TAG Heuer sees 5-10 pct sales growth next year

Wed Nov 4, 2009 9:51pm IST

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* Looks to Asia and Middle East to revive sales

* 2009 sales to fall by high single digits-low double digits

* September, October sales higher than same period in 2008

By Amran Abocar

DUBAI, Nov 4 (Reuters) - Swiss watchmaker TAG Heuer, part of French luxury goods group LVMH (LVMH.PA), sees sales growth of between 5 and 10 percent next year as it looks to Asia and the Middle East to help revive its flagging performance.

Group Chief Executive Jean-Christophe Babin also said the worst of the decline in its key U.S. market was behind it.

"The whole year for the industry will be negative. Consumer demand will probably be minus 10 percent, minus 15 percent depending on the brand," Babin said. "On TAG Heuer, I think it will be a high single digits or low double digits decline, so

(it will be) pretty contained in terms of consumer percentage.

"If we do things properly ... we should grow significantly next year. Probably anywhere between 5 to 10 percent." Babin, speaking after the launch of a limited edition luxury mobile phone, said sales in September and October were higher than the same period in 2008 and were likely to rise in November.

"The hurt was more last year," he said of its key U.S. market, noting sales there had begun to decline in late 2007.

Yet the group is not expecting a blockbuster Christmas season. "If it's 3, 4, 5 percent it would be a good performance," he said.

TAG Heuer, which has expanded rapidly in the Gulf Arab region since 2000 and has outlets in Kuwait, Qatar and the United Arab Emirate, targets 10 percent sales growth by 2014.

The watchmaker is the No. 3 brand in the Middle East behind Rolex and Chopard, which Babin attributes to its popularity among the region's women.

LUXURY DEMAND

"The Middle East is a very feminine market when it comes to luxury market," he said. "A lot of ladies do buy for themselves and receive as gifts, watches."

Demand for luxury goods has held up relatively well in the Gulf, a region renowned for its glitz and glamour. In Dubai, home to the world's biggest mall, TAG Heuer has two outlets and it last week opened another in the UAE capital, Abu Dhabi.

"In just a few years ... we've provided TAG Heuer with much better visibility than before," Babin said. "The perception now of local people in the Middle East is getting closer to what it's been in the western world."

Demand for Swiss watches has fallen sharply as customers worry about the economy and their jobs. Swiss watch exports fell 26.4 percent in the first half of 2009, according to the Federation of the Swiss Watch Industry.

Babin said TAG Heuer, which opened 25 boutiques worldwide in 2009, had made temporary layoffs in its manufacturing division and had frozen hiring.

But Babin said the export data reflected retailer appetite, which is weak as stores opt to shift existing stock instead of ordering new goods, rather than consumer demand.

"Consumer demand is probably down only 10 percent, which is not small, but not that dramatic," he said. "We see now the situation improving, especially from Asia, Middle East and these two months, the USA ... seems to have bottomed out and is gradually coming back better."

(Editing by John Irish and David Holmes)

((amran.abocar@thomsonreuters.com; +971 4 391 8301; Reuters Messaging: amran.abocar.reuters.com@reuters.net)) Keywords: TAGHEUER/MIDEAST

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