WATCHES AND JEWELRY
Formed in 1999, Watches and Jewelry is the most
recent LVMH business group. It includes TAG Heuer,
Ebel and Zenith, three highly esteemed Swiss watch-
makers, plus Montres Christian Dior, also made in
Switzerland. Chaumet and Fred, two of France’s most
venerable jewelers, are part of this business group,
as is the De Beers LV joint venture, created in July
2001, which will open its first store in 2002. Omas,
Italy’s famous designer of writing instruments
acquired in 2000, rounds out the division’s portfolio
and strengthens a pen business already initiated by
Christian Dior and Chaumet.
STRATEGY AND OBJECTIVES Each company invested significant efforts to
“Our business group reflects LVMH’s goal to build improve its product portfolio, retaining the most
a significant position in watches and jewelry with promising lines and giving greater focus to the
a portfolio of prestigious and profitable brands. high-end, more profitable markets. We also added
In 2001, we fine-tuned the strategies of these to our international network, pooled more admin-
recently acquired companies, strengthened their istrative services, and improved coordination of
respective market positioning and management, our industrial activities.
and provided shared resources and methods. For 2002, the watch and jewelry brands of LVMH
Last year the Watches and Jewelry business have set an ambitious growth target supported
group withdrew from certain production and by a stronger organization and additional
retailing activities on behalf of non-LVMH brands. resources. The differentiated and complementary
Philippe Pascal market positionings of these brands will offer
This was a strategic decision to ensure future
profitable growth. optimum synergies.”
58 LVMH Annual report 2001 WATCHES AND JEWELRY
C HARACTER TRAITS
The value of the Ebel brand
combine watchmaking expertise
with the esthetic design
imperatives. In 2001, its 90 th
anniversary year, Ebel received
a new visual brand identity and
revamped all of its advertising
and publicity tools.
Its advertising campaign
emphasizes its elegant product
design and attention to detail.
60 LVMH Annual report 2001 WATCHES AND JEWELRY
Net sales for the Watches and Jewelry business group totaled 548 million euros .
Excluding sales for third-party brands,
net sales for LVMH brands stood at 517 million euros .
Income from operations amounted to 27 million euros.
Investments Net sales
by geographic region
EUR million
in %
9 16 26
(EUR million) 1999 2000 2001 Other markets 8% France 7%
Rest of Asia 10%
Net sales 135 614 548
Rest
of Europe
Japan 13% 33%
Income from operations 5 59 27
Operating margin 4% 10% 5%
North and
1999 2000 2001 South America 29%
Highlights
s New senior managers were s The De Beers LV joint venture s The Ateliers Horlogers, s TAG Heuer acquired the
appointed at Chaumet, Fred, was formed in July with head- located in La-Chaux-de-Fonds, metal bracelets division of
Omas and Zenith. quarters in London. It com- Switzerland, was created from Morellato Spa, its principal
pleted its strategy and initial the merger of Benedom and supplier for the last ten years.
s The Watches and Jewelry busi- plan for store openings. PLD, the Ebel division special- The new subsidiary has been
ness group continued to integrate ized in “private label” watches. named Artelink.
its international retail network by
setting up subsidiaries.
The Watches and Jewelry business group laid the activities for non-LVMH brands. In 2001, sales of
foundation for profitable growth in 2001 in line LVMH watch brands grew everywhere but in the
with its objectives. It now has enhanced manage- United States, while also gaining market share.
rial expertise necessary to develop both creativity The business group broadly expanded its interna-
and an entrepreneurial spirit, improve the posi- tional presence and improved the coordination
tioning of each company and product line, and and pooling of its administrative services. It
gradually implement the appropriate operating beefed up its sales and marketing teams and
synergies. began to set up a multi-brand customer service
Against the backdrop of an economic downturn, network around the world designed to improve
LVMH’s watch and jewelry companies rigorous- customer satisfaction. By the end of 2001, LVMH
ly continued their two-pronged strategy, which Watches and Jewelry had a global organization
has had a short-term adverse impact on net sales covering all of Europe, the Americas, Northern
and profits, but has paved the way for future Asia, Japan and the Asia-Pacific region. In 2002,
growth. The first task was to implement more TAG Heuer and Montres Christian Dior will
selective and qualitative retailing by building open the first stores in China and India.
relationships with the best specialty retailers. The In 2001, we also improved our manufacturing
second was to reduce some production and retail organization by identifying common resources,
WATCHES AND JEWELRY LVMH Annual report 2001 61
such as prototyping capacities, and by sharing the design, like the Monza Calibre 36, equipped with
best methods for developing investment plans, a movement that operates at 36,000 beats per
improving productivity, and negotiating better hour and developed in collaboration with Zenith
purchasing terms from suppliers. Manufacture.
With the prestigious Zenith Manufacture, cur- The Alter Ego watch for women introduced in
rently being modernized, the Ateliers Horlogers 1999 has become an established performer, sup-
created in 2001, TAG Heuer’s specialized sub- ported by an advertising campaign that features
sidiaries plus Artelink, LVMH’s watch brands Marion Jones, Zhang Ziyi and Ines Sastre pho-
now have strong capacities for developing and tographed by Jean-Baptiste Mondino. With the
manufacturing movements and supplying high sporty Link model set in diamonds or combining
quality watch cases, dials and metal bracelets. steel with gold, TAG Heuer continued to expand
Based, on all these developments, the Watches its female customer base.
and Jewelry business group has set an ambitious
Performance values
target for growth for 2002.
TAG Heuer continued its association with sports
TAG Heuer is in 2001 as the official timekeeper for the Formula
TAG Heuer
one of Switzer- 1 world championship and the world alpine ski
land’s leading watchmakers and the world’s championship. The brand is also a partner of the
leader in prestige professional sports watches. Formula 1 McLaren Mercedes team, the most
award winning team for the past 20 years and The Watches and Jewelry
Offering high quality, high-tech and leading edge
business group has invested
style inspired by a tradition of innovation going ranked second worldwide. Additional partner-
heavily in its workshops in Locle
back 142 years, TAG Heuer watches appeal to ships will be formed in 2002. and la-Chaux-de-Fonds
young, trend-setting active consumers. The advertising campaign initiated in 2000 will in Switzerland. LVMH’s watch
After rapid growth in the previous two years, yield in early 2002 to a campaign modeled after brands now have strong
TAG Heuer’s legendary campaigns that featured capacities to develop and
TAG Heuer refocused its strategy toward more
manufacture movements as well
selective retailing in order to exert better control its values of prestige and performance symbolized
as to supply cases, dials
over its brand image. This decision and the impact by distinctive watch models and well-known and metal watchbands.
of the events of September 11th in the United celebrities.
States, its biggest market, resulted in lower net As part of its continual focus to retailing, TAG
sales in 2001. Nevertheless, the company gained Heuer renovated the décor and displays in its
additional market share everywhere else. The
company now controls over 90% of its worldwide
retail outlets through its exclusive subsidiaries
and those carrying other LVMH brands. Sales
grew significantly in Japan, France, Great Britain,
Spain, Italy, Australia and Thailand as customers
purchased higher-end products across the board.
Successful leaders
and promising new products
TAG Heuer’s leader 2000 series celebrated its
twentieth anniversary and continued to attract
customers and increase sales. The introduction of
the Kirium F1, which combines design and tech-
nology, widely surpassed sales forecasts and
strengthened the brand image of leading-edge
style and features.
Sales of the classic Monaco, Carrera and Monza
models rose sharply, confirming TAG Heuer’s
strong potential for brand expansion into prod-
ucts that bring classic watchmaking to sports
62 LVMH Annual report 2001 WATCHES AND JEWELRY
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WATCHES AND JEWELRY LVMH Annual report 2001 63
exclusive boutiques, making them exhibit spaces Technical advertising
that showcase the brand’s entire collection. A new and selective retailing
store opened in London and will be followed by Zenith launched its advertising comeback with a
another in New York in the spring of 2002 after a campaign focused on the quality of its move-
delay caused by the September 11th attacks. The ments and its watchmaking expertise and sup-
company selects its multi-brand points of sale ported by new displays installed at high-end
with particular attention and, with the same atten- watch retail stores. The new sales force and deal-
tion to quality and esthetic appeal, it installed a ers received training in watchmaking so they
new generation of high-end display cases. could capitalize on the brand’s exceptional
expertise.
Prospects for 2002
Today, Zenith controls 85% of its retail network.
In January 2002, TAG Heuer introduced TAG In 2001, the brand entered Japan and the United
Heuer Sportsvision, a line of licensed sports eye- States where it was warmly received by the best
wear, offering design and advanced technology retail shops.
that reflect the performance values associated
In 2002, Zenith Manufacture will make signifi-
with the brand. The gold Silmo that recognized
cant capital investments to meet the growing
this innovation confirms its potential.
demand for mechanical movements and the spe-
In 2002, TAG Heuer will focus on supporting its tra- cific complications generated by Zenith’s growth
ditional positioning in prestige professional sports and the growth of other LVMH brands.
watches and continue to develop more high-end
As a symbol of traditional fine watchmaking,
lines. Growth will be driven by a revamped organi-
Zenith will continue to expand and develop high-
zation, the opening of new markets like China and
end products with a more active ad campaign and
India, and increased investments in marketing.
selective partnerships with the best retailers. Its
loyalty to tradition will not prevent the introduc-
Zenith Manu- tion of new designs that will be presented at the
Zenith
facture was foun- 2002 Basel trade show.
ded in 1865 in Locle, in Switzerland’s Jura
region. It joined LVMH in late 1999 and special-
Developed by
izes in manufacturing fine watch movements. In Montres Christian Dior
Benedom and
2001, Zenith began to modernize its production
Ateliers Horlogers, Christian Dior watches
shops and refocus on marketing mechanical
achieved growth of over 30% in 2001, despite the
watches, abandoning its quartz watch activity
slow economy that heavily impacted the fashion
and making sharp cuts in its sales of movements
watch segment. Thanks to close collaboration
to other companies. Despite this refocusing,
with Christian Dior Couture, the watch lines
Manufacture maintained net sales and sales of
continued to expand, adding new styles and earn-
the Zenith grew 10%.
ing increased media attention.
The rising values of fine watchmaking The Chris 47 watch, the exclusive creation of the
Zenith makes two of the world’s most prestigious Christian Dior Couture studios under the direc-
mechanical movements for fine watches. El tion of John Galliano, was the year’s most origi-
Primero is an automatic chronograph and the nal new watch in terms of both design and color
world’s first to measure time to one-tenth of a sec- and an immediate success. Dior’s Malice, Diorific
ond, ticking at 36,000 beats per hour. The Elite and Riva watches also performed very well with
extra flat automatic movement is only 3.28 mil- strong support from effective marketing and sales
limeters thick and functions at 28,000 beats an promotions. The additional production capacity
hour. Product lines equipped with these move- at Ateliers Horlogers will enable Dior to meet the
ments posted sharp growth in sales despite the growing demand for its watches.
economic slowdown. Zenith improved its sales The consolidation of Montres Christian Dior
across the world, except in Italy where the with- within the LVMH group has been an opportuni-
drawal from quartz watches was not entirely off- ty to prepare for sustained and more controlled
set by sales of mechanical watches. growth in many markets.
64 LVMH Annual report 2001 WATCHES AND JEWELRY
WATCHES AND JEWELRY LVMH Annual report 2001 65
Strategic developments Founded in 1911
Ebel
and famous for its
New women’s models designed to harmonize
watchmaking excellence and elegant design, Ebel
with Dior Couture, like the Dior 66 inspired by its
began in 2001 to reap the fruits of its integration
latest collection and the new Malice in a round
within the LVMH group, which strengthened its
version, will help fuel growth for Montres
organization and clarified its strategy.
Christian Dior in 2002. The brand will continue
to focus on high-end products as it reduces the The industrial reorganization initiated in 2000
size of its collection and launches jeweled models. resulted in significant gains in productivity. At the
same time, the company ended its private labels
The year 2002 will also be devoted to strategic
activity and stopped producing movements for
developments leading to the introduction of new
third parties.
women’s and men’s models in 2003 that reflect
the styles of Christian Dior Couture and The brand also continued to integrate its retail
Christian Dior Homme. network, creating a subsidiary in Japan. It now
controls nearly 80% of its sales to retailers.
This famous jew-
Chaumet A new focus on high-end products
eler located in The workshop’s secret
place Vendôme in Paris implemented an in-depth At the 2001 Basel Trade Show, Ebel unveiled a
review of its operations in 2001 to build a firm specialized and improved product line, centered At Place Vendôme,
foundation for future growth. Chaumet, with its on three of the nine lines existing in 1999. The Chaumet’s jewelry craftsmen
rich and colorful history, archives and exception- Classic Wave line, a redesigned version of the perpetuate their expertise,
al jewelry pieces, plans to enhance its brand iden- Sport Classic, was especially well received by handing it down from one
generation to the next with the
tity and grow systematically. Sales were up 13% in retailers and wholesalers who liked its elegant
concern for quality and detail that
2001, due primarily to stronger performances in curved lines and the comfort they provide. The have been the Company’s
Japan and Korea. Beluga and Beluga Manchette lines were complet- hallmark since it was founded
Chaumet added to its Anneau and Plume ed with many gold and jeweled models that were in 1780.
contemporary design lines, while significantly highly appreciated. The 1911 line, remodeled Five years of shop apprenticeship
with new dials and leather straps, strengthens out are necessary to acquire the
expanding its line of rings for the Japanese mar-
the men’s line. Generally, Ebel began to improve skills which make Chaumet’s
ket. designs so distinctive.
its product mix with the use of precious metals
The Class One line, combining steel and dia-
monds in a creative design and launched in 1999.
was the top performer in the watch segment. The
Class One chronograph for men was particularly
popular.
The brand focused its advertising efforts on its
leader products, concentrating on France and
Japan where the approach proved effective.
Chaumet did not open any new boutiques, but it
did integrate the management of its “shop-
in-shops” in Japan, and initiated a very tightly
controlled retail activity with specialty retailers.
New momentum
Chaumet’s growth in 2002 will accelerate, sup-
ported by strategic initiatives that include a strong
visual identity, a new boutique format, and sever-
al new stores, notably in Japan, new watch and
jewelry lines, and increased emphasis on adver-
tising and public relations.
Chaumet will enter new markets very gradually
as it develops the teams required for a very tar-
geted expansion.
66 LVMH Annual report 2001 WATCHES AND JEWELRY
and diamonds. At the same time, the company Since it joined
Omas
redirected its retailing toward the best points of LVMH in May
sale, particularly in Germany. Although US sales 2000, Omas, a well-known pen manufacturer in
were adversely affected by the events of Bologna, has undertaken a serious strategic
September 11th, Ebel’s sales rose in France, Great review to build a firm foundation for future
Britain, Spain, Central America, the Middle East growth.
and in Southeast Asia. The company sharply reduced its private label
manufacturing and made the investments essen-
A new ambassador tial for its growth. Its priority markets are Italy,
Ebel’s new strategy was reflected in an advertising France and the United States, the top markets for
campaign emphasizing its elegant product design luxury writing instruments.
and perfection of detail. Maggie Cheung, a At the Frankfurt Trade Show in January 2002,
famous Chinese actress, is now serving as spokes- Omas introduced its new product line which is
woman for the brand. now refocused on the top symbolic lines that
Ebel will continue its new strategy, strengthened made its reputation. The legendary 360 and Arte
by the strong performances of its subsidiaries cre- Italiana models are two of these lines and they
ated in 2000 and 2001. The year 2002 will usher will be expanded in new designs, materials and
in many new high-end and jewelry models for colors. Omas will continue to design very limit-
existing lines as Ebel completes preparations for ed series reserved for collectors, like Paris Ville
the major new products to be launched in 2003. Lumière unveiled in 2001.
New display cases will be set up in the specialty
A top contempo- stores and Omas plans to open a boutique in
Fred Paris
rary jeweler, Fred Milan in 2002.
continued its refocusing strategy in 2001 by end-
ing sales of third-party products in its network of In July 2001,
De Beers LV
stores. In the fourth quarter, three new points of LVMH and De
sale opened in the key locations of New Bond Beers obtained approval from the European
Street in London, the Ginza in Tokyo, and rue Commission for their joint venture to create a
Faubourg Saint-Honoré in Paris. These new chain of jewelry stores under the De Beers name.
stores increase the number of boutiques to ten, all Formally established under the name De Beers
with a décor reflecting the exclusive architectural LV, the company set up its headquarters in
London and assembled an experienced manage-
format first used at place Vendôme in 1999.
ment team. Its goal is to build a global network of
In 2001, Fred enhanced its product line with new stores that will make De Beers a leader in jewel-
variants of the Mouvementée and Success rings. ry. The De Beers name is very well known in
The highly successful Marine ring has a very major markets and LVMH brings its expertise in
modern design with unusual color tones. The 36 developing luxury brands to the joint venture.
line of watches and chronographs performed par- The company plans to enter the diamond jewelry
ticularly well. market from an original angle, both in terms of
creative inspiration and store concept. In late
2001, the market positioning strategy, creative
Confirmed style
management, and the initial store opening plan
Fred updated its advertising campaign combining were being finalized.
creativity and sensuality to feature its latest cre- De Beers LV’s mission in 2002 is to design and
ations. This will continue in 2002. produce the product lines of the future brand,
develop the concept and décor for its stores, and
In the spring of 2002, Fred Paris will unveil a new set up management systems and advertising cam-
line of watches in keeping with its contemporary paigns. The first store is slated to open in London
and creative positioning. Three “shops-in-shops” at year end. s
will be opened in Japan and France during the
year. With a revamped management team and
collections featuring an established style at an
affordable price, Fred Paris should enjoy signifi-
cant growth in 2002.
68 LVMH Annual report 2001 WATCHES AND JEWELRY
WATCHES AND JEWELRY LVMH Annual report 2001 69