Swatch Group won't renew Calvin Klein licence agreement

Swiss watchmaker Swatch Group will no longer make watches and jewellery under the Calvin Klein brand, reducing its exposure to a price segment that is under pressure from smartwatches and other fashion watches.

The group, which also makes high-end Omega and cheaper plastic Swatch watches, said in a statement on Tuesday it would not renew the collaboration with Calvin Klein when it expires “in the near future."

Vontobel analyst  René Weber attributed the decision to uncertainties in Calvin Klein Inc.’s management, adding that declining sales across the wider watch segment were also a factor.

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Calvin Klein owner PVH Corp unveiled a restructuring plan in January that included the closure of the brand's Madison Avenue flagship in New York, in an attempts to reposition the label in the face of falling sales.

The US brand was until now the flagship brand o the Swatch Group in its fashion watch segment, with models retailing at around 136 to 282 euros. It's a segment that has seen strong competition, both from cheaply produced Chinese watch brands and from the rising smartwatch market, Weber added.

Weber said the decision would reduce group sales by about 2%, calculating the results of the Calvin Klein partnership for the group at 145 million euros in 2018, but said that the earnings contribution was likely zero due to the heavy competition.

Swatch Group shares were flat at 0957 GMT in line with the Swiss market.


Reuters with AFP