NEW YORK (TheStreet) -- Tiffany (TIF) cut its full-year profit outlook on Monday following a Dutch court's ordering of the high-end jewelry retailer to pay more than half a million to Swatch Group over the two companies' ongoing arbitration suit.
Shares fell 0.12% to $90.51 on Monday.
The New York-based company said in a release on Sunday that it was ordered to pay $449.5 million plus interest and legal fees (bringing the total payment up to about $480 million, according to Sterne Agee analysts) to Swatch after a Netherlands arbitration panel majority ruled in favor of the Swiss watchmaker.
Swatch is the world's largest watchmaker. The companies had established a joint venture in 2007 to create watches under the Tiffany brand together. But the arrangement, which was supposed to last for 20 years and solidify Tiffany's position in the luxury watch market, didn't pan out for either company. The deal was terminated in 2011 with both companies ending up in court, according to Reuters.
Swatch blamed Tiffany for "systematic efforts to block and delay development of the business," while Tiffany accused Swatch of not honoring the agreement's terms, Reuters said.
Today, Tiffany only receives about 1% of sales from watches currently, Reuters said.
"We were shocked and extremely disappointed with the decision of the majority of the arbitral panel," Tiffany's chairman and CEO Michael J. Kowalski stated in the Dec. 22 release. "We firmly believe the panel's ruling is not supported by the facts of this case or the various agreements between the Swatch parties and the Tiffany parties. While we are reviewing our options with our legal counsel, I want to assure you that we do have sufficient financial resources to pay the full amount."