The Richemont Group, the world’s second-largest luxury goods company whose brands include Cartier, Montblanc and Baume & Mercier, is restructuring some of its watchmaking operations.

Richemont’s 11 luxury watch brands include Carter, Vacheron Constantin, Piaget, A. Lange & Sõhne, Van Cleef & Arpels, Montblanc, Officine Panerai, Baume & Mercier, IWC, and Dunhill.

The changes follow what Johann Rupert, executive chairman of the Swiss conglomerate, in its June 5 annual report called “a very difficult [fiscal] year,” which ended Mar. 31. Richemont’s net profits fell 22% to 642 million euros ($762 million), and operating profit by 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 a belt-tightening program, Richemont is closing a number of its 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 the assembly plant for Cartier watches 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 some other Richemont brands. Its 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 let go in the towns of La Chaux-de-Fonds, Geneva, Villeret, and in Fribourg.

The watch news isn’t all downbeat for Richemont. In the year just ended, Officine Panerai showed “very strong growth,” says Rupert, while three brands acquired in December 2000-Jaeger LeCoultre, IWC and A. Lange & Sõhne—have been “fully integrated into the Group’s distribution structures [and] showed growth in sales.” Montblanc also saw sales rise, in part due to 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, said Rupert.

JCK