ZURICH — Maurice Lacroix, the latest Swiss prestige watch brand to go on sale, should trigger fair interest among potential buyers. But analysts warn the bonanza valuations of Swiss watch properties might be over.
Swiss trading house DKSH said this week it would sell Maurice Lacroix, a small maker of midpriced prestige watches based the Jura region. DKSH, focused on sales and marketing for foreign multinationals in Asia, did not disclose financial information for its watch brand, but chief executive officer Joerg Wolle cited no barriers to the disposal.
In 2011, the last year figures were revealed, DKSH said Lacroix had revenues of 70 million Swiss francs, or $73.9 million at current exchange rates, and 200 employees. “The market doesn’t have any idea about the performance of this subsidiary,” said Patrick Jnglin, a broker at Kepler Cheuvreux.
Sources suggested the brand could command a price of around 100 million Swiss francs, or $105.5 million.
Wolle acknowledged Lacroix had been hit by falling demand in Asia, industry consolidation and the soaring Swiss franc. Asian sales of expensive Swiss timepieces, dependent on mainland Chinese buying through Hong Kong, have dropped sharply after Beijing’s crackdown on corruption and the associated decline in ostentation and gift-giving.
Conditions for watchmakers have been exacerbated by the strong Swiss franc, which has soared in value since the Swiss National Bank decided in January to abolish the minimum exchange rate against the euro.
Such conditions could deter even well-heeled potential buyers. Both Swatch Group and Richemont already have a strong portfolio of brands – though Richemont recently announced its cash pile had risen to more than 5.2 billion euros, or $5.7 billion. Meanwhile, LVMH Moët Hennessy Louis Vuitton and Kering, which have both expanded into Swiss watchmaking, may prefer to digest existing acquisitions.
A sale may not be helped by the fact that DKSH’s luxury goods and own watch brands business, including Lacroix, had, after years of “above-average profitability,” swung to a loss, the group revealed this week.
DKSH traces its origins to Swiss pioneers who established Asian trading posts for European products. It first bought into Lacroix in January 2008, raising its stake to a majority in July 2011.