LONDON — It’s more than just the chief executive officer role that’s disappearing at Compagnie Financière Richemont, which is planning to slash more than 200 watchmaking jobs in Switzerland, according to media reports.
Earlier this month, Richemont announced a 51 percent decline in first-half profits to 540 million euros, or $605 million, and a 12.6 percent drop in sales to 5.09 billion euros, or $5.7 billion.
Richemont has been systematically buying back some of its highest-priced watches, most of them Cartier gold ones, harvesting the jewels and melting down the metal as watch sales — especially those by third-party retailers in the Far East — suffer.
According to a Bloomberg report, citing Unia trade union sources, the biggest cutbacks will likely be at Piaget and Vacheron Constantin. It said Richemont contacted the union at the end of last week and will meet with employee representatives tomorrow at three Swiss sites.
Richemont did not return calls at press time.
The news comes despite the fact that Richemont ruled out layoffs in its watch division during a conference call earlier this month. Gary Saage, Richemont’s chief financial officer said that, instead, the company would continue to invest in manufacturing while also “gaining efficiencies” in the process.
This would be the second major round of layoffs in Richemont’s watch division this year. In February, the luxury goods giant said it would cut up to 350 jobs from its watch manufacturing operations in Switzerland, or up to 4 percent of its Swiss workforce.
Richemont is the second-largest luxury goods group after LVMH Moët Hennessy Louis Vuitton. It employs about 9,000 people in Switzerland. Its stable includes Cartier, Vacheron Constantin, IWC, Panerai, Piaget and Montblanc.
Richemont has been grappling with the strong Swiss franc and a crisis in the high-end watch business. A crackdown on bribery in China and a change in tourism and shopper habits has damaged the watch business, with little sign of immediate recovery.
During a call following the results, Saage talked about adjusting to the “new normal” for the watch business. “Before the gifting explosion in China, we were seeing modest growth in watches. We don’t know where sales are going to be in the future, but we can no longer expect a return to growth of 20-odd percent. We’re looking at this — and all parts of the business — on an ongoing basis.”
The watch buybacks were aimed at helping third-party retailers clear stock without resorting to promotions, and cost Richemont 249 million euros, or $279 million, in the period. A portion of that money also went toward making the Richemont stores more efficient.
On the same day that the results were announced, Richemont’s executive chairman and shareholder of reference Johann Rupert said he was eliminating the ceo role in a bid to streamline company management, take the pressure off one individual role, and cut the fat in the business.
Richemont will be run by the board, with Rupert overseeing the team.