Swatch yanks some brands out of Lotte

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Swatch yanks some brands out of Lotte

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The Swatch Group, the world’s largest watchmaker, pulled seven brands from Lotte Department Store following a disagreement over the splitting of profit margins, the two companies confirmed yesterday.

High and mid-range brands made by Swatch such as Longines, Hamilton and Mido closed their boutiques in the country’s largest department store chain in July and August.

Other watch brands departing the stores are Rado, Tissot, Calvin Klein Watches and the basic Swatch line.

Luxury lines like Omega and Breguet are still in Lotte.

The watchmaker demanded it lower the share of the profits given to Lotte, which the store chain did not accept.

“Over the past months, Swatch Group Korea demanded that Lotte lower the margins it receives,” said the head of the public relations office of Lotte Department Store, who requested anonymity.

“The two parties were unable to reach an agreement for various reasons and the brands began closing in July through August,” said the source.

Swatch Group Korea admitted that its request was not approved.

“It’s true that seven brands no longer operate at the Lotte Department Store,” said a representative of Swatch Group Korea.

“What we can say is that our group couldn’t come to an agreement on some important issues.”

The watch manufacturer is having similar negotiations with other department stores including Hyundai and Shinsegae, according to local media outlets.

There has been a history of conflict about profit margins between upscale retail chains and luxury brands.

In 2012, Swatch Group Korea requested that Lotte Duty Free Shop and The Shilla Duty Free Shop curb their profit margins by 10 percent. The duty-free shops accepted the demand given that sales of high-end watches account for a large share of the total sales of the duty-free shops.

Swatch Group is not alone in the fight over margins.

In 2009, Chanel cosmetic stores left the Lotte Department Store because of disagreements over profit margins and the locations of their boutiques.

Lotte tried to move the Chanel stores and reduce margins shared with Chanel as sales of the French brand were declining. At the time, the sales of Chanel’s cosmetic line ranked fifth at Lotte. But Chanel made a reluctant comeback in 2012 by accepting lower margins.

BY PARK EUN-JEE [ejpark@joongang.co.kr]














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