Rupert to step down, two will be joint chiefs of RichemontComment on this story
Richemont’s Johann Rupert would end his latest spell as chief executive and hand control of the Cartier owner to two of his long-serving managers, the second-biggest luxury-goods company said.
Bernard Fornas, who runs Cartier, and Richard Lepeu, who was named as Rupert’s deputy last year, would become joint chief executives in April when Rupert stepped down, the Geneva-based company said on Friday. The two have worked together at Richemont’s watch and jewellery brand.
“Fornas is going to drive the growth, something he did very well at Cartier, while Lepeu is looking after the central functions,” said Jon Cox, the head of Swiss research at Kepler Capital Markets in Zurich.
The appointment of the joint chief executives put Richemont in “safe hands” amid a slowdown in Asia, a key driver of a boom in luxury goods, Cox said. Also, Richemont reported a 53 percent gain in first-half profit, beating analysts’ estimates, as a weaker euro spurred wealthy Asian visitors to spend more on luxury goods in Europe. The company said it expected the currency impact to become less favourable during the second half.
Richemont fell as much as 2.6 percent in Zurich trading and was down 2 percent at Sf63 (R577.81) as of 9.31am on Friday, trimming the stock’s gain this year to 33 percent. On the JSE Richemont closed 1.6 percent lower at R58.42 on Friday.
Rupert, the company’s controlling shareholder, became chief executive in 2010 after Norbert Platt, who had held the job since 2004, resigned. He will continue in the role of executive chairman.
“In terms of the management, nothing much changes,” Rupert said. “We’ve always worked in a collegial sense at head office.”
The Rupert family set up Richemont in 1988 to hold investments outside South Africa during apartheid, when sanctions limited investment.
Richemont said in March that Fornas would leave his position as chief executive of Cartier at the end of this year. The executive joined Richemont in 1994 and has led Cartier for a decade. He previously worked for the company’s Baume & Mercier brand as well as French perfume maker Guerlain. As head of Cartier, he often said the brand’s success came from the fact that it was like a plane with five engines, and if one region was weakening, other areas could make up for it.
Lepeu joined Cartier in 1979 and was chief executive of the brand from 1995 to 2001. He spent three years as chief operating officer of Richemont from April 2001, before becoming group finance director in May 2004 to March 2010.
Net income at Richemont rose to E1.09bn (R12.06bn) in the six months to September, beating the E1.02bn average estimate of nine analysts surveyed by Bloomberg. Purchases by tourists in Europe fuelled growth, though growth in Asia was easing, the company said.
Growth in Asia was “clearly moderating”, chief financial officer Gary Saage said.
Still, in China “the top end continues to do pretty well for us”, he added.
Sales in October increased by 7 percent in local currencies after first-half revenue rose 21 percent to E5.11bn, or 12 percent excluding currency shifts.
The growth in October “looks reasonable”, Kepler’s Cox said. Still, “it appears Asia and America’s local currency sales declined in October, which some might highlight as a negative”.
The maker of Jaeger-LeCoultre watches outperformed its August forecast that first-half profit would rise as much as 40 percent as European sales rose 19 percent in local currencies, twice as fast as the pace in the Asia Pacific region. The weaker euro helped drive profit growth as it boosted sales in Europe to the detriment of China, Richemont said.
The dollar was on average 13 percent higher against the euro during the period. – Bloomberg