The report stated that the progress of Harry Winston – which Swatch acquired in January 2013 – had been “highly encouraging” for the period ended 30 June. It also highlighted that efforts made to expand the brand’s product range was expected to make a “major contribution” to Swatch’s development over the next six months.
The considerable investment included expenditure of more than CHF 140 million (AU$164.6 m) on a new diamond-studded “high jewellery” collection, launching the latest Harry Winston watch collection, which was presented at BaselWorld earlier this year, and a renovation of the brand’s retail stores.
Overall gross sales for the Swiss watch giant increased by 8.5 per cent to CHF 4.535 billion (AU$5.333 b) at constant exchange rates; however, the report stated that this figure was negatively impacted by an “extremely adverse exchange rate situation”.
As such, at current exchange rates, sales increased by 4 per cent to CHF 4.347 million (AU$5.112 b).
An 8.8 per cent increase in gross sales for the group’s watches and jewellery segment – including production – was attributed to Swatch’s “strong brands and broad distribution network”.
The company also experienced an 8.8 per cent decrease in operating profit to CHF 830 million (AU$976 m) compared with the previous year. The report stated that the result was expected, with reasons cited including the negative currency situation; the high level of marketing expenses for the Winter Olympic Games in Sochi, Russia – particularly for its Omega brand; and a fire in one of Swatch’s Swiss buildings that caused extensive damage, delays in production and delivery, and set the group’s gross sales back by about CHF 200 million (AU$235.2 m).
Despite an 11.5 per cent decrease in net income to CHF 680 million (AU$799.9 m) compared to the previous year, the group’s outlook in all regions and segments remained “very good”.
In addition, a promising second half of 2014 was expected due to the anticipated lower comparison basis of exchange rates to the Swiss franc, as well as the improved situation following recovery from the building fire.
Swatch guards Winston name
In other related news, the United States Patent and Trademark Office has ruled in favour of Harry Winston in a long-held trademark dispute with the founder’s son.
Bruce Winston’s application to register the trademark “Bruce Winston” for his gemstone and fine jewellery business was rejected on the grounds that it could cause “confusion, mistake or deception” amongst consumers, given the similarity of both party’s products.
The legal dispute has reportedly run for more than a decade, and although Swatch only became involved towards the latter end following its acquisition of the diamond jewellery brand, the group is no stranger to lengthy trademark legal battles.
Earlier this year, the group resolved an almost eight-year dispute with Belgian watch company Ice-Watch over the similarity of company names.
The feud began after Swatch moved to block the other watch manufacturer’s Ice-Watch trademark filing, arguing that there was a risk of phonetic confusion that may have led to deception within the public.
In January 2014, the two companies finally reached conciliation with an agreement signed to end litigation proceedings.
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