American jewelry chain Tiffany & Co has to pay Swatch 330 million euro because of a breach of contract. The Dutch Arbitrage Instituut believes Tifanny has breached the contract in regards to a collaboration between both companies.
Colllaboration that never solidified
Tiffany and the Switch watch maker Swatch started a collaboration in 2007, to stimulate the sale of Tiffany’s watches. It never amounted to anything and Switch accused Tiffany in 2011 of blocking the company’s development, demanding 3.8 billion Swiss francs (3.1 billion euro) in damages.
Tiffany had a counter-claim, saying Swatch had failed to live up to a few deals and demanded 541.9 million Swiss francs (some 440 million euro). The Dutch court denied the counter-claim.
Fine higher than the profit
The fine Tiffany has received is larger than the profit the company had the past year. Part of the fine resulted in Tiffany accepting a fourth-quarter charge of at most 250 million euro on its earnings and as such, profit per share has been adjusted down more than 60 %. “We are shocked,” says CEO Michael Kowalski after the ruling. “We are convinced that the panel’s ruling is not supported by the facts in this case.”
In the nine months up until 31 October, Tiffany had a 2.7 billion dollar (nearly 1 billion euro) turnover, with 285 million dollar profit (208 million euro). That profit will have evaporated after the ruling.
(Translated by Gary Peeters)