Advertisement

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.

Advertisement - Article continues below

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

Advertisement
Advertisement

Recommended

Broker safety – your questions answered
Investment strategy

Broker safety – your questions answered

Cris Sholto Heaton answers more of your questions about the safety of stockbroker accounts
25 Mar 2020
How demographics affects stock valuations
Investment strategy

How demographics affects stock valuations

New research suggests that stock and bond valuations are driven by the age of the population – at least in the US.
24 Feb 2020
Do you own shares in Sirius Minerals? Here’s what you need to do now
Stocks and shares

Do you own shares in Sirius Minerals? Here’s what you need to do now

Mining giant Anglo American has proposed a cash takeover of Yorkshire-based minnow Sirius Minerals. Unhappy shareholders must decide whether to accept…
20 Feb 2020
Why investors should be “cautiously bullish” for 2020
Stockmarkets

Why investors should be “cautiously bullish” for 2020

Analysts have been out in force making rosy predictions for stockmarkets in 2020, but while there is certainly a case for optimism, investors should r…
17 Jan 2020

Most Popular

What gold, bonds and tech stocks have in common
Stockmarkets

What gold, bonds and tech stocks have in common

"Risk off" or "safe haven" assets such as gold and government bonds have been doing well lately. But so have riskier tech stocks. That seems to defy c…
10 Jul 2020
An economics lesson from my barber
Inflation

An economics lesson from my barber

On reopening his shop after lockdown, Dominic Frisby’s barber doubled his prices. It’s all part of the post-Covid inflation process – and we’re going …
8 Jul 2020
Share tips of the week
Share tips

Share tips of the week

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
10 Jul 2020