Tiffany & Co. 'Shocked' as Court Orders $449M Damages to Swatch

(IDEX Online News) – Swatch Group AG won an arbitration award of $449 million (402 million Swiss francs) against Tiffany & Co. in a court case in which Swatch claimed a breach of contract in a joint venture.

The amount in the judgment is more than Tiffany earned last year, and the upscale jeweler said it will record a charge of $295 million-$305 million in the fourth quarter for the decision.

The charge may reduce earnings by up to $2.35 a diluted share for the fiscal year ended January 31. That compares with a company forecast of $3.65 to $3.75 per share made last month, Tiffany said.

The company recorded net income of $416 million in its last fiscal year

Tiffany’s CEO Michael Kowalski said: “We were shocked and extremely disappointed by the decision of the arbitral panel [in the Netherlands].” He claimed the ruling was not supported by the facts or agreements between both sides. Tiffany said it is reviewing its legal options.

Swatch, Switzerland's biggest watchmaker, said Tiffany’s counterclaim was dismissed by the Netherlands Arbitration Institute.

Swatch and Tiffany locked horns in a legal fight in 2011 after the watchmaker claimed that Tiffany prevented development of a joint business.

Tiffany counter-claimed that it honored its obligations under the terms of the venture that the two firms started four years earlier, when they agreed to develop and sell watches under the Tiffany brand and split the profits.