Swatch Group and Tiffany & Co. have severed ties. The Swiss watch company terminated its partnership with Tiffany yesterday as a result of a breach of contract. The Wall Street Journal Online reports that Swatch decided to end the alliance “following Tiffany & Co’s systematic efforts to block and delay development of the business.”
Tiffany quickly responded, retorting that “Swatch has failed to provide appropriate distribution for Tiffany & Co. brand watches” (online.wsj.com). The Tiffany Watch Co. was formed in 2008 by Swatch to develop and sell luxury Tiffany-branded watches. The partnership was originally supposed to last 20 years. Tiffany Watch will have the next two years to wind down current business, then it will be dissolved. Swatch will be filing a claim for compensation, which will be heard by a court in the Netherlands. Tiffany claims that it has honored all its obligations, and thus views Swatch’s behavior as misconduct.
The termination of this contract won’t have a huge impact on Tiffany, as the jewelry company has stated that the Swatch business represents less than 1% of their total sales.