The fashion watch category is as hot as it ever was.

A number of medium-priced lines of sport wrist watches are selling well in department stores. These include the Ann Klein, Ann Klein II, Fossil, and Guess lines, as well as licensed cartoon-character watches. Most of these watches are selling in the $20-$200 range, and some industry executives believe that sales are coming at the expense of higher-priced watches. In addition, Joe Boxer and Timberland will launch wrist watch lines in 1995.

And, according to industry vendors and retailers – a segment in which merchandise typically retails in the $20 to $200 range – brands are currently the biggest news of all.

According to a variety of retailers, brand names have become a critical factor in determining fashion watch purchasing patterns. In the meantime, the price issue, which heretofore had been considered paramount, has become less important.

Much of the action right now, stores say, is happening in the Anne KIein, Anne Klein II, Fossil and Guess lines, as wen as novelty-oriented licensed lines, Looney Tunes and Disney among them.

In addition, merchants say they are always willing to test new entries. Some recent brand-name newcomers cited by stores include Nautica, Liz Claiborne, Swiss Army Watches and Hugo Maxx. Balancing out this group is a slowdown in a few other brands, such as Swatch, which some stores said has not been performing up to par of late.

Watches are one of the more explosive driving forces for main floor business,” said Kim White, merchandise manager for watches at Federated Merchandising, the buying arm for Federated Department Stores. “We’re positioned for another year of tremendous growth.

“Consumers are now building a watch wardrobe for their varied needs – career, casual Friday wear, weekend, sport and young-at-heart looks,” White noted. “It’s hip to wear a Looney Tunes watch with an Armani suit.”

Guess and Fossil are anchor brands in Federated Stores, according to White. These are followed closely by Anne Klein and Anne Klein II, which are expected to grow even more this year as a result of the return to ladylike dressing.

Sportly merchandise has also been scoring big, White said.

“It’s still `Clinton Chic’ to wear a plastic sport watch,” she noted. “And the more functions the better.”

J.C. Penney is also going strong with its fashion watch business.

“While our growth may be slightly less than last year, we’re still projecting good double-digit gains this year,” said Don McKean, merchandise manager for fashion and better watches.

Business is coming from a combination of the big brand names as well as newer entries such as Hugo Maxx and even Penney’s own private label line, Arizona.

He added that although the fashion watch category continues to grow, this is probably to the detriment of the better segment of the market, which includes such brands as Seiko, Bulova and Citizen. This segment struggled to finish last year with flat sales, McKean said, and he expects that performance to be repeated this year.

Among big-brand vendors in the fashion watch field, most reported very healthy increases in 1994 and are projecting similar growth this year. They claimed increases averaging 20 to 50 percent for last year, despite the fact that Christmas sales came very late in the season. Many are particularly optimistic because of early reports of strong retail sell-throughs in January, traditionally one of the slowest months of the year.

“The launch of bracelets and metals last fall greatly contributed to our success,” said Mark Odenheimer, vice president for the Anne Klein and Anne Klein II divisions of E. Gluck.

Those categories will be further exploited this year and, he added, “We’re being very aggressive in terms of focusing on high-performing areas like interchangeable sets and classic strap business.”

Mark Shell, vice president of sales for E. Gluck’s Armitron division, which also includes its licensed Looney Tunes and other cartoon character lines, credits his products’ growth to a surge in items priced at retail in the $20 to $30 range combined with a rebound in sport business.

Armitron’s Instalite sport line, which has a dial illumination feature, will be expanded this year to include more casual lifestyle and rugged outdoor looks with leather, suede and metal bands retailing for $35 to $45, he said.

On the novelty side, the firm has created the licensed collection of watches for “Batman Forever,” the third feature film about the caped crusader, opening in late June.

Fossil continues its focus on brand name and image expansion as well as product diversification, according to Peter Benanti, vice president of marketing.

To fill out its core watch line, this year the company is adding two new watch collections – Defender and FSL – as well as a sunglass line.

“Geared to urban sport kids, we hope FSL will attract an untapped customer niche,” Benanti said.

“We’re looking at snow boarders, mountain bikers, surfers, skate boarders and rock climbers – those leading-edge alternative lifestyle consumers that demand functionality,” he noted. “We took the utilitarian trappings of this market and made it into fashion.”

FSL’s retail price range of $85 to $90 is slightly higher than that of the Fossil brand. The firm will begin shipping it at the end of May to leading U.S. sporting goods stores as well as department stores.

Benanti declined comment on the Defender line, saying only that it will be shown at the May accessories market.

Timex is coming off a particularly strong year in 1994, which saw the launch of its licensed Nautica brand. Two more licensed collections will bow this year. The Joe Boxer line will hit stores in time for the back-to-school season, with Timberland arriving for the holidays.

Justine Jennings, manager of fashion watches, said Joe Boxer is geared to the teen and young adult market – a new market for Timex – with retail prices ranging from $40 to $100.

She would only divulge that the unisex line would represent a “unique way of telling time” and noted that the name, while known to consumers, hasn’t “maxed out yet.”

Timberland will be directed to a more upscale element. With prices starting at $60 and going as high as $200, the collection is geared for active outdoor enthusiasts, according to Susie Watson, Timex’s trend analyst.

Unlike sport, which focuses on endurance and timing, Watson said the outdoor market is geared to multiple fabrications like waterproof leather and nylon combinations, with style rather than functionality being key.

“Timberland is a global name with a strong image, which we intend to support with a large advertising campaign,” Watson added, noting that Timex will participate in the Outdoor Retailer trade show in Nevada in August in order to target sporting goods stores and other current Timberland-approved outlets as well as department stores. The print ad campaign will break in November and December.

Guess expects its projected 48 percent growth this year to come primarily from its new Waterpro line and from a new product category to be launched in August, according to Mickey Callanen, president of The Callanen Group, which produces Guess watches under license. He wouldn’t discuss any details except to say that the firm’s national advertising program, which began last Christmas, will also be expanded by 25 percent to support it.