Richemont (CFRUY) , the maker of Cartier jewelry and Piaget watches, said Friday its CEO and CFO will step down along with nearly a third of its board in a management overhaul it hopes will reverse a slump in sales.
Richemont shares climbed 6.9% to Sfr67.45 on news of the changes and after the company reported a 43% decline in its financial-year first-half operating profit to €798 million ($885 million). The figure was slightly better than expectations following a recent profit warning that prompted analysts to slash their consensus forecast to €765 million.
Luxury goods makers, and in particular Swiss watch makers, have seen sales slump amid declining global demand for high end goods led by Chinese travellers, who have cut back on European visits following recent terrorist attacks and spending in Hong Kong due to a government clamp down on graft.
"The board has ... decided to restructure the responsibilities of senior management in the group, recognizing the need to be able to react quickly to the challenges facing business in general and the luxury industry," said Richemont.
CEO Richard Lepeu and CFO Gary Saage will retire next year, at the end of March and end of July, respectively. Eight directors will also leave the board at the company's annual shareholder meeting next year.
Chairman Johann Rupert will remain with the company and is set to increase his influence after he told reporters on Friday that the company would not replace the departing CEO. Under a new management model the heads of the groups brands will report directly to the board, a move the company hopes will make the divisions more nimble.
Burkhart Grund, currently deputy CFO, will step up to the CFO role.
The management changes were a "generational overhaul," noted Exane BNP's luxury goods analyst Luca Solca. Lepeu, who has been with Richemont for 30 years, and Saage, who has spent 28 years at the company, had both flagged their intention to retire.
Richemont's six month sales fell 13% year-on-year to €5.1 billion, while net profit for the period fell 51% to €540 million. Sales fell across Europe, except in the U.K., which enjoyed double digit growth as tourists flocked to luxury stores to take advantage of a more than 20% decline in the pound.
Richemont's watch sales posted the largest decline over the six month, falling 24% at constant exchange rates to €2.1 billion. The figure underlines the extent of the woes facing Switzerland's watch industry, which last month reported a 5.7% decline in September sales, its 15th-straight monthly decline.