Maurice Lacroix up for sale due to Swiss watch slowdown

Just two or three years ago Maurice Lacroix’s fortunes seemed to be on the rise, with the brand eagerly venturing into the high-end of watchmaking. Now, with the Swiss luxury watch slowdown, Maurice Lacroix’s parent company, DKSH Holdings AG, has put the company up for sale at an asking price of CHF100 million.

Maurice Lacroix is a victim of the perfect storm – the surge in the Swiss franc since the cap was removed last year, as well as an ongoing slump in demand from its key markets of Hong Kong and China. With trillions wiped off the Chinese stock exchange recently and several thousand investors losing large sums on paper, this trend is not going to be reversed anytime soon.

This year has seen a 15% gain in the franc against the euro, thereby reducing the value of the revenue that Swiss watchmakers can make abroad. Continued weak consumption in China, which accounts for a quarter of global luxury demand, has also hurt European luxury-goods stocks.

Presently, Maurice Lacroix watches are selling at discounts, which have reached as much as 66% off the list price.

‘It’s a decent enough brand but it operates in a competitive price segment and lacks the retail muscle of the bigger watch groups,’Jon Cox, Analyst at Kepler Cheuvreux. He estimates the watchmaker has annual revenue of about CHF 70 million.

Swiss timepiece exports saw their biggest monthly drop in more than five years in May of this year. Ulysse Nardin, owned by French luxury-goods maker Kering, said that month it would cut jobs to adjust to weaker demand.

Maurice Lacroix makes watches that typically sell for CHF1,000 to CHF5,000. Amazon.com lists discounts of 20% and 49% on models in that range, and as much as 66% off a more elaborate $8,760 men’s timepiece.

DKSH also owns the Glycine brand, which specializes in entry level military style timepieces, and a joint venture with Davidoff. DKSH may sell these brands as a package or in separate parts, explained Chief Executive Officer Joerg Wolle.

DKSH wants to walk away from watch production to focus on its main activity, which is helping clients expand in Asia in industries such as consumer goods, technology and pharmaceuticals. The company will continue to offer marketing and other services in the luxury-goods industry, according to Wolle.

“Several parties have approached the company for Maurice Lacroix in recent years. I am confident the brand will find a new home within a bigger group.”
Joerg Wolle DKSH Holdings AG

However, if DKSH is pinning its hopes on the likes of the Swatch Group they are likely to be disappointed. The Swatch Group AG, Switzerland’s biggest watchmaker, has no interest in buying Maurice Lacroix, according to spokeswoman Beatrice Howald. “We have all the brands we need,” she said.

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