Swiss watchmaker Swatch Group made a significant announcement regarding its future plans, revealing that it will be ceasing the production of watches and jewelry under the Calvin Klein brand. This strategic move is aimed at reducing the company’s exposure to a price segment that is currently facing challenges from the rise of smartwatches and fierce competition from other fashion brands. The decision was outlined in a release on Tuesday, indicating that once the current agreement expires in the near future, Swatch Group will no longer be partnering with Calvin Klein.
René Weber, an analyst at Vontobel, offered insights suggesting that the termination of the collaboration with Calvin Klein could be linked to uncertainties surrounding the management of Calvin Klein Inc. and the overall decline in sales within the watch market.
The restructuring plan introduced by Calvin Klein’s parent company, PVH Corp, earlier in the year, included notable changes such as the closure of the brand’s flagship store on New York’s Madison Avenue. These actions point towards a strategic shift in positioning Calvin Klein in response to the downward trend in sales. Calvin Klein has previously served as Swatch Group’s flagship brand in the fashion watch segment, with price ranges between €136 and €282. However, facing tough competition from low-cost Chinese watch brands and the growing demand for smartwatches, this segment has encountered challenges.
Weber’s estimates indicate that the discontinuation of the partnership with Calvin Klein could lead to a 2% decrease in group sales. Despite the substantial sales volume of approximately €145 million generated by the partnership in 2018, it is believed that earnings contributions were minimal due to the competitive landscape in the market.
In the wake of this announcement, Swatch Group’s shares held steady at 0957 GMT, in line with the broader trends in the Swiss market. This decision to end the collaboration with Calvin Klein underscores the company’s strategic acumen and ability to adapt to changing market dynamics.
For more information on the latest developments in the watch industry, you can visit WatchPro and stay informed about industry trends and updates. Additionally, to explore the impact of smartwatches on traditional watchmaking, you can check out this article by Business Insider.
