NYON, Switzerland — Impacted by the strong dollar, Swiss watch brand Hublot is looking into a possible 7 percent to 8 percent drop in retail prices in the U.S. market, its strongest in the world, the company’s chief executive officer Ricardo Guadalupe said Tuesday.
“At the moment the U.S. dollar is a little bit too expensive. I’m thinking of maybe reducing the prices in the U.S.,” Guadalupe said in an interview on the sidelines of the inauguration of the company’s new 20 million Swiss franc, or $20.6 million at current exchange, manufacturing facility here. The event was attended by Bar Refaeli, Lapo Elkann and Brazilian football legend Pelé, all of whom are ambassadors for Hublot.
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Pressed if the drop would be in single, or double digits, the ceo countered, “I don’t know; we are studying it. It could be maybe 7 to 8 percent.”
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He indicated the anticipated move was a first for him. “In my career, it’s the first time I would reduce prices, but I would say that if it’s really necessary from a monetary exchange problem, I think we can do it.”
Asked in what price range this might occur, Guadalupe said, “It’s going to be the full range, it’s going to be from $6,000 to let’s say $50,000 retail, across the board…coming soon, before the end of this year.”
Hublot, part of LVMH Moët Hennessy Louis Vuitton, manufactures collections such as Big Bang, Classic Fusion, King Power, MP Collection and Spirit of Big Bang.
In the aftermath of the de-coupling of the Swiss franc from the euro in January, Hublot has already this year ushered in two price changes, with an increase in euro prices and a cut in prices in China due to the depreciation of the yuan. Guadaloupe summed up all the various price adjustments as, “we are really correcting the difference by adapting our retail price based on the currency.”
Both Guadaloupe and Hublot’s chairman Jean-Claude Biver said they have ambitious plans for the U.S. market.
“The U.S. is our strongest country market in the world. We have been developing our retail business in the U.S. and this has been the key element of the success. Our next big, big plan is to open a boutique on Fifth Avenue. We’re going to have a big flagship store coming soon,” the ceo said, adding, “We are going to do a big launch for the opening of our boutique on Fifth Avenue, probably in April next year. It’s going to be huge.”
He also emphasized, “We are present in Dallas, we are investing in Houston, we’re investing in Atlanta, in Orlando. So really, in places where no other watch brands are investing at the moment, except Rolex, and that’s it almost. Those are potential [cities] where we can sell our watches, but, of course, we need to make the brand known, and we’re in the process of doing it.”
Biver was equally bullish. “Our plans are to develop the U.S. market because even if the U.S. market is doing well, and is our biggest market today, it has still a lot of potential for us.”
Jean-Francois Sberro, managing director for Hublot of America Inc., said the company’s growth in the U.S. has been running at around 5 percent, when overall growth in the sector has been flat for timepieces above $10,000. Timepieces above $100,000 have posted bigger sales, he said.
Sberro admitted overall growth has dampened, since Hublot grew by 50 percent in the previous three years.
Aside from the U.S. and Europe, Biver said other important markets are Japan and China, which he conceded was “our weakest in the world.”
“We are doing 8.6 percent of turnover in China, which is ridiculous when the Swiss watch industry does 30 or 35 percent, so we have to develop China,” he said.
Regarding the downturn in the Chinese market because of the crackdown on corruption and the weakening economy, Biver cautioned, “Yes, China is on a downturn and this is something people make a big confusion because the Chinese are also buying abroad. And when France makes 40-plus percent, you know it’s not the French that buy more watches; it’s because more Chinese are coming to France and more Chinese are buying in France. So, at the end of the day, what we lose in China we might gain elsewhere.”
With the addition of the new facility in Nyon, Biver said production capacity could increase from 38,000 to 50,000 timepieces a year in the next five to seven years.
Similarly, Guadaloupe said,”This facility has been built to integrate our production vertically for us to be able to produce more of our own movements, more of our own cases with new materials. This is really the real objective to integrate knowhow.”
But he noted Hublot would take its time on e-commerce.
“We are having projects to sell online. Of course, I would say the online business is made on products you are confident you want to buy. Your decision is made and you can buy it online. Watches at the higher-end level, like us, sometimes you want to see different models, you want to touch them because you are spending $10,000, $15,000 on a piece. So there is still the temptation to still see what you are getting, before buying it.
“I think there is some work to do,” he added. “But we really want to go into it, but maybe not next year, but the year after, we will be with our Web store.”