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Richemont watches boss makes surprise early departure
July 14, 2017 / 11:47 AM / in 7 days

Richemont watches boss makes surprise early departure

FILE PHOTO: A visitor looks at new models on the Montblanc stand at the "Salon International de la Haute Horlogerie" (SIHH) watch fair in Geneva January 19, 2015.Denis Balibouse/File Photo

ZURICH (Reuters) - Georges Kern, tipped as a potential chief executive of Richemont (CFR.S), left the luxury goods group abruptly on Friday just four months after taking over as head of its watchmaking division.

The departure of Kern, who had been at Richemont for 17 years, is a blow after the maker of Cartier, IWC, Montblanc and other top brands recently moved to a new management structure that split the top role between a handful of heir-apparents to the post.

Swiss newspaper Le Temps reported that Kern had taken a stake in rival Swiss watchmaker Breitling and planned to try to revive that brand.

Breitling declined to comment on the report.

"Georges has been offered an interesting opportunity to become an entrepreneur," Chairman Johann Rupert said in a statement. "He has had a very successful career at IWC Schaffhausen and we wish him well."

Kern, who steered watchmaker IWC Schaffhausen for 15 years, was previously seen going head-to-head for the CEO job with former Montblanc executive Jerome Lambert.

"Kern was touted as a potential future CEO of the group but the company has recently moved to a committee structure after Richard Lepeu retired as CEO," Kepler Cheuvreux analyst Jon Cox said. "He may have just thought the structure wasn't for him."

In a reshuffle announced last November, Lambert assumed responsibility for all businesses outside jewellery and watchmaking, while Kern was appointed head of watchmaking, marketing and digital. They assumed their new roles just under four months ago.

Richemont's other brands include Jaeger-LeCoultre, Van Cleef & Arpels and Piaget.

Luxury watchmakers have been struggling with dwindling demand in their biggest markets, Hong Kong and the United States, and growing competition from the likes of Apple.

Change at the Top

The unconventional move to abolish the top executive role came as part of chairman and leading investor Rupert's efforts to refresh the Geneva-based group's ageing management team and board.

Rene Weber, a luxury specialist at Swiss bank Vontobel, said rumours had been circulating about Kern's possible departure for months, making his resignation only "half a surprise".

"We recognised (Kern) as a strong leader and an emotional person, who could also sometimes cause friction," Zuercher Kantonalbank analysts said in a note on Friday.

"Apparently, the new role didn't allow him to fulfil his potential."

The group has been hard hit by a severe and prolonged watch industry downturn, which saw Richemont's timepiece sales - accounting for just under half of group revenue - plummet 15 percent last year.

Despite some recovery in recent months, Richemont in May struck a cautious note, citing worries over volatile geopolitical and trading climates.

Analysts said they didn't see Kern's departure as a reflection of any underlying problems with the watchmaking division.

"We don't assume the abrupt shift is related to any deterioration in the watch business," Zuercher Kantonalbank analysts said, pointing to recent improvements in Richemont's watch sales.

Watchmaking -- as well as marketing and digital activities -- will now report directly to the senior executive committee, Richemont said.

Reporting by Brenna Hughes Neghaiwi; editing by Susan Fenton and Keith Weir

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