The Richemont Shakeup
With murmurs of an impending CEO reappointment for the luxury behemoth, Compagnie Financière Richemont SA getting louder with every passing second in the past weeks — it absolutely was just the a matter of time before an announcement was made. Here’s how it all went down.
On Friday, the 4th of November (i.e. just yesterday) the Richemont Group published an unaudited financial report documenting its performance in six months that preceded the 30th of September 2016. More on that later.
Along with that report, yet another document was published citing nominated changes in Board of Directors’ and Senior Management appointments, which put forth news that is earth shaking, to say the least.
This second document was the result of the Nominations Committee and Board of Compagnie Financière Richemont SA having met on the 3rd of November, to work through succession planning in light of the Group’s alarming performance figures over the year and as well because of some retirements in the horizon. Some bare facts from the report are as follows:
|Executive Chairman of the Group||Johann Rupert||Johann Rupert|
|Chief Executive Officer||Richard Lepeu|
|Chief Financial Officer||Gary Saage||Burkhart Grund|
New Board Level Nominations
|CEO of Van Cleef & Arpels||Nicolas Bos||Bos will be joining the Board in his capacity as CEO of Van Cleef & Arpels|
|Head of Watchmaking, Marketing and Digital||Georges Kern||Kern will be stepping down from his role as CEO of IWC Schaffhausen|
|Head of Operations||Jérôme Lambert||Lambert will be stepping down from his role as CEO of Montblanc; his Board level responsibilities will encompass central and regional services and all Richemont Maisons other than jewellery and watchmaking|
All nominations will, of course, have to be brought up for the Group’s shareholder approval at their annual general meeting in September 2017 before the roles can be cast in stone. Only two names were mentioned to join the Board with immediate effect: Grund, who is currently the Group’s Deputy Chief Financial Officer, and Frank Vivier, the Chief Transformation Officer.
Once all of the appointments are laid out, it becomes clear that the Nominations Committee and Board found it fit to not put someone into the CEO role moving forward and instead have it decentralized because the Board is — and I quote from the Richemont press release — “recognizing that rapidly changing technologies bring significant challenges to traditional business models.”
Chairman Rupert further comments in the release saying, “The changes we have proposed today will strengthen the Group’s ability to respond to the dynamic markets in which we operate, especially in the developing field of digital marketing and e-commerce.”
The focus behind the shakeup and reorganization is, therefore, crystal clear. The word is Digital. And investors have already sounded their support for the drastic decisions announced with the Group’s stock climbing 9.4 percent in Zurich despite the earlier half-year report stating a 43 percent dive in profits.
That’s all the good news to have come out of yesterday’s development. Because again looking at the unaudited half-year financial filling, Bloomberg has reported the following words from Rupert and other executives:
– Richemont will reduce production of watches and needs to slim down through natural attrition
– The company isn’t planning job cuts, but is considering a hiring freeze and has been closing boutiques in less important locations in China
– Under-performing brands need to be fixed or sold
Analysts all around have their thumbs on the Cie Financiere Richemont SA ticker in what has gravitated into the Biggest Shakeup in Years in the luxury goods industry. Revolution too, will be keeping our ears to the ground for further developments.
In the meantime we celebrate the definitive decisions made because a drive towards a reformed business approach/mindset has been a long time coming in light of the Swiss industry’s ailing health. And, of course, to our friends Georges Kern and Jérôme Lambert, a hearty congrats on the Board nominations. Both gentlemen were, no doubt, in the minds of many to helm Richemont’s future.