Feb 23, 2016
Possible Richemont job cuts signal further industry troubles
Feb 23, 2016
Luxury goods group Richemont is considering cutting up to 350 jobs in Switzerland in what analysts say could signal a lasting weakness in the Swiss watch industry.
Richemont on Monday confirmed Swiss newspaper Le Temps' Friday report which cited an internal memo and said the company would be cutting up to 4 percent of its Swiss workforce given tough market conditions and the Swiss franc's strength that has weighed on tourist visits.
"Richemont would not consider jobs cuts in its production facilities if it was foreseeing an imminent rebound in the watch industry, in our view," analysts at JPMorgan Cazenove said in a note on Monday. "Watch production employees are skilled craftsmen, and it takes time to train them."
Richemont's portfolio includes the Cartier, Vacheron Constantin, Piaget and Montblanc brands. It employs around 9,000 staff in Switzerland.
Richemont said last month business was likely to remain challenging after sales fell 4 percent in the final three months of 2015, with the Hong Kong market remaining weak and Islamist attacks hitting tourist spending in Europe.
Several watch makers have cut jobs in recent months, such as Kering's recently acquired Ulysse Nardin and privately-owned Parimigiani and Christophe Claret.
The industry is having to adapt to a market with fewer Russian, Middle Eastern and Chinese buyers than a year ago, feeling the combined effects of record low oil prices and signs of economic weakness in China.
Swiss watch exports fell 7.9 percent in January year-on-year and in nominal terms after falling 3.3 percent in the full year.
$1 = 0.9984 Swiss francs
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