NEW YORK — Hit by a higher tax rate, Italian eyewear manufacturer De Rigo SpA weathered a 10.1 percent drop in profits during the first half of 2003.

For the six months ended June 30, net income declined to $9.7 million from $10.8 million in the prior-year period. Dollar figures have been converted at current exchange as the firm reported net income of 8.5 million euros against 9.4 million in the first half of 2002.

However, operating profits picked up 2.4 percent to $22.1 million, or 19.3 million euros, from $21.6 million, or 18.8 million euros. The increase in profitability came from EID, the joint venture with Prada terminated in July, which contributed about $2 million, or 1.7 million euros, in operating profits versus a break-even performance during the first six months of 2002. Prada, as reported, bought out De Rigo’s 51 percent stake in EID and subsequently sold the enterprise to Luxottica SpA.

As reported, De Rigo’s first-half sales declined 0.3 percent to $313.6 million, or 273.4 million euros, from $314.4 million, or 274.1 million euros. Retail accounted for 66.8 percent of sales in the first half of this year versus 67.6 percent in the comparable 2002 period.

Gross margin declined to 60.2 percent of sales in this year’s first half versus 61.6 percent last year.

In a statement, Ennio De Rigo, chairman of the group, noted the effects of events “out of our control, like SARS and the war in Iraq, are behind us.”

He added, “Retail distribution is showing a strong growth in local currency, even if our significant investments in marketing initiatives are cutting into our profitability. The joint venture with Prada has been successfully resolved, ending a difficult investment for our company, as the joint venture had not turned a profit for a long time.”

Improving economic conditions have made the firm “optimistic about an increase in the sale of sunglasses” during the back half of the year. In addition to the recent signing of Formula One racer Michael Schumacher to back the Sting brand, officials at the firm “await further developments over the next few weeks to increase the visibility of the Police brand around the world,” De Rigo said.

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