Richemont Closes a Cartier Watch Factory

The Richemont Group, the world's second-largest luxury goods company, is restructuring some of its watchmaking operations. The group's luxury watch brands include A. Lange & Söhne, Baume & Mercier, Cartier, Dunhill, IWC, Montblanc, Officine Panerai, Piaget, Vacheron Constantin, and Van Cleef & Arpels.

The changes follow what group executive chairman Johann Rupert, in a June 5 annual report, called "a very difficult [fiscal] year," which ended March 31. Richemont's net profits fell 22% to 642 million euros ($762 million), and operating profit fell 46% to 259 million ($307.4 million). Total sales dropped 5%, to 3.6 billion euros (just over $4 billion). In watch sales alone (including both those by jewelry houses like Cartier and specialist watchmakers like Panerai), there was a 5% decline to 1.7 billion euros ($1.8 billion).

As part of its belt-tightening, Richemont is closing a number of Lancel and Dunhill retail stores in the United States and Europe (except for Dunhill's New York flagship store) and moving to "optimize its manufacturing capacity as a consequence of changing market conditions," said Rupert. That includes shutting down Cartier's watch assembly plant in Villeret in the Swiss canton of Bern.

The state-of-the-art facility, designed by famed French architect Jane Nouvel, was opened in April 1992 to great fanfare in ceremonies attended by 1,000 guests from around the world. It annually produced hundreds of thousands of luxury quartz and mechanical watches for Cartier and other Richemont brands. The facility's activities and some of its staff will be transferred to the Cartier factory in La Chaux-de-Fonds. About 200 employees—or 5% of the group's total Swiss watchmaking work force of 4,000 people—are being laid off in La Chaux-de-Fonds, Geneva, Villeret, and Fribourg.

The watch news isn't all downbeat for Richemont. In the last fiscal year, Officine Panerai showed "very strong growth," said Rupert, while three luxury brands acquired in December 2000—Jaeger-LeCoultre, IWC and A. Lange & Söhne—have been "fully integrated into the group's distribution structures [and] showed growth in sales." Montblanc also saw sales rise, in part because of continued expansion into new products including watches and accessories, while sales of Cartier's precious metal and jewelry watches "were more resilient" than those in steel and gold, Rupert said.