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June 21, 2007

Breaking news: World's most expensive Timex watch costs $73,900 — but the face says 'Versace'


Long story short: You won't be able to prove it's a Timex 'cause the venerable maker of low-priced timepieces makes these ultra-luxe versions for none other than Versace and Valentino, whose name — but not that of Timex — appears on the watches' faces.

Above, a Timex ad from the 1950s next to its Versace DV One watch.

According to Stacy Meichtry's article in today's Wall Street Journal, which notes in passing that Timex has quietly been making and selling Versace-branded watches since 2005, "Timex can't trumpet its ties to fashion companies too loudly or customers might think twice about shelling out cash for watches that aren't actually made by the high-end brands."

Next thing you know they'll tell us the watches contain lead and were made in the Thomas and Friends toy train factories in China.

Here's the newspaper article.

    How Timex Plans to Upgrade Its Image

    Fashion House Deals May Help Watchmaker Break Into New Market

    Some of Italy's most exclusive fashion houses have found an unlikely business partner: Timex, the brand known for cranking out mass-market timepieces that "take a licking but keep on ticking."

    This morning, family-owned Salvatore Ferragamo SpA will open the doors of its medieval palazzo on the banks of the Arno River in Florence to Timex Group Chief Executive Joe Santana, who is expected to unveil a deal whereby the U.S.-based company will produce high-end watches for the Italian fashion house.

    Closely held Timex has similar partnerships with two other illustrious names in the Italian fashion scene — family-owned Versace SpA and Valentino Fashion Group SpA, recently taken over by private-equity firm Permira — to make watches in the $2,000 to $55,000 range. It inked the Valentino deal in February, and has made watches for Versace since 2005. Through these pacts, Timex, whose own brand of watches normally retail between $80 and $130, hopes to make its way into the higher echelons of the watch industry, where business is booming and rising prices are buoying profit margins. But the company will need to tread carefully in promoting its ties with the luxury labels, given its history as a mass-market manufacturer.

    It is an "assault on the high end of the watch market world-wide," Shannon Eis, a spokeswoman for Timex said in an email about the deals, without giving details.

    Ferragamo confirmed the deal but declined to elaborate. Versace and Valentino declined to comment for this article.

    For fashion houses, entering the watch business is a fast way to boost revenue and profit — especially for companies like Ferragamo and Versace, which are considering public listings on the Milan stock exchange and therefore will have to woo investors. For watches, as with perfumes and sunglasses, designer brands justify a high premium for an otherwise mass-market product. Watchmakers also often pay lucrative royalty fees for the right to license high-end labels. Through license deals, fashion houses don't have to pour capital into setting up a watch-manufacturing business.

    "The [watch] market is very competitive," Versace CEO Giancarlo Di Risio said in an interview earlier this year. "You really need a specialist." Versace originally made its watches in-house, but as part of a wide-ranging restructuring plan for the Italian label, Mr. Di Risio in 2004 sold its Switzerland watch-making division to Timex, which now produces Versace watches under license.

    The partnerships carry risks for both sides, however. Seeking a higher-paying customer is a major about-face in strategy for Timex, which forged its image half a century ago as a producer not of finely crafted objects of desire, but of blunt machines that could withstand "torture tests."

    Timex has taken a number of steps upmarket. In October, the company acquired Vincent Bérard SA, a so-called haute horology brand that produces high-end, limited-edition watches with retail prices that start at about $13,400.

    Timex has also started making watch models with sophisticated functions such as "perpetual calendars" that track the days of the month for an entire year without having to be adjusted. Although many of these watches are still priced at the low end of the market at about $100, Timex is trying to appeal to a trendier audience by advertising them in glossy fashion magazines.

    It could take years for Timex to get its new higher-priced brands off the ground, says Rune Gustafson, chief executive of the British unit of Interbrand, a global branding consulting firm that is part of ad holding company Omnicom Group Inc.

    Timex, based in Middlebury, Conn., and tracing its history back to 1854, doesn't boast the Swiss watch-making legacy that helps elite manufacturers such as Rolex create an aura of exclusivity. Swiss watchmakers, Mr. Gustafson says, "are all marketing from a heritage of engineering excellence. I don't think Timex has that."

    Stepping into the image-obsessed world of luxury may also prove somewhat of a culture shock for Timex.

    Mr. Gustafson says Timex can't trumpet its ties to fashion companies too loudly or customers might think twice about shelling out cash for watches that aren't actually made by the high-end brands.

    The upside for Timex could be huge, however. By manufacturing watches for luxury brands, Timex gets quick access to the most lucrative end of the watch market without having to build a brand from the ground up.

    The Timex-made and Versace-labeled DV One watch ranges in price from about $6,700 for a basic model to $73,900 for a diamond-studded edition. Although the Timex name doesn't appear anywhere on these watches, some analysts say the company's links to the fashion labels will boost the cachet of its basic Timex brand.

    "If they've got a big marquee brand, they can persuade a retailer to take one of their smaller brands that they're trying to develop," says Jim Hurley, a luxury-industry analyst with New York-based fashion-retail consulting firm Telsey Advisory Group. "It means they can get more shelf space."


Now, aren't you glad you passed on that Cartier tank in favor of the Timex-made "Versace" you've been waving around?

My favorite line from the story above: "Versace and Valentino declined to comment for this article."

Tell you what — there are not a lot of happy campers over at those two companies' headquarters as they survey the wreckage of their formerly stealth approach to luxury on the cheap.

"Have you driven a Jaguar lately?"

June 21, 2007 at 10:31 AM | Permalink


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The Swiss watchmaker Vacheron Constantin marked its 250th anniversary in 2005 with the world’s most expensive watch. Its name refers to one of the historical sites of the venerable company, located next to the current Maison Vacheron Constantin on the Quai de l’Ile. At $1.5 million....
But Patek Philippe’s 5002 (which is the world’s most complicated wristwatch) also retails for $1,500,000 US dollars. In fact, it is even rarer with only 4 in existence (1 in each metal).

Posted by: ANKUR SHARMA | Apr 19, 2008 12:47:09 AM

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