By Silke Koltrowitz
GENEVA (Reuters) - Richemont <CFR.S> replaced almost half of its board members on Wednesday as the world's second biggest luxury group looks for an executive to revive its struggling watch business.
The board overhaul was the company's latest response to a slump in profits triggered by a collapse in Chinese demand for luxury timepieces over the last few years.
The downturn exposed massive overcapacity at Richemont's watch factories, notably at Cartier, Vacheron Constantin and Piaget, leading to inventory buybacks, job cuts and the replacement of almost all its brand chiefs.
Richemont, whose jewellery brands include Cartier and which also owns the Alfred Dunhill and Montblanc ranges, reported that demand was picking up, with constant currency sales for the group rising 12 percent in the five months to the end of August.
Controlling shareholder and Executive Chairman Johann Rupert held court at the company's annual meeting in the suitably elegant lounges of the Four Seasons Hotel in Geneva.
He gave no word on a new head of the watchmaking division after the surprise departure of Georges Kern, touted as a potential future CEO. Kern, a long serving Richemont executive, left in July after just four months in the role to join rival Breitling.
"I did tell Georges that being an entrepreneur without the support services of the group may prove to be an interesting experience," Rupert told reporters on the sidelines of the meeting.
"Welcome to my world where you have sleepless nights now and then," the South African added.
Asked whether a successor would be appointed soon, he said: "We'll make announcements in November. Obviously, we're looking at other people and we're also looking in other functions."
The fact that the search is taking time shows there may be no suitable candidate inside the group and outsiders may be reluctant to take on the challenging task.
Kern departed shortly after Richemont introduced an unconventional management structure, replacing retiring CEO Richard Lepeu with a senior executive committee of younger managers.
Rupert said the eight new board members, including two women and his son Anton, would help the board steer the group "in times of great change" thanks notably to their know-how in technology and strategic areas like e-commerce.
Another shareholder said she was glad to see a young Chinese woman elected to the board, given the importance of that part of the world to the company.
"That's the kind of competence they need," she said, speaking of new board member Keyu Jin, an economics professor and expert on the Chinese economy.
Another investor spoke admiringly of Apple's <AAPL.O> ability to become a major player in watches in just two years. The tech giant on Tuesday presented a new Apple Watch able to make calls without the need for an iPhone nearby.
Shares in Richemont, which have gained over 30 percent so far this year, were down 1.6 percent at 1330 GMT.
The improved sales figures were less convincing when buybacks of unsold inventory from Chinese and Hong Kong retailers in the year-ago period were taken into account, analysts said.
Without this one-off effect, Richemont's constant currency sales increase was reduced to 7 percent.
Richemont did not give any guidance on first-half profit that will be released on Nov. 10. Analysts expect it to increase by around 40 percent.
LVMH <LVMH.PA>, the world's biggest luxury group, said in July that an uncertain economic climate meant its second half results may not match its sterling performance in the first six months of the year.
(Reporting by Silke Koltrowitz; Editing by Keith Weir)