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Departing Richemont: Perrin to Resign Post As Luxe Group’s CEO

Alain Dominique Perrin will step down as chief executive of Compagnie Financière Richemont SA at the end of the year, citing personal reasons.

Alain Dominique Perrin

Alain Dominique Perrin

Photo By Stephane Feugere

LONDON — Alain Dominique Perrin will step down as chief executive officer of Compagnie Financière Richemont SA at the end of the year in a move the luxury goods group insisted was personal rather than political.

The firm said in a statement that Perrin, a 30-year Richemont veteran dubbed "Mr. Cartier" for his work building the French jewelry brand, would retire on his 61st birthday in October. However, he will continue in an executive role as a member of Richemont’s strategic product and communications committee, its top management board, and also will be nominated to the group Richemont board. It could not be learned whether Perrin’s role at Richemont would remain a full-time one, however.

His resignation comes a month before Richemont releases figures for the fiscal year ended March 2003, when operating profit is expected to be as much as 40 percent below previous year’s levels due to restructuring costs at the Dunhill and Lancel divisions and a crisis in consumer confidence, especially in the vital Asian markets, which have been hit by SARS.

The Swiss-based company, which controls brands including Cartier, Van Cleef & Arpels, Piaget, Montblanc and Dunhill, will announce its full-year results on June 5.

Perrin’s successor has not been named. It is understood, however, that Johann Rupert, executive chairman of the group, will take over Perrin’s responsibilities later this year. It is also understood that the ceo position will eventually be phased out as part of the group’s long-term plan to decentralize power and give more say to the individual brand directors at Richemont.

In a telephone interview, Rupert told WWD that Perrin’s decision was purely personal.

"At Christmas, Alain and I had a discussion about his future commitment to the company. I wanted him to commit for the next five years, but he told me he wanted to dedicate more time to his family, his wine-making and his outside interests. And I can understand that. Alain is going to be 61 years old, and he spends his days traveling around the world. He’s never home.

"But there is no animosity whatsoever," Rupert added. "Alain and I have been friends for 28 years, and I would never have asked him to stay with the company if there were any bad feelings. To be frank, I don’t see his role changing substantially at Richemont. He will continue to be my friend, my adviser, my colleague, and my counselor, and he will continue to be a strategic thinker and marketer for the company. I plan to draw heavily on his expertise in the years to come."
In the statement, Perrin referred to the last two years at Richemont — he was named ceo in March 2001 — as challenging, but exhausting. "The time has come to allow myself more time for my personal life and my many other interests," he said, adding he would be working with Rupert on marketing and product conceptualization.

"I have given Johann my commitment that I will make a substantial part of my time available to Richemont over the period and I look forward to a continuing involvement with my friends and colleagues in the group," Perrin, who developed the successful Must de Cartier concept, added.

Perrin joined Cartier in 1969 and eventually rose to become president of Cartier International, a position he held for 17 years. In February 1999, he became chief operating officer of the-then Vendome International Ltd., the U.K. subsidiary of Richemont’s luxury group. In December 1999, he was appointed senior executive director of Richemont, responsible for marketing, manufacturing and strategic operations.

Some luxury goods analysts argued Perrin’s resignation may have been a result of what they see as Rupert’s increasing power within the company.

"I don’t think that Perrin was pushed out at all — in fact, I think that they tried to retain him," said Melanie Flouquet, European luxury goods analyst at J.P. Morgan. "But Rupert has had more of a foothold over the past two years and he is a lot more present day-to-day in terms of product, communication and turnaround strategy; this may have somewhat undermined Mr. Perrin’s position."

Another luxury analyst, who spoke on condition of anonymity, said: "I cannot believe that Perrin’s resignation does not have something to do with Rupert’s increasing control over Richemont. But I see that as a good thing. Richemont needs to be brutal in terms of cost-cutting right now, and maybe Perrin is not the man for that particular job."

Rupert, however, told WWD there has never been a "power story" with Perrin. "I would not have asked him to stay if it were a power issue," he said.

As reported, Richemont warned two months ago that, due to the depressed economic climate, eroding consumer confidence, and the weakening of the dollar against the yen and the euro, its operating profits for the fiscal year ended March 2003 would be "as much as" 40 percent below the previous year’s level.
The dent in operating profits, it added, would also come from a restructuring charge of $53 million linked to the Dunhill and Lancel brands. In the fiscal year ended March 2002, operating profit was $511 million on sales of $4.09 billion. The company also announced plans to scale back the loss-making Dunhill and Lancel businesses in the U.S.

Analysts welcomed the news of the warning, saying that restructurings were long overdue.

As for the timing of Perrin’s departure, analysts were divided. J.P. Morgan’s Flouquet said she was puzzled by it. "I thought it was quite surprising for a ceo with his sort of experience to leave at the toughest possible moment for the group. It must have been a difficult decision to make."

However, Dana Telsey, senior managing director of Bear, Stearns & Co. in New York, said that changes can often occur during challenging times. "Businesses will always go on to the next phase. Sometimes these changes are a result of a challenging environment. Look at what’s happening at Chanel."

Telsey added that she didn’t view Perrin’s partial exit from the company as a negative. "He’s very well respected and an able business manager and I like the fact that he’s remaining a member of the board. Next month, at the analysts meeting, it will be interesting to see what the company’s plans are going forward," she said.

It’s no secret that Rupert’s ultimate goal is to distance Richemont from the idea of a big conglomerate with a high-powered ceo. Over the next five years, it is likely that he will treat the holding company as a support base for the brands, overseeing distribution, central administration and real estate issues. As a result, the brand management will become more autonomous.

Richemont’s shares on the Swiss stock exchange closed Tuesday at $15.78, up 56 cents, or 3.7 percent from the previous day.
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