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Purchases of Swatches are not exactly in a nosedive – but the charismatic brand Maurice Lacroix is up for sale. The Swiss franc has gained 15 percent against the euro this year, making foreign sales prohibitive even for customers in China, which accounts for 25 percent of global luxury demand. Also, Lacroix occupies a highly-competitive market segment for anyone wishing to sport their wealth on their wrists. The price of the company has been estimated at some US$195 million – but even though it hopes to find a home within a bigger McMansion fold, one problem seems to be that (as a spokesperson for Switzerland’s largest watchmaker opines) “we have all the brands we need”. – Peter Wilhelm
The Swiss watch slowdown has claimed a new victim. Maurice Lacroix, a brand that delivers 90,000 timepieces a year, has been put up for sale by owner DKSH Holding AG as the surge in the Swiss franc and a slump in demand from Asia weigh on the business. DKSH aims to find a buyer for the unit this year, Dominique Nadelhofer, a spokesman, said by phone Monday.
This year’s 15 percent gain in the franc against the euro is reducing the value of the revenue that Swiss watchmakers make abroad. Weak consumption in China, which accounts for a quarter of global luxury demand, has also weighed on European luxury-goods stocks, Goldman Sachs said in a note to investors.
‘It’s a decent enough brand but operates in a competitive price segment and lacks the retail muscle of the bigger watch groups,’’ said Jon Cox, an analyst at Kepler Cheuvreux. He estimates the watchmaker is probably worth about 100-million francs ($105-million) and has annual revenue of about 70-million francs.
Swiss timepiece exports had their biggest monthly drop in more than five years in May. Ulysse Nardin, a watchmaker owned by French luxury-goods maker Kering, said that month it would cut jobs to adjust to weaker demand.
Maurice Lacroix makes watches that typically sell for 1,000-5,000 francs, according to Nadelhofer. Amazon.com lists discounts of 20 percent and 49 percent on models in that range, and as much as 66 percent off a more elaborate $8,760 men’s timepiece.
The luxury business also includes the Glycine brand and a joint venture with Davidoff. DKSH may sell it all as a package or in separate parts, Chief Executive Officer Joerg Wolle said on a call with reporters.
DKSH plans to exit watch production to focus on its main activity, which is helping clients expand in Asia in industries such as consumer goods, technology and pharmaceuticals. The company will continue to offer marketing and other services in the luxury-goods industry, Wolle said.
Several parties have approached the company for Maurice Lacroix in recent years, Wolle said, adding he’s “confident the brand will find a new home within a bigger group”.
DKSH said its consumer-goods unit had a one-time charge of 59.4-million francs related to writedowns and costs at the luxury business in the first half. That follows “many years of above-average profitability” for those activities, the company said. The restructuring will boost profit in 2016, the Zurich- based company said.
The stock fell as much as 5.1 percent and traded 3.9 percent lower at 67.10 francs Monday midday in Zurich. DKSH’s first-half operating profit rose 6.2 percent to 139.5-million francs, missing analysts’ estimates for 142.8-million francs. Demand for consumer goods in Thailand fell, weighing on the consumer division in a market where DKSH gets about a third of its revenue.
Swatch Group AG, Switzerland’s biggest watchmaker, isn’t interested in buying Maurice Lacroix, according to spokeswoman Beatrice Howald. “We have all the brands we need,” she said.
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