Richemont (CFRUY)  shares fell the most in 16 months Friday after the luxury watchmaker reported a 14% drop in first quarter operating profits in the year to March as it grapples with dwindling demand.

Richemont shares were marked 6% lower at Sfr80.80 each by 11:00 CET in Zurich, the biggest single-day decline since January 2016. The shares have gained 6.83% over the past three months, compared with a 2.22% gain in the S&P Global Luxury Index.

The maker of Cartier and Montblanc brands reported operating profits of €1.76 billion ($1.91 billion) in the year to March from €2.06 billion the previous year. Sales fell 4% to €10.6 billion, Richemont said. The company also reported a 200 basis points fall in the year to 16.6%.

"The past year posed challenges for Richemont. The Group responded to changes in demand, which particularly affected our watch businesses, and shifting patterns of consumption," Chairman Johann Rupert said in a statement. "The Group has addressed those challenges by taking significant measures which, while having weighed on short term financial performance, will ensure Richemont is well positioned for the future."

Last year, Richemont bought back and destroyed some products to ease overstocking.

The company was particularly hard hit in its Specialist Watchmaker division, which saw sales fall by 11%. The lower demand for fine watches together with the adverse impact of buy-backs and production capacity adjustments led to a 57% reduction in the segment's operating result.

Rupert warned of volatility and uncertainty in the geopolitical and trading environments in the upcoming year.

"Our attention is focused on transitioning the Group to adjust to operating in a more sustainable growth environment, by adapting our product offer, communication and distribution to new consumption patterns while allocating resources primarily towards research and innovation, digital marketing, online sales platforms and training in all of our Maisons," Rupert said.