difference being the diamonds.Tag Heuer's overall average prices have appreciated recently — about 14 percent in the U.S., for example — because of the growing vogue for mechanical watches among men. Even if he were keen to keep the brand in its traditional sweet spot of watches that cost $1,500 to $3,000, Babin said Tag Heuer could gain ground in the $3,000 to $5,000 segment. "We think we can become a major player there."
LVMH doesn't break down sales for its watch and jewelry brands, which include Zenith and Chaumet. Operating profits last year at the division skyrocketed 281 percent to 80 million euros, or $108.1 million at current exchange. Most of that is attributable to Tag Heuer.
Babin said he did not foresee a slowdown. Swiss luxury watches have had an unprecedented boom, ignited by strong wealth creation around the world. Most of the key players, from Cartier to Omega, have reported high-double-digit growth. Average prices also have climbed as customers seek complicated pieces and jeweled styles.
Wohn said the U.S. was poised for more growth. "Watch wardrobing is a new phenomenon and it's here to stay," he said. "Men think they need a Swiss watch now when they enter the workforce. We are an accessorizing society. And young people get the watch thing."
The U.S. made up 34 percent of Tag Heuer's business last year. "There's a lot of growth left for the brand in the United States," Wohn said.
Elsewhere, Babin said Tag Heuer was building its retail presence, though there are no plans for a network of stores in Europe or the U.S., where the bulk of the watch trade is with wholesale partners.
In the emerging Chinese market, for instance, Babin said the brand wanted to open five to 10 stores a year over the next five years, bringing the number of stores from the existing seven to as many as 40.
Tag Heuer operates about 50 stores, mostly in Asia, including India, Thailand and Japan. A new retail concept will be unveiled in Hong Kong in the fall. Babin declined to provide any details, saying he wanted to keep the store a surprise. The design will be used in all of Tag Heuer's new stores.Watch retailers have praised the brand's high level of innovation. At the last watch show in Basel, Switzerland, for example, Tag Heuer presented 47 new products. Most of the development has been redesigns in the company's perennial classic watches. "We're like Porsche when it revisits the Carrera," Babin said. This year, Tag Heuer introduced one of the most complicated quartz watches ever made. The Aquaracer Calibre S Regatta, replete with a yacht regatta countdown function, has 230 parts.
Though Babin provided few details, he said Tag Heuer would launch a significant men's watch this month in the South of France that would be associated with race car driving. "I can only say it will be part of our push in the $3,000 to $5,000 range," he said.
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