Rolex, the century-old maker of Swiss watches, appointed Jean-Frederick Dufour as its new chief executive officer. His appointment marks the third leadership change in the company since 2008. Dufour will succeed its current CEO Gian Riccardo Marini, whose date of departure is yet to be decided, according to the company’s statement today.
Dufour served as the head of Zenith watch brand of LVMH Moet Hennessy Louis Vuitton SA (EPA:MC). He became the division CEO of the Zenith watch brand in 2009, and restructured the business by refocusing its product line and returning to more classical models to improve sales.
Prior to his career at Zenith, Dufour also worked at Chopard, The Swatch Group Ltd. (VTX:UHR), and Ulysse Nardin.
Rene Weber, an analyst at Vontobel commented that Dufour will bring some “young ideas” to Rolex. The analyst also noted that the newly appointed CEO “did a great job at Zenith, which was close to dead.”
Rolex faces strong competition
Rolex is among the three watch companies including The Swatch Group Ltd. (VTX:UHR) and Compagnie Financiere Richemont SA (JSE:CFR) that account 46% of the total sales of timepieces by value worldwide, according to the estimates of Bank Vontobel. Over the past two years, watch exports doubled and Rolex is facing increased competition from its two competitors.
Loca Solca, head of luxury goods research at Exane BNP Paribas opined, “Rolex has missed one step or two in the competition to be the top dog in the watches business.”
The growth of the watch industry weakened after the government of China took actions against bribery and extravagant display of wealth among state officials last year. Swiss watch exports were only 1.9% last year, the slowest growth rate since the financial crisis.
Conflict within Rolex organization
Jon Cox, an analyst at Kepler Cheuvreux estimated that Rolex probably generated 4.5 billion Swiss francs ($5.1 billion). The company does not release its financial information to the public. According to him, “There is a conflict within the organization between the modernizers, who want to see faster development and more innovation, and more traditionalists, who want to see a more steady-as-she-goes approach and blame overexposure to greater China for current woes.”
The members of the Heinigir family controlled the business operations of Rolex for almost a half century until 2008 when Patrick Heinigir stepped down. He was succeeded by the company’s CFO Bruno Meier. In 2011, Marini took over as CEO.