Swatch Group Reports Record Sales

Swatch Times Square store.

Swatch Group saw its 2011 gross sales increase 21.7 percent, year-over-year, to 7.14 billion Swiss francs ($7.5 billion) with December 2011 posting the strongest month in sales in company history.

The world’s largest watchmaker shrugged off the impact of the strong Swiss franc, which negatively affected sales by 10.8 percent. “Despite this extremely negative currency effect, sales in CHF increased by an impressive 10.9 percent over the previous record year 2010,” the company said.

The company also noted that “despite enormous pressure on margins due to the catastrophic currency situation,” it expects 2012 to be another good year for operating profit and net income.

Swatch’s Watches & Jewelry segment recorded an increase in sales of 26.1 percent at constant rates to 6.312 billion Swiss francs ($6.65 billion). Greater China was a very strong market bu the company said it “experienced significant growth” in all regions and price segments. “Investment in retail activities as well as numerous marketing offensives throughout the world contributed to these gratifying sales figures,” the company said.

The brand’s Production segment, where it provides watch components to other watch companies, reported a 32.6 percent increase in sales to 2.015 billion Swiss francs ($2.12 billion) due to “an enormous increase in demand for all types of components. Despite an expansion of production capacity, there were and still are major production bottlenecks,” the company reported.

The Electronics Systems segment mainly felt the effects of the overvalued Swiss franc against the US Dollar and the downtrend in certain key markets. Gross sales fell 16.3 percent to 336 million Swiss francs ($354.1 million).

“Despite the strongly negative currency impact during the course of the year and our traditionally defensive policy concerning price increases, Group Management expects good results for operating profit and net income,” the company said in its report. “The Swatch Group is confident of again generating qualitative growth in 2012, despite the ever more challenging comparison basis.”

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Swatch Group Underscores Strength of the Swiss Watch Industry

Swatch Group, the world’s largest watch company, said Tuesday that its watch and jewelry sales for the first half of 2012 grew 16.7 percent to 3.4 billion Swiss francs ($3.42 billion), year-over-year. The company owns 19 watch and jewelry brands in all market segments, including Swatch, Breguet and Longines.

The results by Swiss company underscores the strength and resiliency of the Swiss watch industry despite the economic problems facing much of the world. Last week, the Federation of the Swiss Watch Industry reported that watch sales for the first half of the year increased by 16.9 percent to 9.5 billion francs ($9.55 billion).

Swatch Group—which also produces movements, hands, crowns, cases, screws, pallets, escapements, electronic circuits, batteries, ceramics and sapphire for its own products and its competitors—saw its gross sales increase 14.4 percent to 3.84 billion francs ($3.86 billion), surpassing the record 2011 half-year figure.

Operating profit for the first half of the year increased by 19.4 percent to 903 million Swiss francs ($908.6 million). Net income increased 25 percent to 724 million francs, year-over-year ($728.4 million).

The Biel/Bienne-based company, in its outlook, expects “dynamic growth in all segments and regions, notably also outside Asia,” for the second half of the year.

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$1 Billion Increase in 2012 Swatch Group Sales

Swatch Group, the world’s leading supplier of finished watches and watch movements, said Thursday that annual gross sales for 2012 increased by $1 billion, year-over-year. Its 2012 gross sales totaled 8.143 billion Swiss francs ($8.88 billion), a 14 percent increase over 2011 gross sales.

The Swiss company said in a statement that its 2012 watch and jewelry gross sales increased 15.6 percent year-over-year, to nearly 7.3 billion Swiss francs ($7.96 billion), led by sales in China, with double-digit increases for all of its brands.

In the production segment of the company, capacity was expanded, resulting in improved performance. This led to a 10.1 percent increase in gross sales to 2.21 billion Swiss francs ($2.41 billion). Bottlenecks, which had been a problem in past years due to robust demand, were reduced in 2012, the company said.

Its electronics systems segment “is still exposed to a combination of strong price pressure and adverse exchange rates,” the company said. As a result, gross sales decreased by 7.4 percent in 2012 to 311 million Swiss francs ($339,373).

The Swatch Group brand, Omega, is the official timekeeper for the Olympics, which meant that the company had major marketing expenses during the 2012 London Summer Olympics. This along with “unsatisfactory currency developments” will hit projected operating profit and net income. However, the company said it still expects “good results.”

The company also said that the first 10 days of January saw strong sales, indicating “healthy growth” for 2013.

Based in Biel—the vertically integrated company with full manufacturing capabilities, branded retail outlets and alliances with other retailers throughout the world—owns and operates the following brands: Breguet, Blancpain, Glashütte Original, Jaquet Droz, Léon Hatot, Omega, Longines, Rado, Union Glashütte, Tissot, Calvin Klein Watches + Jewelry, Balmain, Certina, Mido, Hamilton, Swatch, Flik Flak, Endura and Tourbillon.

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Swatch Group Acquires Harry Winston’s Luxury Retail Division for $1 Billion

The Swatch Group has acquired the famed Harry Winston luxury diamond jewelry and timepiece retail business for $750 million plus their assumption of up to $250 million of pro forma net debt. When this transaction is completed the company, Harry Winston Diamond Corp., will be solely in the diamond mining and distribution business.

The U.S. based division (Harry Winston Inc.) is a premier diamond jeweler and luxury timepiece retailer with salons in key locations—including New York, Paris, London, Beijing, Shanghai, Hong Kong, Singapore, Tokyo and Beverly Hills. The possible sale of the retail division was the subject of rumors for months, which the company denied in a statement issued in October.

The company’s namesake (Harry Winston, March 1, 1896 – December 28, 1978) founded the company in 1932. He was among the most famous jewelers in the world and the first jeweler to lend jewels to an actress for the Oscars red carpet in 1944. He was also famous for donating the Hope Diamond to the Smithsonian Institution in Washington.

The jeweler was bought by Canadian diamond mining group, Aber Corp., in 2006 to create the Harry Winston Diamond Corp., with divisions in luxury retail and diamond mining, which was listed on the New York Stock Exchange in 2007.

The transaction does not include the Canadian-based diamond mining activities of Harry Winston Diamond Corp., which has a 40 percent ownership interest in the Diavik Diamond Mine and is finalizing the purchase of the Ekati Diamond Mine, including its diamond sorting and sales facilities. Both mines are in the Northwest Territories of Canada.

When the transaction with Swatch is completed, this diamond business will operate under the name: Dominion Diamond Corporation.

Robert Gannicott, Harry Winston chairman and CEO, said changes in both luxury retail and the diamond markets, as well as the need for cash, led to the decision to sell its luxury retail operation.

“At the time that we purchased the Harry Winston brand, resource investment opportunities for diamonds were rare and expensive following the euphoria of the Canadian diamond discoveries, and the involvement of the large international mining companies,” Gannicott said in a statement. “The Harry Winston brand was competitively priced compared with its peers and we could bring diamond expertise and strategic connections to enhance value. Today there is a range of diamond resource opportunities while the value of heritage luxury brands has increased dramatically. This transaction represents a sound return on our original investment. It will leave us well equipped to realize upstream opportunities in an environment where cash has become a strategic resource while preserving and expanding our relationship with the downstream diamond business.”

The Swatch Group, based in Biel, Switzerland, is the world’s leading supplier of finished watches and watch movements and one of the world’s largest buyers of polished diamonds. The two companies said that they will also explore the opportunities for a joint diamond polishing venture bringing together the manufacturing and diamond expertise of the two companies.

“Harry Winston does brilliantly complement the prestige segment of the Group,” said Nayla Hayek, chairwoman of The Swatch Group Ltd. in a separate statement. “We are proud and happy to welcome Harry Winston to the Swatch Group family—diamonds are still a girl’s best friend.”

The transaction is subject to the approval of the different regulatory authorities.

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Harry Winston Diamond Corp. Receives Approval to Sell Luxury Brand to Swatch Group

Harry Winston Diamond Corp. said Thursday that it expects the sale of its luxury diamond jewelry and timepiece division, Harry Winston, Inc., to the Swatch Group to close on or around March 26. The Toronto-based company said it has received regulatory approval to complete the sale.

The two companies announced in January that the Harry Winston luxury division was being sold to the Swatch Group for $750 million plus the assumption of up to $250 million of pro forma net debt.

In addition to being a luxury jeweler and timepiece company, Harry Winston Diamond Corp. operates as a diamond company with a 40 percent ownership interest in the Diavik Diamond Mine. It is finalizing the purchase of the Ekati Diamond Mine, including its diamond sorting and sales facilities. Both mines are in the Northwest Territories of Canada.

Upon completing the sale of its luxury retail business, the company will be solely in the diamond mining and distribution business operating under the new name, Dominion Diamond Corp. The Swatch Group will retain the Harry Winston brand name.

The U.S.-based luxury retail business was bought by the Canadian diamond mining group, Aber Corp., in 2006 to create the Harry Winston Diamond Corp., with divisions in luxury retail and diamond mining. It was listed on the New York Stock Exchange in 2007.

The brand’s namesake (Harry Winston, March 1, 1896 – December 28, 1978) founded the luxury retail company in 1932. He was among the most famous jewelers in the world and the first jeweler to lend jewels to an actress for the Oscars red carpet in 1944. He was also famous for donating the Hope Diamond to the Smithsonian Institution in Washington.

The luxury diamond jeweler and timepiece retailer has salons in key locations—including New York, Paris, London, Beijing, Shanghai, Hong Kong, Singapore, Tokyo and Beverly Hills.

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Swatch Group Finalizes $1 Billion Acquisition of Harry Winston

The Harry Winston Salon in Harrods London department store.

The world-renowned Harry Winston luxury brand is now under new ownership. The Swatch Group Ltd. said late Tuesday that it has successfully completed the acquisition of the jewelry and timepiece retailer.

Swatch and Harry Winston Diamond Corp.,  now the prior owner of the brand, announced in January that the Harry Winston luxury retail division was being sold for $750 million plus the assumption of up to $250 million of pro forma net debt.

In addition to being a luxury jeweler and timepiece company, Harry Winston Diamond Corp. operates as a diamond mining business with a 40 percent ownership interest in the Diavik Diamond Mine. It is finalizing the purchase of the Ekati Diamond Mine, including its diamond sorting and sales facilities. Both mines are in the Northwest Territories of Canada.

Following the transaction, the company now is solely a diamond company and operates under the new name, Dominion Diamond Corp., while Swatch Group retains the Harry Winston brand name.

The U.S.-based luxury retail business was bought by the Canadian diamond mining group, Aber Corp., in 2006 to create the Harry Winston Diamond Corp., with divisions in luxury retail and diamond mining. It was listed on the New York Stock Exchange in 2007.

The brand’s namesake (Harry Winston, March 1, 1896 – December 28, 1978) founded the luxury retail company in 1932. He was among the most famous jewelers in the world and the first jeweler to lend jewels to an actress for the Oscars red carpet in 1944. He was also famous for donating the Hope Diamond to the Smithsonian Institution in Washington.

The luxury diamond jeweler and timepiece retailer has salons in key locations—including New York, Paris, London, Beijing, Shanghai, Hong Kong, Singapore, Tokyo and Beverly Hills.

The Swatch Group, based in Biel, Switzerland, is the world’s leading supplier of finished watches and watch movements and one of the world’s largest buyers of polished diamonds. The two companies previously said that they will explore the opportunities for a joint diamond polishing venture bringing together the manufacturing and diamond expertise of the two companies.

Please join me on the Jewelry News Network Facebook Page, on Twitter @JewelryNewsNet and on the Forbes Website.

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The Swatch Group Brands at Baselworld 2013 (including Harry Winston)

Harry Winston Opus XIII

The powerful presence of the Swatch Group was present like never before at Baselworld 2013, taking up a larger chunk of the renovated Hall 1.0, the most prestigious area at the show for the majority of its 19 watch brands, which span just about every segment of the watch industry.

In addition, the company, which also owns watch movement manufacturers and retail brands, hosted a separate museum-quality exhibition in Hall 2.0 for its Swatch timepieces; the brand that has been the most responsible for the company’s enormous success.

The newest brand under Swatch Group’s enormous umbrella, Harry Winston, still had its own space in Hall 1.1, as the $1 billion acquisition occurred in March, well too late  for Harry Winston to be folded into the other company holdings (perhaps next year).

Below are some of new releases from the seven brands in the group that I had the chance to visit during the eight-day tradeshow. I included Harry Winston as the company's new CEO, Nayla Hayek, was announced Friday.

Blancpain Carrousel, Minute Repeater and Chronograph
The Swiss luxury watch brand has created a fully mechanical watch that combines a one-minute flying carrousel (similar to a tourbillon) and a minute repeater with a flyback chronograph.

For the minute repeater, the blades of its cathedral gong wrap one and a half times around the movement to emit the sound. Its transmission is optimized by fixing the gongs inside the case, which increases volume and clarity. A flying governor reduces the background noise produced by the movement.

The pusher for the chronograph function with the flyback or instant-restart function (historically used by pilots) is located at 4 o’clock and enables the wearer to restart a time measurement while a first measurement is in progress.

The watch comes in a red gold 45 mm case with a chapter ring, a 30-minute and hour-markers in grand feu enamel. The open dial and sapphire crystal case-back provides in-depth views of this complex device.

Breguet Classique Chronométrie 7727
Available in rose or white gold, the watch is fitted with the new in-house caliber 574DR, which has a balance frequency of 10Hz.thus, improving the time-keeping performance of the balance and spring. It is fitted with a double balance-spring, pallet lever and escape wheel, all in specially prepared silicon. The result is a regulating power equivalent to around 830 microwatts. Despite its high frequency, it has a power reserve of 60 hours.

However, Breguet says the major innovation of this model is the use of magnetic pivots, which not only controls the negative effects of magnetism in a watch, but also uses the magnetic force to improve the pivoting, rotation and stability of the balance staff.

The dial shows an off-center chapter of hours and minutes, small seconds at 12 o'clock, a power-reserve indicator at 5 o'clock and a tenth-of-a-second indicator at 1 o'clock having a patented lightweight silicon hand with low inertia that doesn’t affect the balance. The pare-chute is visible at 2 o'clock, both as a reminder of A-L Breguet’s 1790 invention and to make the timepiece slimmer.

The dial is engine-turned in six patterns: “Geneva waves” in the center, a hobnail pattern for the small seconds, sunrays on the tenth-of-a-second dial and chevrons for the power-reserve indicator. The hours chapter is cross-hatched while a barleycorn pattern decorates the outer edge. The hands are in polished steel with the Breguet open tip, while the case displays delicate fluting.

Glashütte Original Senator Chronometer Regulator
This new timepiece unites the classic regulator display with an officially certified manual winding chronometer movement.

The dominant central position on the lacquered silver-grainé dial is the blue minute hand with its polished eye. On the central axis above and below the minute indicator are smaller hour and seconds displays.

The Glashütte Original panorama date display is placed at 3 o’clock. The date change takes place at midnight. From 6 in the morning until 6 in the evening, the small circle in the region of the hour display is white; from 6 pm until 6 am it is black. This timepiece is framed by a 42 mm polished case in red gold or a white gold version.

The watch is driven by the caliber 58-04, which permits the precise coordination of minute and seconds hands. A second-zero-stop-mechanism makes it is easy for the wearer to set the exact time. When winding the crown, the time display is stopped, the second hand jumps to zero and remains there. At the same time, the minute hand is also moved to the next full minute index. When one winds the crown to set the time, the minute hand always rests only on the full minute indices. This provides the correct relationship of the displayed seconds and minutes. A power reserve display at 9 o’clock indicates the energy remaining in the manual winding movement.

The watch is officially certified and bears a certificate from the German Calibration Service after a 15-day testing period.

Hamilton Jazzmaster Regulator
The H-12 movement in this watch allows the separation of the minute and hour hands on  different axials and sub-dials. The idea is to make the watch more accurate and provide an easier way for the person who owns the timepiece to read the time. However, I think most people wear such a watch is because of the appearance. Add to this the blue or silver dial and you have watch that can be worn for casual or formal occasions. There are three 42mm timepieces in the collection. In addition to the dial choice straps come in either leather or stainless steel.


Harry Winston Opus XIII (top photo)
It was difficult to determine which of the many technically advanced and aesthetically pleasing timepieces from this luxury brand to show. In the end I chose the newest addition to its iconic Opus collection. Opus is the watch that introduced Harry Winston to the world as more than just luxury jeweler. Each year the brand works with gifted independent watchmakers to build a timepiece with the goal of defying the conventional rules of watchmaking.

This year the newest member of the Swatch Group created a watch where the minutes accumulate around a track. Eleven rotating silver triangles spring from a faceted dome to show the hours. Every 12 hours, Harry Winston’s logo is appears on the dial and vanishes after sixty minutes. The 59 minute hands pivot on a ring of steel shafts that are held in place by 242 ruby bearings.

The mechanical watch is powered by the in-house HW4101 movement, which has 364 components. The case is made of 18k white gold.

Jaquet Droz Perpetual Calendar Eclipse
This newest version of the Eclispe line presents a new moon phase complication, which displays the cycles of the night of the sky on the dial, with the perpetual calendar complication. On the black or ivory-colored Grand Feu enamel dial, two straight hands contrast with the curves of two wavy hands, tipped with a crescent moon. The calendar information is easily read on several places on the dial: on the right is the date, on the left is the day of the week. At 12 o’clock, a single-hand counter indicates the month with the leap year appearing in a small window. At 6 o’clock, a black or ivory-colored onyx index moves across the face of a golden moon, revealing, and then concealing it until its total eclipse, unfolding on a night sky of eight golden stars, the watchmaker’s favorite number. The timepiece is powered by a Jaquet Droz 5853LR.4 self-winding mechanical movement, double barrel, perpetual calendar, retrograding moon phase, 22-carat white gold oscillating weight.

Longines Heritage Military 1938
Following Orb’s victory in the Kentucky Derby, Longines, the Official Watch and Timekeeper for the celebrated race, awarded the horse’s owner, trainer and jockey with watches from the brand’s Saint-Imier collection at the event’s Winners’ Circle Party. The Swiss watchmaking brand was the Official Watch and Timekeeper of Kentucky Derby 139 and Entitlement Partner of Longines Kentucky Oaks 139. Now the luxury watch brand is Paris where it is the Official Timekeep of Roland-Garros, home of the French Open.

Prior to both events, the brand was in Baselworld showing off its new watch collections. Among them was the Longines Heritage Military 1938, which uses the same aesthetics based on the design of a military watch produced by Longines in the 1930s. With a diameter of 42 mm and fitted with the automatic calibre L705, this timepiece displays the hours and minutes, a 30-minute counter at 3 o’clock, the date at 6 o’clock and the small second at 9 o’clock. Large white Arabic numerals, coated with Super-LumiNova and a minute circle white as well contrasts with the deep matt black of the dial.

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Harry Winston and Swatch Group Pay $26.7 Million for 101-Ct. ‘Perfect Diamond’

The Swatch Group and HarryWinston are celebrating their new partnership with the purchase of a pear-shaped, D color, flawless diamond of 101.73 carats for more than $26.7 million at Christie’s Geneva Magnificent Jewels Sale Wednesday.

Billed by the auction house as the “perfect diamond,” the price paid set a world auction record for a colorless diamond. The diamond (which sold for $254,400 per carat) has been renamed “The Winston Legacy.”

“The acquisition of ‘Winston's Legacy’ underscores the brand’s continued commitment to perfection and quality at the highest level. A stone of this caliber and rarity is the perfect continuation of Mr. Winston’s legacy as the King of Diamonds,” said Nayla Hayek, the new CEO of Harry Winston.

Rahul Kadakia, head of Jewelry, Christie's Switzerland and Americas, added: “Harry Winston acquired the most perfect diamond ever offered for sale at auction, ‘Winston Legacy,’ continuing the tradition of buying and selling only the very best, a trait of the founder Mr. Winston himself.”

The diamond was the top lot in a sale that fetched a record-breaking $102.1 million, selling 86% by lot and 93% by value, the highest result ever for a various-owner jewelry auction at Christie’s. It included several world records for diamonds, pearls and sapphires. A total of 20 lots sold above $1 million with 147 buyers coming from 31 countries across five continents, Christie’s said.

Among the other notable purchases at Christie’s Geneva Magnificent Jewels Sale, are:

* 19.88-carat cushion-shaped Kashmir sapphire, named “The Star of Kashmir” sold for more than $3.4 million, or $175,202 per carat, breaking the world auction record for a per-carat sale of a sapphire.

* Single strand of natural pearls measuring from 13.7 to 10.4mm sold for more $8.4 million, setting a world auction record for a single-strand natural pearl necklace.

Drop-shaped natural pearl ear pendants of 261.66 and 216.37 grains sold for more than $2.4 million, setting a world auction record for a pair of pearl ear pendants.

* 1.92-carat fancy red diamond sold for $3.2 million, setting a world auction price for a red diamond.

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Swatch Group Sees Strong Growth Potential For Harry Winston

The Harry Winston salon in Paris.

The Swatch Group has big plans for the recently acquired Harry Winston brand, finding it an asset that is both complimentary and with plenty of room for growth.

The Swiss conglomerate on Tuesday for the first time partly revealed what it plans for the luxury retail brand during its earnings report for the first half of the year. The company, which now owns 20 watch and jewelry brand, said that gross sales for the period increased 8.7% year-over-year to 4.18 billion Swiss francs ($4.47 billion). Net income increased 6.1% compared to the first half of 2012 to 768 million Swiss franc ($821,700), with a 19.2% return on net sales. Sustained growth was reported in all regions.

“The continued integration of the Harry Winston brand will … make a significant contribution, as this brand has huge, almost untapped market potential in the high jewelry and watches activities,” the company said, adding that this potential will start to be seen in the second half of the fiscal year.

Swatch Group said that following its $1 billion acquisition of Harry Winston in March, the conglomerate invested in infrastructure, settled all debts, expanded its equity capital base and increase inventory. “The latter was initiated in order to ensure that our clientele has access to the best selection of jewelry as well as to increase its availability,” Swatch Group said in its earnings statement.

“The acquisition of the Harry Winston brand did more than simply round off the group’s already broad brand portfolio; it also expanded the high jewelry segment, along with the segment’s value chain from production up to and including the retail network,” Swatch added.

In May, Swatch Group, in Harry Winston’s name, purchased a 101.73-carat diamond at auction for $26.7 million and renamed it the “Winston Legacy,” explaining that it “reconfirms the number one position of this high jewelry brand.”

Swatch says that its see the luxury watch segment of the brand as having the best potential for worldwide growth.

“The Harry Winston brand has an extremely large and almost untapped potential in the watch sector, which the group now aims to expand further using its experience around the world,” the company said. “The necessary funds will also be invested into this activity.”

In fact, the acquisition led to some company restructuring by integrating the production division into the watches and jewelry business unit. “This integration will also provide a more uniform view of activities, facilitating comparability with our competitors.”

Other highlights of the company’s first-half report include:

• Benchmarked to the 1.5% export growth for wristwatches of the Swiss watch industry in the first half of 2013, the segment Watches & Jewelry (now including production) growth was more than 9%.

• An operating profit of 910 million Swiss francs ($973,500) was recorded, with an operating margin of 22.7%, despite a high marketing spend, important investments in products and production methods, and the integration of Harry Winston.

The company said its outlook “remains very promising,” expecting a strong second half. 

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