Reuters Summit-UPDATE 1-Watchmakers raise prices as euro falls

Thu Jun 3, 2010 12:44pm EDT

(For other news from the Reuters Global Luxury Summit, click here)

* Ulysse Nardin, Audemars Piguet raised prices in euro zone

* Both brands see sales growth this year

* Ulysse Nardin has been approached by a big luxury group

(Adds comments from Audemars Piguet, analyst quotes)

By Silke Koltrowitz

PARIS, June 3 (Reuters) - Independent luxury watchmakers Ulysse Nardin and Audemars Piguet have raised prices in the euro zone by about 4 percent to counter the drop in the euro.

"We changed all our prices in the euro zone a week ago. We took an exchange rate of 1.40," Rolf Schnyder, Ulysse Nardin president and chief executive, told the Reuters Global Luxury Summit in Paris on Thursday.

The Swiss franc has risen 4.6 percent against the euro EURCHF= since the beginning of the year, but intervention by the Swiss National Bank has so far kept the franc from climbing above the 1.40-threshold against the euro.

"Of course there's the pressure to adjust pricing upwards in Europe. This trend is going to persist. We had to make a little adjustment in March," said Audemars Piguet Chief Executive Philippe Merk. "We increased prices by 4 percent."

He said further adjustments might be necessary in the second half of the year.

Asked about the impact of the European debt crisis on demand, Schnyder said: "I'm not so worried about it. It affects more the medium-priced brands because the middle class are the people who suffer the most."

For Merk, the European market is losing momentum, not only temporarily but also in the long run.

"Europe compared to Asia and also the Americas has slowed down. I think it's not only the euro, it's the general economic climate which is not as strong as five or ten years ago," he said. "We expect less growth from Europe in the future."

SALES UP

For Ulysse Nardin, sales turned positive at the end of last year and the United States market is recovering strongly with sales up 35 percent in May against a low comparison base, Schnyder said. Russia and China were also doing very well.

"I expect sales to go up by 20 to 25 percent this year," Schnyder said. Ulysse Nardin offers high-end watches that sell for an average price of 18,000 Swiss francs ($15,620).

Entry-prices start at about 6,000 francs but some models, like the Genghis Khan Tourbillon Minute Repeater, can cost 740,000 francs, Schnyder said.

Audemars Piguet, whose sales were down about 10 percent last year, posted a rise of 10 percent during the first four months of 2010.

"The motor in this industry is the Chinese consumer. That's certainly very positive," said Merk. "The second smaller engine I believe is Latin America, which showed excellent growth last year, a trend that continues to persist this year," Merk said, noting also a strong rebound in the United States and the Middle East.

NOT FOR SALE Analysts have speculated that Ulysse Nardin could be an interesting target but Schnyder said he expected it to remain independent.

Schnyder, who was born in 1935, said retailers preferred working with independent companies because they were more flexible and could make decisions quickly.

Schnyder, who bought the brand in 1983, said he had a successor in mind but would not say who it was.

(For summit blog: blogs.reuters.com/summits/)

($1=1.152 Swiss Franc)

(Editing by David Cowell)

((silke.koltrowitz@thomsonreuters.com; +41 79 840 5106; Reuters Messaging: silke.koltrowitz.reuters.com@reuters.net)) Keywords: LUXURY SUMMIT/ULYSSENARDIN

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