Louis Vuitton 2003 Annual Report Download - page 56

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54 LVMH ANNUAL
REPORT 2003
WJ
EWELRY
ATCHES
&
AN ENCOURAGING YEAR-END
In 2003, for the second straight year, the
jewelry and timepiece market was faced with an
unusually difficult economy. The crises in the
Middle East and the SARS epidemic in Asia
adversely affected sales in the principal tourism
regions. Furthermore, the decline of the dollar
and the yen and the increase in the Swiss franc
generated an increase in the value of the watch
supply, confining their appeal to a more limited
number of customers.
Faced with this situation, the Watches and
Jewelry group reduced structural costs, optimi-
zed inventories within its distribution chain, and
focused its resources on priorities in each brand
and in strategic countries. With this approach,
marketing expenses were maintained, and a
number of new products were successfully laun-
ched.
Net sales remained at 2002 levels on a like-for-
like basis (down 9% on a current currency
basis). Unfavorable currency trends accounted
in large part for the decline in operating
income, in the absence of significant hedging
between the Swiss franc, the dollar and the yen.
In a remarkable achievement, Dior Watches and
Chaumet recorded double-digit sales growth in
2004. In the fourth quarter, the branch recor-
ded organic growth of 7% in net sales, primarily
the result of TAG Heuer’s steady return to
growth.
TAG HEUER
TAG Heuer, the world’s leading company for luxury
sports watches and chronographs, is a profitable
brand which, in the past two years, has been
refocusing its product line, closely controlling
distribution and improving its merchandising.
In 2003, TAG Heuer recorded a decline in net
sales, due largely to unfavorable foreign exchange
effects. Because of the brand’s vitality, it quickly
benefited from the market recovery observed in
the second half of the year. Thus, in the third quar-
ter, it posted double-digit organic growth. Its
performance was particularly dynamic in
the English-speaking markets, one of its priority
targets.
EXCELLENCE AND PERFORMANCE:
TAG HEUER CONTINUES ITS MISSION
OF CREATIVE TIMEPIECE INNOVATION.
Inspired by the values in the world of sports--
excellence, performance and precision-- the
brand pursued its mission of creative timepiece
innovation in 2003, rolling out the multi-func-
tion Microtimer, which is accurate to one thou-
sandth of a second, and the Chrono 2000
Aquagraph. It also successfully relaunched its
historic Link line, partnered with Tiger Woods.
In the legendary classic line, the Autavia was
added to the collection of historic models
Monaco, Monza and Carrera, equipped with
mechanical movements. Lastly, in December,
TAG Heuer launched the new Fo rmula 1, a col-