LONDON — Management sands are shifting at Compagnie Financière Richemont as the owner of brands including Cartier, Van Cleef & Arpels and IWC continues to fight for market share in an environment increasingly hostile to hard luxury.
Bernard Fornas plans to retire and step down from his role as co-chief executive officer. Fornas, a former Cartier ceo who oversaw sales and marketing, will not be replaced. Instead, his co-ceo Richard Lepeu, who oversees central functions, will become the company’s sole ceo.
The two had served in the joint role since 2013, the same year that Richemont’s chairman and shareholder of reference Johan Rupert revealed he was taking a year’s sabbatical.
From the start it was an unconventional setup and industry observers had questioned its sustainability.
In a flash report following the announcement on Friday, Thomas Chauvet of Citi called Richemont’s ceo management structure “unusual,” and added that having Lepeu as the sole operator “is likely to simplify the organizational structure and decision-making process.”
Richemont’s stock edged up 0.6 percent to 64.30 Swiss francs, or $66.09, in mid-morning trading on Friday following the announcement, and closed up 1.5 percent at 64.85 Swiss francs, or $66.65.
Fornas, who turns 69 this year, will continue to serve as a non-executive director and will serve on the nominations committee. He will stand for reelection by shareholders at Richemont’s next annual general meeting on Sept. 14.
Rupert called Fornas, who joined Cartier in 1994, “a major figure” in the significant growth that the group has enjoyed over the past decade. “As the luxury goods domain evolves around us, Richemont’s board is delighted that Bernard has chosen to serve the shareholders for many more years to come.”
The evolution that luxury — especially hard luxury — is facing cannot be underestimated, with challenges in China and Hong Kong damaging the once-flourishing watch market. Changing tourism patterns, a crackdown on gifting in China, and political unrest in Hong Kong, which has virtually been deserted by mainland Chinese tourists, have all eroded sales and profits in the region.
The strong Swiss franc has also pushed up the cost of doing business and put pressure on Richemont’s profit margins. The second-largest luxury goods group after LVMH Moët Hennessy Louis Vuitton employs about 9,000 people in Switzerland.
Last month, Richemont confirmed it was planning to cut up to 350 jobs from its watch manufacturing operations in Switzerland after the Swiss paper Le Temps cited an internal memo from the company stating it would be laying off up to 4 percent of its Swiss workforce.
The memo said Richemont would try to “limit the downsizing as far as possible” by reallocating those affected to other company-owned brands. Sources close to Richemont have since told WWD the group is actively looking to find jobs for the affected workers both inside and outside the luxury conglomerate.
More recently, the Tribune de Genève, a local Geneva newspaper, speculated that 170 jobs could go at Cartier’s Neufchatel and Fribourg manufacturing sites, while 120 further positions would be cut at the Vacheron Constantin and Piaget watchmaking units.
A Richemont spokeswoman declined to comment on the details of the Tribune de Geneve’s story.
Chauvet of Citi pointed out that both Vacheron Constantin and Piaget have been the most exposed to the gifting crackdown and general demand slowdown in Greater China. He said the cost implications of cuts would probably feed through negatively in Richemont’s full-year 2016-17 profit and loss accounts.
On Friday, Richemont also said Cyrille Vigneron, Cartier’s ceo, would become a member of the senior executive committee with effect from April 1. He will continue to be a member of the group management committee. Vigneron, a longstanding Cartier senior executive who rejoined Richemont from LVMH at the beginning of the year, will also stand for election to the board of directors at the September annual meeting.
In his report, Chauvet speculated that Vigneron might be a potential candidate for the ceo position at Richemont if he succeeds in turning around Cartier, which has been impacted negatively by the struggling watch business over the past few years.
Separately, Alain Dominique Perrin, the former ceo of Richemont and a longtime adviser to Rupert, will not be standing for reelection to the board. He will serve as a consultant to the company.
On Friday, Richemont also nominated Jeff Moss for election to the board. Moss will serve as a non-executive director and become a member of the board’s nominations and strategic security committees. He is a computer security and Internet security expert who currently serves as a member of the U.S. Department of Homeland Security Advisory Council; a member of the Council on Foreign Relations; a non-resident senior fellow at the Atlantic Council, and a member of the Georgetown University School of Law Cybersecurity Advisory Committee. Previously, Moss has served as chief security officer of the Internet Corporation for Assigned Names and Numbers, and a director at Secure Computing Corporation. He is the founder of the Black Hat Briefings and Defcon.
His appointment should come as no surprise as Richemont has been a leader in tackling counterfeiting and cyber crime, succeeding through the courts in pulling down thousands of rogue Web sites over the years. Two years ago in Britain, Richemont struck a major blow against online counterfeiters by winning a U.K. court order demanding that local Internet service providers block access to specific Web sites selling fake Cartier, Montblanc and IWC products.