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Richemont Group no longer to be run by a CEO but a group of senior figures

Richemont Group will no longer have a chief executive and be run by a group of senior figures once Richard Lepeu retires in March, Chairman Johann Rupert said on Friday as the group battles a severe watch industry downturn.

Shares in Richemont rose more than 8 percent after the group said October sales were “modestly positive,” beating forecasts of a continued decline and echoing similar positive comments from luxury rivals.

“It is impossible to replace Richard (Lepeu) and appoint a new person who will take care of 35 direct reports,” South African billionaire Rupert said in an analyst conference call. “The board is really there to allocate capital and human resources, this is a more sensible and fairer structure.”

Rupert, Richemont’s controlling shareholder who has served in the past as CEO, said he would not become more involved in the day-to-day management of the group and preserve his role as “an air traffic controller of egos.”

The group appointed Georges Kern, currently CEO of IWC Schaffhausen, as head of watchmaking, marketing and digital. Jérôme Lambert, currently CEO of Montblanc, becomes head of operations responsible for central and regional services and all sections other than jewelry and watchmaking.

Chief Financial Officer Gary Saage would also retire in July, replaced by deputy Burkhart Grund, while around a third of board members would step down and join a newly created International Advisory Council.

Rupert pointed to a generational change. Nearly all of Richemont’s board members are over 50 and there is only one woman.

“I want to see less gray haired men and less gray haired Frenchmen, we have too few women and not enough diversity, not enough Asians or Americans,” Rupert said, adding the possibility of his son joining the board “had not yet been discussed.”

Richemont declined to give details about job cuts. It would tackle excess capacity and reduce headcount through natural attrition. It would also close underperforming shops, in second and third tier cities in China for example.

Saage said 25 shops were shut by the end of Sept. and another 25 would be closed by Dec.31. “We have to slim down not only in production but throughout the group to make sure we don’t have excess fat,” Rupert said.

The shop closures and buyback led to a one-off charge of 249 million euros ($27 million).

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