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The head of Richemont, the owner of Cartier and Vacheron Constantin, said the luxury watch industry must reduce production after a downturn in demand for costly timepieces.
Chairman and founder Johann Rupert told shareholders at the Swiss luxury conglomerate’s annual general meeting that global demand for watches “has gone past the boom,” held back by subdued sales in mainland China and Hong Kong.
“One should be cautious in just trying to pursue volume,” the South African billionaire said in Geneva on Wednesday.
The Richemont chairman, whose brands also include IWC, Jaeger-LeCoultre and Van Cleef & Arpels, applauded private competitors in the watch industry for showing restraint. The biggest closely held watchmakers in Switzerland include Rolex SA, Patek Philippe SA and Audemars Piguet Holding SA.
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“We have a close relationship with the private competitors and we know what they are doing and they are acting very responsibly by constraining production,” he said.
Although Rupert controls Richemont through a family trust that has a majority of the voting shares, the stock is publicly traded and the company is required to provide detailed financial updates. By contrast, closely held watchmakers in Switzerland “don’t have shareholders to report to,” he added.
After three years of gains at record value levels, Swiss watch exports have declined this year. Consumers turned cautious as pandemic-era savings ran dry following a period of high inflation and as a strong Swiss franc raised watch prices and crimped profits for producers.
Bloomberg News reported last week that makers of watch components and some brands are using a Swiss government programme that allows them to furlough employees and reduce production without permanent job cuts.
By Andy Hoffman
Learn more:
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The double-digit drop in sales seen in the latest results mark a stunning reversal of fortune for an industry that enjoyed an unprecedented sales boom during the pandemic-era.
