WATCH TALK FORUMS banner
1 - 8 of 8 Posts

·
Banned
Joined
·
18,138 Posts
Discussion Starter · #1 ·
Guys

This came in on my alert a few days ago. You may of course have read it elsewhere too. I thought to post it here since Swatch is the big daddy of Omega.


Y'all be well and enjoy a happy Friday pals :)

ZIN




The Swatch Group, the world’s largest watchmaker, and Tiffany & Co., one of the globe’s leading luxury retailers, announced Dec. 2 that they have formed a new watch company to “further the development, production and worldwide distribution of Tiffany brand watches.” The strategic alliance, in discussion for over a year, is for 20 years, and can be extended another 10 if certain conditions are met.

The agreement is “a path-breaking strategic move,” said Nicolas G. Hayek, Sr., chairman and co-founder of The Swatch Group. Swatch and Tiffany are “again setting trends. It allows without any financial capital transaction the maximum utilization of manufacturing and distribution resources of both partners."

“The Swatch Group is the best conceivable strategic partner for Tiffany’s long-planned re-entry into watch distribution,” said Michael J. Kowalski, Tiffany chairman and chief executive officer. “It’s the leader in the high-end watch business with unparalleled distribution capabilities and experience in the luxury segment of the watch business.”

Nicolas Hayek Jr., chief executive officer and president of the group management board of The Swatch Group said the two companies will “collaborate on design, engineering, manufacturing, marketing, distribution and service. We fully expect to see Tiffany & Co. strengthen its position among the best known and most respected watch brands worldwide.”

According to the announced agreements, the Swatch Group will incorporate the new watchmaking company in Switzerland; it will be wholly-owned by Swatch Group. It will be authorized to use Tiffany’s trademarks and operate under the Tiffany name.

Tiffany & Co. will participate in the new company’s before-tax profits and have one seat on its five-member board of directors, and seats on its product design and marketing committees. The watches will be produced in Switzerland, using Swatch group’s technological expertise and manufacturing capacities. The watches include both watch designs for which Tiffany is noted and new ones, too.

Tiffany & Co. watches will be distributed through the Swatch Group’s network (i.e., Swatch Group affiliates, Swatch Group retail facilities and third party distributors), as well as Tiffany stores. Swatch Group affiliates will have the right also to establish and operate Tiffany & Co. watch stores in some markets outside the United States. Those stores may also offer some Tiffany jewelry.

The watch company will support distribution with significant marketing, which will be “fully integrated [with Tiffany advertising] and support a common objective,” said Kowalski.

Officials of the two companies were expected to discuss details of the strategic alliance and the new watch company at a Dec. 5 press conference at Tiffany & Co. flagship store in New York City.

The Swatch Group produces 18 watch brands and had in 2006 of over CHF 5 billion (above $4.5 billion). It has 160 production centers in Switzerland.

Tiffany & Co. watches are distributed worldwide through more than 180 company-operated stores and boutiques, and approximately 100 independently-operated locations. It had net sales of $2.6 billion in 2006


Source- Reed Business information
 

·
Banned
Joined
·
9,123 Posts
So does this mean Tiffany was never part of Swatch, and that they decided to merge their operations with Omega? Or, Tiffany has sold the rights to Omega to use their name in producing watches, and in return Tiffany will sell the Swatch brand watches at their stores to get more visibility for Swatch?
 

·
Banned
Joined
·
18,138 Posts
Discussion Starter · #4 ·
Well Time

It's a strategic alliance by which Swatch will further the development, production and distribution of Tiffany & Co branded watches. The new company which will be located in Switzerland will be wholly-owned by the Swatch Group with Tiffany holding a seat on the board and participating in the pre-tax profits of the new company. The arrangement is for an initial 20 years with an option for an extension of a further ten years if certain conditions were met.

With falling property prices and rising fuel costs, demand for Tiffany's watches is expected to be challenging in the coming year. It has been reported that Tiffany has been forced to cut its prices to stimulate demand and in a filing to the US Securities and Exchange Commission yesterday, the company said that it would take a $20 million charge related to the cost of discounting some of its existing watch collections.

Even though sales for the third quarter came in at the top end of Wall Street expectations, financial markets reacting nervously to Tiffany’s earnings for the period which were published on Friday. The Times in London reported that Goldman Sachs told its clients that the shares were likely to suffer because of weakening American demand and tough comparisons with the year before.
A joint venture with Swatch which as the largest manufacturer of watches in the world and which holds brands like Omega, Breguet, Blancpain, Glashutte Original, Jacquet Droz among many others, can only present Tiffany with development and production opportunities leading towards a larger international market.

The market reacted well to the announcement of the arrangement which saw shares in the Swatch Group rising by 5.5%. Business Week reported that Citibank (C) upgraded Swatch to "buy," noting "it has gradually become a significant luxury player, not the mass-market consumer company some view it as. We believe it is an attractive, long-term growth story."

The Swatch Group has enjoyed continued growth for some years now, revealing a 39.4% growth in net income over the year. With a brand like Tiffany on board, Swatch feels that it will be able to market watches more effectively to the ladies market. I think it could be a win-win situation for both companies. It certainly is for Swatch which came in to the rescue of a number of producers which might well have faced extinction following the quartz revolution of the 70s.

Quoting Jennifer Fishbein of Business Week -

" Tiffany hopes the agreement will make it a strong competitor to Cartier and Bulgari (BULG.MI), two jewelers that have successfully moved into the luxury watch business. The company will absorb a writedown of $20 million on inventory of watches it plans to discontinue, but will keep its three most popular lines—Atlas, Mark, and Grand—in production. The first new products will launch in the second half of 2008, with the first full collection to follow in 2009. "This is about the long-term health of the brand," says Tiffany Chief Executive Officer Michael Kowalski ".

I have no idea if any of the Swatch brands will be carried by Tiffany but it seems like a good opportunity for this to be a part of the arrangement.


OK my friend.


Enjoy your weekend


ZIN
 

·
Banned
Joined
·
18,138 Posts
Discussion Starter · #6 ·
Further update on JCKonline

Tiffany, Swatch to Create Global Business

William George Shuster, Senior Editor -- JCK-Jewelers Circular Keystone, 12/6/2007 11:33:00 AM


Luxury jeweler Tiffany & Co. and its new partner the Swatch Group, the world’s largest watchmaker, aim to build Tiffany’s tiny watch business into one of the world’s leading fine watch brands within the next decade.


Michael Kowalski (left), chairman and CEO of Tiffany & Co., and Nicholas Hayek Jr.,
CEO of the Swatch group's management board, sign papers calling for Swatch Group
to produce and distribute Tiffany watches, prior to press conference at Tiffany's flagship store.
Nicolas G. Hayek, Sr., Swatch Group chairman and co-founder, appears via video link.


Watches are now two to three percent of Tiffany’s total sales, and have long taken second place to Tiffany’s diamond jewelry business, admit its officials. Now, with its new 20-year alliance with the Swatch Group, “we have the resources and potential to grow that substantially,” and make its brand name watches a major player in the world’s fine watch market, said Michael Kowalski, Tiffany chairman and chief executive officer.

The Tiffany brand can become “one of the most important watchmakers in the world in the next five to 10 years,” declared Nicolas G. Hayek, Sr., Swatch Group chairman and co-founder.

Tiffany’s core lines–Atlas, Tiffany Grand, and Tiffany Mark—will continue, with new designs plus those for which Tiffany is noted. The full new collections will be unveiled in 2009, though some new watches could be ready in the second half of 2008, said Nicolas (“Nick”) Hayek, Jr., CEO and president of the Group’s management board.

Retailing pricing will be similar to that now (about $1,000 to $15,000, said Kowalski).

Distribution will be “selective”—through the Swatch Group global network, Tiffany stores, and areas where rivals like Bulgari watches are sold—and is still being “defined,” said Nick Hayek. However, “phones have been ringing off the hook” since the Dec. 2 announcement with calls from U.S. jewelers and other retailers who want to carry the watches, said Caroline Faivet., Swatch Group USA president.

Kowalski, Hayek, Jr., and Hayek Sr. (by video link with Geneva, Switzerland) outlined the new alliance—the most important in Tiffany’s 170-year history, said Kowalski—to three dozen domestic and foreign watch and financial trade journalists at a DEC. 5 press conference at Tiffany & Co.’s flagship store in New York City.

The new Swiss watch company, called Tiffany Watches but wholly-owned by Swatch, will be built in Switzerland. It will be headed by Nayla Hayek, daughter of Swatch founder Nicholas Hayek Sr. and a member of the Swatch Group board. That’s “a clear signal of how important this partnership is” to the Swatch Group, said Nick Hayek Jr.

Both companies will collaborate on design, engineering, manufacturing, marketing, distribution and service, he said. The company will produce the watches (formerly done by contracted watchmakers) using Swatch Group’s technological and manufacturing expertise, and distribute them worldwide. Tiffany will participate in before-tax profits, have a seat on its five-member board of directors, product design and marketing committees.

Both companies will provide financial support for what each called “significant” marketing and advertising of the watch brand.

Tiffany watches will be the 19th brand made by Swatch Group, and expands its high-end watch portfolio (including Breguet, Blancpain, Glasshütte Original, and Omega).

In the late 1990s, Tiffany redefined its watch collections and attempted to develop worldwide wholesale distribution, but it was “limited and too small,” to be effective, noted Kowalski. Now, the Swatch Group’s “unparalleled distribution capabilities and experience in the luxury watch business” will provide the clout Tiffany’s “long-planned re-entry into watch distribution” needs to become a world player, he said. “This will take the business to an entirely new level,” said Tiffany’s chairman.

Tiffany also said it will take a $20 million pre-tax charge to discontinue some of its current collections and related inventory, in preparation for the new ones.

On a related note, Nicholas Hayek Sr. said that Swatch Group will spend 450 million Swiss francs (almost $400 million) to increase the operating capacities of its 160 production facilities in Switzerland.



Interesting forecast for the Tiffany brand. Watch this space as they say.

Pals, I know this is more about Swatch as opposed to being directly related to Omega but as they bear the closest of relationships, I thought it worthwhile to maintain a bulletin on this.


Y'all be well now


ZIN
 

·
Banned
Joined
·
9,123 Posts
I am curious as to why the stores are being defined, and why not all stores would carry them. Unless their are agreements in place with current ADs that another AD can not be within so many miles of their current location.
 

·
Banned
Joined
·
18,138 Posts
Discussion Starter · #8 ·
Well we're talking about somewhat exclusive watches here and the Swatch Group Global network presumably means the stores or outlets which carry top Swatch names like Breguet, BlancpaiN and the like. I'm not certain if Omega boutiques will carry them yet but areas where Bulgari for example are sold are indeed also areas where Omega boutiques are located. Until the final word comes, it's all presumably high end. I have not seen Tiffany watches on these shores but that's probably as much to do with not actively looking for them. Presumably over here they will be found in Bond Street where incidentally Omega has a boutique and Breguet and BlancpaiN are sold at high end ADs. Till now, Omega boutiques have carried Omega exclusively but as these are also located in affluent areas, there will also be ADs which carry the top Swatch brands and it is more likely that they will be the ones which carry Tiffany stocks.

My 2c while we await further releases.


Be well pal


ZIN
 
1 - 8 of 8 Posts
Top