Tough times force watch companies including Timex, Citizen to cut targets

NEW DELHI: It seems to be a bad time for watch makers in the country. A slowing economy and negative consumer buying sentiment has adversely impacted sales for most brands, leading them to settle for lower growth targets for the near future. While the luxury segment is betting on its niche consumer base for ensuring value growth, the mass-to-premium segment has been worst hit.

The impact has been more for international brands, owing to the depreciation of the Indian currency against the dollar, as most of them import 100% of their products from abroad. So the rupee depreciation has made the watches more costlier.

Timex Group, which is among the few international watch makers to have an assembling unit in the country, said it has reduced its growth target from 25% to around 15% for the current year. “Growth has slowed down because the consumer is not optimistic about the future,” Timex India MD & CEO, V D Wadhwa, said.

The company, which markets brands like Timex, Helix, Nautica, Versace, Salvatore Ferragamo and others in the country, has also softened its expansion targets to ensure profitability. “Now our whole concept is that if there is no profit, then we will do no business. With just have two fashion brands in the portfolio, we can’t get in deeper in the market,” Wadhwa said.

Currently Timex, which is present in the lower price range as compared to other brands in its portfolio, contributes almost 90% to the overall sales. The company is expecting it to be a major contributor in the near future as well with the luxury sector expected to remain underpenetrated.

For companies targeting the mid to high segment, analysts say growth will be muted in light of the weak rupee. The luxury watch segment in India is still at a nascent stage with most players present in the top metros through a select few outlets. A slowdown in growth will further impact expansion plans.

Citizen Watches, which sells products in the range of Rs 10,000-45,000, said it is doubtful if the company would be able to record similar growth as last year. The company, which entered India over 13 years ago, currently has only 25 company-owned outlets. “We are in the process of adjusting to the weak rupee at the 55-56 levels.

The entire watch industry is struggling due to consumers cutting down expenses,” said Aditya Sengupta, marketing manager at Citizen Watches India. The company has already postponed its plans to open exclusive outlets in a bid to minimize expenses.

Tag Heuer watches, which saw a 4.8% increase in exports of its Swiss Watches to India, said while growth is good for a country with 5.5% GDP growth, the impact of the inflation and rupee devaluation has been bad. The company is waiting for the festive season for a healthy pick-up in sales.