Tiffany Aims to Be a Leading Luxury Watch Brand

Luxury jeweler Tiffany & Co. and its new partner, the Swatch Group, intend to make Tiffany one of the world's leading luxury watch brands within a decade. A 20-year pact between the two was announced in December. Watches now account for 2 to 3 percent of Tiffany's total sales.

Tiffany's core lines—Atlas, Tiffany Grand, and Tiffany Mark—will continue, using new and current designs. The first new collections will be unveiled in 2009, though individual models could be ready this year, said Nicolas Hayek Jr., president and chief executive officer of Swatch Group's management board.

Retail pricing will remain about the same, ranging from $1,000 to $15,000, said Tiffany chairman and chief executive officer Michael Kowalski. Distribution—through Swatch Group's global network, Tiffany stores, and in areas where rivals like Bulgari watches are sold—will be selective.

The new watch company, called Tiffany Watches but wholly owned by Swatch, is headquartered in Switzerland and headed by Nayla Hayek, a member of the Swatch Group board and daughter of Nicolas Hayek Sr. That's “a clear signal of how important this partnership is us,” said Nic Hayek Jr.

Both companies are collaborating on design, engineering, manufacturing, distribution, and servicing, he said.

Tiffany is taking a $20 million pretax charge to discontinue some watch lines and related inventory, to prepare for the new business. Kowalski denied a press suggestion that the pact with Swatch is a “poison pill” to ward off possible hostile takeovers by other major luxury goods groups.

Nicolas Hayek Sr. said Swatch Group is spending almost $400 million to boost capacity at its 160 facilities in Switzerland.