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Tag Heuer latest luxury brand to tweak prices on forex
[BASEL] Tag Heuer, French luxury group LVMH's biggest watch brand, said on Wednesday it planned to freeze prices in some markets while it cuts them elsewhere in a move to balance out the impacts of the recent jump in the Swiss franc.
Prices will drop an average 8 per cent in Switzerland, China, the United States, the Caribbean, and Central and South America, 7 per cent in the UK and 13 per cent in Hong Kong, but Tag Heuer said it would not raise prices in the eurozone, Japan or Singapore.
"Tag Heuer is seizing the opportunity of the recent appreciation of the Swiss franc to rebalance its international price policy," it said in a statement.
The news follows a decision by French fashion house Chanel this week to hike prices in Europe and cut them in Asia to counter the euro's decline and discourage customers from buying fakes, while Swiss family-owned watch brand Patek Philippe was reported to have already made similar moves.
The Swiss National Bank's surprise decision two months ago to abandon its longstanding 1.20 Swiss franc per euro cap caused the currency to surge to 0.86 per euro. The franc is currently trading at 1.064 per euro.
The euro has lost almost a quarter of its value against the dollar in the last 12 months, meanwhile, including 12 per cent since the start of this year.
"While price harmonisation is easier said than done and forex volatility tends to make things quite complicated, we believe the era of global, unique pricing in the industry is not that far-fetched nor that far away," HSBC luxury analysts wrote. "Chanel and Patek are showing the way."
The analysts said they did not expect many other brands to increase prices significantly short-term in Europe "as there is a risk of alienating what little is left of local European consumer interest".
However, they expected most moves to come in Asia, "with likely further brands trimming in Hong Kong and in mainland China, but also likely increasing prices in Tokyo".
Patek Philippe did not immediately respond to an email seeking comment.