* Hermes watches warns about possible industry double dip
* Patek Philippe says too early to call end of downturn
* LVMH watch CEO says retailers could still delay purchases
By Astrid Wendlandt and Silke Koltrowitz
BASEL, March 23 Rising watch sales, boosted by
wholesalers restocking, may not be a true sign that the downturn
is really over, industry executives said on Tuesday.
The head of Hermes (HRMS.PA) watches said concerns about
rising taxes in Europe to help cut bulging state debts could
crimp luxury spending while the head of Patek Philippe said
consumer demand for watches worldwide remained fragile.
"We could still be in the middle of the tunnel," Patek
Philippe Chairman Thierry Stern told Reuters at the watch
industry's biggest annual fair in Basel. "It is too early to say
the crisis is behind us."
Luc Perramond, Hermes watch chief executive, said the Swiss
watch industry could still see a double dip after showing signs
of recovery in recent months.
He declined to give a precise sales growth forecast for the
current year saying only he expected an increase only if current
positive market trends continued.
Concerns about the weak state of the industry were echoed by
Philippe Pascale, head of LVMH (LVMH.PA) watches and jewellery,
who acknowledged that part of the uptick was due to retailers
filling up empty shelves.
He noted that rising orders did not necessarily mean
consumers were back in the shops.
"Our orders (at the Basel fair) this yeat beat our
expectations but we have to see how the sell-out (when a watch
is sold to the end user) will be in the second quarter," Pascal
"If markets start coughing again, retailers will postpone
Some watch brands such as LVMH's Hublot and Zenith secure
the bulk of their annual sales at the Basel watch fair.
However, Pascal forecast revenues at his division would be
up by more than 20 percent on a like-for-like basis in the first
Pascal also stressed that the revenue jump came against a
very low basis as LVMH watch and jewewllery sales fell 40
percent in the first quarter last year.
Swiss watch exports rose for the first time in January this
year after suffering their biggest slump in two decades in 2009,
dropping to 2006 levels, and in February, they continued their
ascent with a 14.2 percent increase.
"We are in a slight recovery phase," Pascal said.
He said demand in the United States, which collapsed during
the downturn, was slowly starting to pick up but Japan, another
big luxury market, remained difficult.
Hermes's Perramond said he was worried about a possible
real-estate bubble in China, the main engine of growth for the
luxury industry for the past two years.
"One has to remain cool-headed," Perramond said in an
interview with Reuters in Basel.
Hermes watch sales, which make up 5 percent of the group's
total sales, fell 12 percent last year at constant currencies.
The cautious tone contrasted with Swatch Group UHR.VX
watch brand executives who said this week they expected 2010 to
be another record year, with some such as Longines saying sales
could rise by as much as 25 percent.
Longines and Tissot were the only two Swatch brands that
enjoyed any growth last year, their executives said.
(Editing by David Cowell)