Rival Breitling grabs Richemont’s head of watches
Richemont has lost its head of watch making, Georges Kern, to rival company Breitling. Kern’s resignation would have come as an unexpected blow to the luxury-goods company as the top executive was promoted to the position four months ago.
Investec Asset Management portfolio manager Samantha Hartard said Richemont had made changes in its leadership structure over the past year. The group CEO and chief financial officer both retired. It then created four operational head roles without the CEO position.
"One of those roles was given to Kern — that of watch making, marketing and digital," said Hartard. "This three-way combination did not exist before. Given that a large part of the earnings pressure Richemont faced over the last two years came from watches, this was an important role as the company navigated a tough operating environment."
In a short statement released on Friday, Richemont chairman Johann Rupert announced Kern’s departure. "If you compare its tone to the statements he made of Richard Lepeu, the former CEO, and Gary Saage, the former chief financial officer, when they resigned, it was very cold," said Hartard.
"This became more understandable when news broke that Kern was joining Breitling and is rumoured to become a large shareholder in the company along with private equity firm CVC Capital Partners, which took 80% ownership in the family owned brand."
Adding to the intrigue of the situation, Hartard said Kern had probably been in talks with Breitling when he took on the new Richemont role on April 1.
Richemont owns a portfolio of international brands that operate in three areas. In jewellery, the company owns brands such as Cartier and Giampiero Bodino. In the specialist watch makers division, it boasts maisons such as IWC Schaffhausen and Piaget.
In the "other" segment, Richemont houses Montblanc, as well as other smaller maisons and unbranded watch component manufacturing activities.
In the year to March Richemont reported sales of €10.6bn. Operating profit for the year amounted to €1.76bn.
Hartard said the silver lining was that Kern was in a newly created role.
"One man does not make an entire industry and the environment for watch makers is definitely improving, judging from data releases," said Hartard. "We will wait to see what leadership changes, if any, Richemont will announce at either its annual general meeting in September or at the interim results release."