Hermès Has 20% Gain in U.S. Watch Sales

Hermès, the French luxury goods group, posted an 8.2% increase in revenues to US$1.04 billion (2.1 billion euros) for 2001, it says.

The company's best-performing division was watches. While some luxury groups posted small or no gains in watch sales for 2001 because of economic slowdowns and the impact of the Sept. 11 attacks, Hermès's watch sales rose 13% worldwide (about 155,000 watches) and more than 20% in the United States. The U.S. market accounts for 10% of Hermès's business.

It was "a very good year" for the business, Hermès USA president Guillaume de Seynes told JCK, and "provides the momentum" for continued growth here. Aiding that growth is a new marketing program aimed at retailers and consumers. The program features annual photo albums of Hermès collections by some of the world's leading fashion photographers, starting this year with photographic considerations of the Cape Cod watches by South African Koto Bolofo (see photo).

Hermès USA already sells its watches through 14 Hermès boutiques and more than 60 non-Hermès retail outlets. It aims ultimately to have a network of some 150 retail outlets across the country.

Company officials attributed the luxury brand's strong gains to several factors. One is Hermès's longtime reputation for quality among watch connoisseurs. "People want confidence in what they're buying, to know it will last for years," says Hermès USA sales director Emmanuel Rafner. Other reasons are fashionable designs, the informality of—and strong focus on—customer service in Hermès USA shops, and strong after-sale support for watch buyers and retailers, says Karl Kreiser, director of Hermès USA's watch business.

Another influential factor is Hermès's price competitiveness in the luxury watch market. Though its Swiss-made watches retail for as much as $20,000, most of its business is in the $1,000 to $3,000 range, noted Kreiser. Examples include its newest models, which debuted at this year's international watch fair in Basel, Switzerland. Among them are the women's steel Paprika (based on a 1970s model) with "H" lugs and straps in several colors ($950), and additions to Hermès's successful Cape Cod line (which originated the now-popular double-wrap straps). The latter includes the steel Cape Cod Chronograph on strap ($1,600) and the Deux Time with wraparound straps ($1,500 to $2,000).

Watches have been a major Hermès product since the 1920s—preceding its worldwide business in jewelry, scarves, and other luxury goods—when it added fine timepieces (made for it by prestigious watchmakers) to its finely sewn leather straps. In 1978, Hermès opened its own watch manufacturing plant in Bienne, combining French design with Swiss expertise in watchmaking.