Potential CEO's sudden departure a blow to luxury goods group

Mr Georges Kern took over as Richemont's head of watchmaking, marketing and digital about four months ago under the company's new management structure. Analysts said the role may not have allowed him to fulfil his potential. He is reportedly moving t
Mr Georges Kern took over as Richemont's head of watchmaking, marketing and digital about four months ago under the company's new management structure. Analysts said the role may not have allowed him to fulfil his potential. He is reportedly moving to rival firm Breitling.BT FILE PHOTO

ZURICH • Mr Georges Kern, who had been tipped as a potential chief executive of Richemont, left the luxury goods group abruptly last Friday just four months after taking over as head of its watchmaking division.

The departure of Mr 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 Mr 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.

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

Mr 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.

Said Kepler Cheuvreux analyst Jon Cox: "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. He may have just thought the structure wasn't for him."

In a reshuffle announced last November, Mr Lambert assumed responsibility for all businesses outside jewellery and watchmaking, while Mr 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.

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

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

Zuercher Kantonalbank analysts, in a note last Friday, said: "We recognised (Kern) as a strong leader and an emotional person, who could also sometimes cause friction. Apparently, the new role didn't allow him to fulfil his potential."

Richemont has been hard hit by a severe and prolonged watch industry downturn, which saw the group's timepiece sales - accounting for just under half of group revenue - plummet 15 per cent last year. Despite some recovery in recent months, Richemont in May had struck a cautious note, citing worries over volatile geopolitical and trading climates.

REUTERS

A version of this article appeared in the print edition of The Straits Times on July 17, 2017, with the headline 'Potential CEO's sudden departure a blow to luxury goods group'. Print Edition | Subscribe