Interview: Franc Makes Jaeger-LeCoultre Mull Second Price Hike

LE SENTIER, Switzerland: Luxury watchmaker Jaeger-LeCoultre, a brand of Compagnie Financiere Richemont SA(CFR.VX), could increase prices for the second time this year to offset the continued strength of the Swiss franc.

The brand, which sells watches from CHF5,000 to CHF400,000, will review its pricing strategy in the next few weeks, marketing director Stephane Belmont told Dow Jones Newswires.

"The Swiss franc is an issue for everyone, and we have adapted our prices," said Belmont. "For our people it is very challenging with strong changes in the currencies, the franc against the euro, the RMB or the dollar."

Jaeger-LeCoultre is following what is happening in the market, and will decide "very soon" whether to increase prices as the strong franc hits its margins, Belmont said.

The Swiss franc has weighed on Swiss industry in recent months as the currency has soared in value driven by its safe haven status. Rival watch maker Swatch Group (UHR.VX) has complained the currency could knock more than CHF500 million from its sales in 2011.

Jaeger-LeCoultre increased its prices for the first time this year in April, and Belmont said the rises had not hit sales so far. The Jaeger-LeCoultre brand is strong enough to withstand price increases, while the company will be reasonable in the increases it introduces, he added.

Despite the currency issue, Belmont expects Jaeger-LeCoultre to achieve record sales in 2011.

He declined to reveal figures, but said they were in line with the overall watch industry, which has seen exports rise 21.7% in the first five months of 2011.

"For us, it is a very good time. Overall sales and volumes will both be higher this year than last year," said Belmont.

Jaeger-LeCoultre has been trying to increase its upmarket positioning through an emphasis on watch making and by adding complications to its watches. This is helping it to raise average selling prices, and could see it compete increasingly with companies such as privately-held Patek Philippe and Swatch's Breguet brand, said Belmont.

The company could also expand further in Asia, where it is a relative newcomer to the market, the Middle East and North America by increasing the number of boutiques it operates. It has 12 owned and operated shops, as well as up to 38 franchised sales outlets, but wants to add around 10 new boutiques a year over the next three years with a particular focus on the Middle East, and the main cities in Europe and North America, said Belmont.

-By John Revill, Dow Jones Newswires; [phone] ; [e-mail]