Swatch buys Harry Winston jewellery arm

Swatch has purchased Harry Winston's high-end watches-to-necklaces division, according to reports Monday.

Swatch has purchased Harry Winston's high-end watches-to-necklaces division, according to reports Monday.

The Swiss watchmaker is paying $750m for the jeweller to the stars, in an effort to expand its luxury offering. Canada's Harry Winston will turn its focus to its diamond mines.

The deal follows strong Asian demand for watches, handbags and other high-end items.

Swatch's Chief Executive Nick Hayek said the acquisition has the potential to generate more than 1bn Swiss francs in sales and 250m net profit in about four to five years.

Deutsche Bank issued a note on the sector Monday saying that while its constructive, long-term positive bias on luxury remained intact, it believed that for the moment "only Swatch and PPR remain significantly mispriced".

Swatch Group had its target price raised from 440 Swiss francs to 590.

Deutsche also raised the target price of FTSE 100 company Burberry from £1,275 to £1,350.

"We have been advocating for a long time that luxury is a structural outperformer," the bank said.

"The combination of a structural growth story driven by wealth creation and middle-class opportunities in new geographies, and the industry's intrinsic strengths, support superior earnings growth.

"This explains why the sector has delivered top-line growth of 11% and EPS growth of 16% in 2012 despite all the macro headwinds."

Shares in Swatch were up 4%, outperforming a 1.5% rise in the sector index SXQP.

RD

Recommended

Share tips of the week – 1 July
Share tips

Share tips of the week – 1 July

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
1 Jul 2022
Bunzl: boring is good for business
Share tips

Bunzl: boring is good for business

Food-service distribution company Bunzl is not a terribly exciting business, but it looks cheap and could be a great investment, says Rupert Hargreave…
30 Jun 2022
Five dividend stocks to beat inflation
Share tips

Five dividend stocks to beat inflation

During periods of high inflation, dividend stocks tend to do better than the wider market. Here, Rupert Hargreaves pick five dividend stocks for incom…
30 Jun 2022
Three Sharia-compliant growth companies
Share tips

Three Sharia-compliant growth companies

Professional investor Scott Klimo of the Saturna Al-Kawthar Global Focused Equity ETF tips three Sharia-compliant stocks.
30 Jun 2022

Most Popular

How to find the best dividend stocks
Income investing

How to find the best dividend stocks

Stocks that pay dividends tend to outperform the market over the long run - as well as providing an income. Here, Rupert Hargreaves explains the best …
28 Jun 2022
Gold has been incredibly boring to own – but that’s no bad thing right now
Gold

Gold has been incredibly boring to own – but that’s no bad thing right now

Stocks, bonds and cryptocurrencies have all seen big falls this year. But gold remains at its one-year average. It may be dull, but it’s doing what it…
29 Jun 2022
What the end of the 1970s bear market can teach today’s investors
Stockmarkets

What the end of the 1970s bear market can teach today’s investors

The 1970s saw the worst bear market Britain has ever seen, with stocks tumbling 70%. Things have changed a lot since then, says Max King. But there ar…
28 Jun 2022