Young Chinese woman elected to Cartier owner Richemont’s board, but no new head of watchmaking named

Economics professor and Chinese economy expert Keyu Jin is one of eight new board members in shake-up at luxury giant, but search continues for new head of struggling watch division

PUBLISHED : Friday, 15 September, 2017, 7:01am
UPDATED : Saturday, 16 September, 2017, 7:19pm

Richemont replaced almost half the members of its board of directors this week, as the world’s second-biggest luxury group looks for an executive to revive its struggling watch business.

The board overhaul was the company’s latest response to a slump in profits triggered by a collapse in Chinese demand for luxury watches over the past few years.

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The downturn exposed massive overcapacity at Richemont’s watch factories, notably at Cartier, Vacheron Constantin and Piaget. This led to inventory buy-backs, job cuts and the replacement of almost all its brand chiefs.

Richemont, whose brands also include Alfred Dunhill and Montblanc, reported that demand was picking up, with constant currency sales for the group rising 12 per cent in the five months to the end of August.

Controlling shareholder and executive chairman Johann Rupert held court at the company’s annual meeting in the suitably elegant lounges of the Four Seasons Hotel in Geneva.

He gave no word on a new head of the watchmaking division after the surprise departure of Georges Kern, who was touted as a potential future chief executive. Kern, a long-serving Richemont executive, left in July after just four months in the role to join rival Breitling.

“I did tell Georges that being an entrepreneur without the support services of the group may prove to be an interesting experience,” Rupert said on the sidelines of the meeting.

“Welcome to my world, where you have sleepless nights now and then,” the South African added.

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Asked whether a successor would be appointed soon, he said: “We’ll make announcements in November. Obviously, we’re looking at other people and we’re also looking in other functions.”

That the search is taking time shows there may be no suitable candidate inside the group. Outsiders, meanwhile, may be reluctant to take on the challenging task.

That’s the kind of competence they need
A Richemont shareholder

Kern departed soon after Richemont introduced an unconventional management structure, replacing retiring chief executive Richard Lepeu with a senior executive committee of younger managers.

Rupert said the eight new board members, including two women and his son Anton, would help the board steer the group “in times of great change” thanks, notably, to their know-how in technology and strategic areas like e-commerce.

Another shareholder said she was glad to see a young Chinese woman elected to the board, given the importance of that part of the world to the company.

“That’s the kind of competence they need,” she said, speaking of new board member Keyu Jin, an economics professor and expert on the Chinese economy.

Another investor spoke admiringly of Apple’s ability to become a major player in watches in just two years. The tech giant on Tuesday presented a new Apple Watch able to make calls without the need for an iPhone nearby.

Analysts said Richemont’s improved sales figures were less convincing when taking into account buy-backs of unsold inventory from Chinese and Hong Kong retailers in the year-ago period.

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Without this one-off effect, Richemont’s constant currency sales increase was reduced to 7 per cent.

Richemont did not give any guidance on first-half profit, figures for which will be released on November 10. Analysts expect it to increase by around 40 per cent.