Richemont in trouble as luxury watch chief quits

Richemont in trouble as luxury watch chief quits
Published: 14 July 2017
Zurich - Swiss luxury-goods maker Richemont's head of watchmaking, once seen as a candidate to lead the entire company, is leaving less than four months after a management reorganisation put him in control of a portfolio of brands stretching from IWC Schaffhausen to Vacheron Constantin.

Georges Kern, a 17-year Richemont veteran, resigned with immediate effect to pursue another opportunity, the Geneva-based company said in a statement on Friday. Kern bought a stake in rival watchmaker Breitling and plans to help that brand revive itself, Le Temps said, citing several people it didn't name.

Richemont said it regrets the loss and didn't name a replacement.

The Swiss watch industry is coming out of the longest downturn in exports on record as it faces challenges such as encroachment from Apple, which has become the world's second-bestselling watch brand.

Richemont chairperson Johann Rupert said in May it's time to let a new generation of executives lead the company after a 14% drop in fiscal-year operating profit. Its Montblanc brand began selling a smartwatch this year.

"The management structure is relatively new and I assume he didn't feel comfortable with it," said Jon Cox, an analyst at Kepler Cheuvreux. "Some assumed that Kern could become group CEO one day, but now the group is run by a senior executive committee. Of course Johann Rupert is an ever present and I don't see any change in strategy."

Kern, 52, received an offer to "become an entrepreneur," Rupert, who controls the company, said in the statement.

CEO departures

The Geneva-based company began its biggest management overhaul in years in November, eliminating the companywide chief executive officer position. Rupert said at the time the decision to get rid of that post was made in order to avoid losing talent by picking one candidate over another. He also said Richemont has too many business lines for a single CEO to manage.

Since then, four brand CEOs have departed and the Swiss company has sold Chinese fashion house Shanghai Tang, reducing the number of its brands to 18. In April, Jerome Lambert became head of all of Richemont's brands outside of watchmaking and jewelry. Cyrille Vigneron heads Cartier, and Nicolas Bos is CEO of Van Cleef & Arpels.

"This seems to suggest that getting watches back on track is a difficult endeavor and confirms our expectations of possible hiccups in a four-headed senior leadership organisation," Luca Solca, an analyst at Exane BNP Paribas, wrote in a note.

Kern, who is Swiss, French and German, will no longer be standing for election to the board of directors at the annual general meeting in September, Richemont said.

Previously he ran IWC for 15 years, building what had been a sleepy brand into one of Richemont's largest timepiece makers. When Kern started in 2002, he was the company's youngest brand CEO. He wheeled in a range of celebrities to promote the brand, whose products sell for about 8 000 to 10 000 francs on average.

McGregor, Lima

Actor Ewan McGregor and model Adriana Lima were among those who attended IWC's annual red-carpet parties at the Geneva watch salon, a highlight of the event each year. Kern also introduced the first women's line at the watchmaker, whose slogan is "Engineered for Men," recognizing that timepiece makers had to expand their audience in the industry downturn.

Kern once turned IWC's booth at the Geneva watch fair into a life-size reproduction of the flight deck of an aircraft carrier, in homage to the brand's pilot watches.

IWC's attempt to compete with smartwatches failed, however. The brand never came through on a plan to start a line of intelligent watch bands that would attach to a mechanical watch and offer connectivity.

The departments Kern was responsible for, which also include digital and marketing, will report directly to the senior executive committee, Richemont said.

The shares were little changed at 79.90 francs as of 10:19 in Zurich.

"Richemont is losing a highly knowledgeable, strong personality," Rene Weber, an analyst at Bank Vontobel, wrote in a note.
- fin24
Tags: Richemont,

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