Kering buys watchmaker Ulysse Nardin, posts mixed Q2

PARIS, France - French luxury goods group Kering said on Wednesday it had agreed to buy Swiss watch maker Ulysse Nardin as it posted mixed first-half results that revealed an unexpected drop in sales at its flagship brand Gucci.

Ulysse Nardin was one of the last remaining major independent family-controlled luxury watch makers in Switzerland after more than a decade of consolidation led by rivals Swatch Group, Richemont and LVMH, a race Kering entered relatively late.

Created in 1846, Ulysse Nardin is based in one of Switzerland's main watch production hubs, Le Locle, where Swatch's Tissot and Richemont's Montblanc watchbrand and LVMH's Zenith are also located.

Ulysse Nardin is estimated to make annual sales of about 250 million Swiss Francs and produces some 30,000 units a year.

Kering said Ulysse Nardin fitted well with its ambition to expand its watches and jewellery business. Kering Chief Financial Officer Jean-Marc Duplaix did not give any financial details about the brand or the deal but said talks went fast and took place during the second quarter.

Duplaix said Gucci enjoyed strong trading in North America in the second quarter but suffered from weakness in mainland China, Hong Kong, Taiwan, Singapore and Japan.

He also pointed to sluggish growth in Europe where the brand saw a drop in traffic from Japanese and Russian tourists and slower growth in spending by Chinese tourists.

Gucci sales, which many analysts had expected to remain flat in the second quarter, fell 2.4 percent on a like-for-like basis and were down 5.7 percent on a reported basis.

However, the group's total like-for-like luxury sales rose 5.2 percent during the period - beating analysts' forecasts of 3-4.5 percent - helped in part by continued strong growth at fashion brands Yves Saint Laurent and Bottega Veneta.

Including revenues from Kering's sports brands, second-quarter sales reached 2.35 billion euros ($3.1 billion), broadly in line with market expectations. (1 US dollar = 0.7476 euro)

Kering buys watchmaker Ulysse Nardin, posts mixed Q2

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