Rupert de Richemont says luxury watchmakers must cut production

The head of Richemont, owner of Cartier and Vacheron Constantin, said the luxury watch industry must cut production after a drop in demand for expensive timepieces.

Chairman and founder Johann Rupert told shareholders at the Swiss luxury conglomerate's annual general meeting that global demand for watches has “overcome the boom,” held back by weak sales in mainland China and Hong Kong.

“You have to be cautious about just trying to get volume,” the South African billionaire said Wednesday in Geneva.

The chairman of Richemont, whose brands also include IWC, Jaeger-LeCoultre and Van Cleef & Arpels, applauded private competitors in the watch industry for showing restraint. The largest private watchmakers in Switzerland are Rolex SA, Patek Philippe SA and Audemars Piguet Holding SA.

“We have a close relationship with private competitors and we know what they are doing. They are acting very responsibly by limiting production,” he said.

Although Rupert controls Richemont through a family trust that holds the majority of voting shares, the stock is publicly traded and the company is required to provide detailed financial updates. By contrast, closely held watchmakers in Switzerland “have no shareholders to answer to,” he added.

After three years of record profits, Swiss watch exports have declined this year. Consumers grew cautious as pandemic-era savings dried up after a period of high inflation and as the strong Swiss franc pushed up watch prices and squeezed producers’ profits.

Bloomberg News reported last week that watch component makers and some brands are using a Swiss government program that allows them to lay off employees and reduce production without permanent job cuts.