By  on July 5, 1994

LONDON -- Vendome, the luxury goods group whose businesses include Cartier, Chloe, Karl Lagerfeld and Alfred Dunhill, reported a 1.6 percent drop in after-tax profits to $259.2 million (345.7 million Swiss francs) at current exchange on a 5.1 percent rise in sales to $1.94 billion (2.59 billion Swiss francs) for the year ended March 31.

In the year-earlier period, the company had profits of 351.1 million Swiss francs on sales of 2.46 billion Swiss francs Vendome was formed last year from the merger of Cartier SA and Dunhill Holdings PLC. The drop in profits was a result of exceptional charges totaling $36.4 million (48.6 million Swiss francs) related to costs associated with the merger and a $45.9 million (61.2 million Swiss francs) charge to cover losses on currency trading in the former Dunhill group.

Vendome said profits were further distorted by the inclusion of other nonrecurring elements, including royalty income on the transfer of Dunhill's tobacco trademarks to its sister company, Rothmans International PLC, and interest earned on former cash holdings that were distributed to shareholders as part of the reconstruction.

Excluding these nonrecurring items, operating profits fell 0.6 percent to $324.9 million (433.2 million Swiss francs).

Vendome said the economic background for luxury goods in Europe was mixed last year, with a slight upturn in the U.K. offset by difficult conditions in continental Europe. There was little or no growth in Vendome's key markets of France, Germany and Italy, but a small increase in volume in the second half in the Far East. The U.S. volume also increased following an improvement in consumer confidence there, Vendome said. The group did not break out profits for its various product categories, but did reveal sales. It did not break out total women's wear sales, lumping these small operations into an overall category that also includes tableware and other accessories, such as eyeglasses. This division had a 15.7 percent rise in sales to $304.8 million (406.5 million Swiss francs).

The group's strongest performer was its jewelry operation, which had a 15 percent rise in sales to $286.7 million (382.3 million Swiss francs). Jewelry accounted for 15.1 percent of group sales, compared with 13.9 percent the previous year.

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