Swarovski undertakes radical restructuring effort
Austrian crystalware giant Swarovski has been severely affected by the Covid-19 crisis, and is embarking on a radical restructuring effort. The goal is to cut 6,000 jobs - a little over 20% of Swarovski's total workforce - and to close down a number of stores. The plan for this major overhaul, the most significant in Swarovski's 125-year history, has been approved by the group's shareholders, according to Bloomberg.
Contacted by FashionNetwork.com, the company confirmed that it is "currently realigning its business according to a new vision and growth strategy, including a thorough adaptation of its existing organisational structures and business model. With this aim, all of the company's global processes and activity is under review in order to ensure that they are in keeping with the strategy and the economic reality."
"This downsizing of our global activity has already impacted over 6,000 jobs across the world. These were extremely difficult and sad decisions to have to make. However, unfortunately, they were necessary to ensure the long-term sustainability of the company and the brand," explained Swarovski, adding that the group will close "a small portion" of its stores to "optimise our distribution network in accordance with our new strategy."
Bloomberg reported that CEO Robert Buchbauer, at odds with the Swarovski family, managed to secure approval for his plan, rallying around him nearly 80% of the group’s shareholders. Buchbauer wants to “reduce [Swarovski's] activity on the scarcely profitable mass consumption market, and to concentrate on expensive jewellery products generating a higher margin, including rings and bracelets.” The idea is to streamline the product range, making it more exclusive.
At the end of June, Swarovski made 600 of its worldwide employees redundant, 200 of them at its long-established headquarters in Wattens, close to Innsbruck, due to slumping demand in the USA and Asia. It then decided to cut another 1,000 jobs at its western Tirol facilities in the autumn, blaming increasingly tough competitive pressure and the Covid-19 pandemic.
The group was founded by Daniel Swarovski in 1895 and has 34,500 employees. It operates manufacturing facilities in Austria, India, Thailand, Vietnam, Serbia and the USA, and its products are sold in some 170 countries.
In 2019, Swarovski generated a revenue of €2.7 billion. It will take from two to three years for the group to return to profitability based on the new plan, which is expected to cause sales to drop by approximately one third this year, according to Bloomberg.
Copyright © 2021 FashionNetwork.com All rights reserved.