Swatch Group has broken off a partnership with Tiffany & Co. that was originally set to last for 20 years, according to the Wall Street Journal.
Nick Hayek, chief executive of Swatch, claims that Tiffany “pushed for the partnership’s creation in 2008 but then neglected it and blocked its development,” according to the Financial Times. As a result, Swatch would like some big bucks in compensation – and it presumably won’t take it in champagne flutes.
The brands' collaborative watch business, dubbed Tiffany Watch Co., is definitely winding down — Tiffany fired back Monday to say that Swatch didn’t “make the necessary commitments and work co-operatively” on the business, either.
This battle of luxury brands should last for some time. The FT has it that Tiffany is “seen as one of the most attractive luxury takeover targets,” but that “some bankers have said the Swatch partnership diluted its appeal.”
Tiffany Watch Co. is fully owned by Swatch, and consisted of Tiffany-branded watches (such as the men's Atlas model above, inspired by the original Atlas clock at the entrance of Tiffany's Fifth Avenue flagship in New York) made by the Swiss watch manufacturer that sold for $3,500, FT.com notes.
Tiffany was supposed to be in charge of marketing and promoting the product “but did not invest any capital in the partnership,” the Financial Times reports, but Swatch claims Tiffany didn’t even bother to display the watches at their flagship store in New York.
Tiffany, however, had a few choice words for Swatch, the Wall Street Journal reports: "Despite assurances to contrary made in 2007, Swatch has failed to provide appropriate distribution for Tiffany & Co. brand watches, with the result that our current business forecasts do not include any meaningful increase in watch sales or royalty income."
Get out of the way. These two are going to go at it all night. Not that they have to: An arbitration hearing is being set up, according to the Journal, but a timetable for that still is not clear.