Swarovski Shareholders Approve 6,000 Job Cuts, New Strategy
(Bloomberg) -- Swarovski shareholders approved the biggest overhaul in the crystal maker’s 125-year history, including 6,000 job cuts, after years of heated discussions among factions of the founding family.
Chief Executive Officer Robert Buchbauer had been battling with family opposition over his plan to shrink the lower-margin mass-market business and focus on more expensive and higher-margin jewelry, including rings and bracelets.
Family members who opposed the plan said that they would legally challenge the vote and push for nullification of the result, arguing that any decision about major corporate shifts need to be unanimous. About 80% of shareholders of the closely held company sided with Buchbauer, meaning the CEO will push ahead with the changes.
“The new strategy for our core business, the efficiency measures and the long-term health of the company remain our goals,” Buchbauer said in a statement after the vote.
Opposing shareholders said in a statement that there are “options and ways on how to finance” the company’s biggest plant, which has been struggling. That family branch, which has offered to buy out the historic production site, wants Buchbauer to “make way and stop trying to cement his power.”
Austrian, Swiss Units
The decision means various Austrian and Swiss units will be folded into an Austrian family company with the headquarters remaining in the Alpine town of Wattens, near Innsbruck. The new structure should allow faster decisions about new products, personnel and investments, management has said. While legal disputes are likely to follow, the company has said it won’t stop the process.
Buchbauer has said the company needs to offer fewer but more exclusive items under its own brand, and cut back its network of 3,000 boutiques. The 6,000 previously announced job cuts equal about 20% of Swarovski’s workforce. The turnaround will take two to three years to execute as sales are expected to fall by about a third this year.
Buchbauer has said the company should be realigned so that it’s possible to raise capital from a share sale or by taking in a partner as family-owned luxury companies have struggled to remain independent.
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