* Kering buys Swiss independent watch market Ulysse Nardin (Adds details)
PARIS, July 30 Kering fulfilled its ambition of expanding in Swiss watchmaking with the acquisition of Ulysse Nardin, the French luxury and sports brand group said on Wednesday as it posted mixed first-half results that showed further weakness at its flagship Gucci brand.
Ulysse Nardin was one of the last remaining major independent family-controlled luxury watchmakers 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 watch brand and LVMH's Zenith are also located.
Kering, whose Gucci brand also makes watches, started investing in 2008 in independent watchmakers Girard-Perregaux and Jeanrichard. It bought control of the brands in 2011 and had long since been hunting for new targets.
Ulysse Nardin gives Kering greater legitimacy and weight in the watch making industry, analysts said, as the brand is one of the country's few integrated producers, in terms of parts and movements.
It will give Kering precious independence from the industry's top supplier Swatch, which started whittling down deliveries to its main rivals in recent years.
Kering Chief Financial Officer Jean-Marc Duplaix did not give any financial details about the brand nor the deal. He would only say that the group paid a multiple of "over 13 times" annual earnings before interest, tax, depreciation and amortisation (EBITDA) for it and that talks went "very fast" and took place during the second quarter.
Ulysse Nardin, whose marine-inspired watches start at around 7,000 Swiss francs ($7,700), is estimated by industry experts to make annual sales of about 250 million Swiss Francs and produces some 30,000 units a year.
"It fits all our criteria, in terms of growth potential and synergy potential for our other watch brand," Duplaix said.
Asked about the group's trading update, Duplaix said Gucci had seen business recover in the second quarter in North America after bad weather hits sales during the previous three months but they had suffered in Hong Kong, Taiwan, Singapore and Japan.
Duplaix said trends remained negative in mainland China, where Gucci was in the final phase of appointing a new chief executive. However, he said business in China had improved since the end of last year, notably in big cities.
In Europe, Duplaix said luxury consumption was "sluggish," which he attributed in part to a drop in traffic from Japanese and Russian tourists and slowing 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.
Last week, industry leader LVMH spooked investors with below-forecast profits and a severe slowdown at Louis Vuitton, whose sales growth collapsed to zero after enjoying a 9 percent rise in the first quarter.
Duplaix said Gucci's same-store sales "were also slightly negative" in the second quarter and the brand's operating margin had lost 20 basis points in the first half against the same period last year and was now 31.5 percent.
"This is a "good" miss, though, as it comes on the back of a declining wholesale," Exane BNP Paribas analyst Luca Solca said of Gucci's performance. "This probably means Gucci senior management is continuing to improve the quality of the brand's distribution, and weeding out questionable accounts."
However, Kering'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 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.
Kering's German sportswear firm Puma on Tuesday said sales of World Cup soccer boots and national team shirts as well as new Arsenal jerseys beat its expectations as it reported second-quarter earnings that fell less than feared.
"After a significant decline of 5 percent on the back of the LVMH negative surprise, this should be a support for the Kering share price," Solca said of the group's trading update and news of its Ulysse Nardin acquisition.
(1 US dollar = 0.7476 euro) (1 US dollar = 0.9092 Swiss franc) (Reporting by Astrid Wendlandt; editing by Leila Abboud, David Clarke and David Evans)