VENDOME NET OFF 5.8% IN HALF; EXCHANGE RATE CITED
Byline: James Fallon
Dos Filename %%w04a23a.arc%%
LONDON — Vendome Luxury Group PLC, owner of Cartier, Karl Lagerfeld, Chloe and other luxury brands, reported a 5.8 percent drop in after-tax profit on a 3.3 percent sales gain for the first half ended Sept. 30.
The drop in net stemmed mainly from the continuing strength of the Swiss franc — in which Vendome reports its results — against other currencies, said Joe Kanoui, Vendome’s chairman, who added that this will remain a problem in the second half. At the operating level, profits in the first half rose 2.6 percent.
Profits after taxes in the six months came to $140 million (164.8 million Swiss francs) at current exchange on sales of $1.1 billion (1.29 billion Swiss francs). Operating profit was $177.2 million (208.6 million Swiss francs).
A year earlier, after-tax profit in the first half was 175 million Swiss francs, sales were 1.25 billion francs, and operating profit was 203.3 million Swiss francs.
Earnings per share fell 5.6 percent to 20 cents (0.23 Swiss francs) from 0.25 Swiss francs.
Kanoui said all of the group’s main product categories registered sales increases despite the unfavorable exchange effect. The star performer was the company’s jewelry division, which had a 13 percent increase in sales compared with the year-ago period. The rise was a result of new products and continued growth in demand for existing lines, the chairman said.
Sales of watches — which include the Baume & Mercier and Piaget brands — rose 2.9 percent in the first half. This growth was fueled by the launch of new models and continued buoyant demand for gold and jewelry watches despite price increases.
Together, jewelry and watch sales represented 39.5 percent of group sales in the first half. Sales of leather goods rose only 0.4 percent in the first six months as customers waited for the launch of new products in the second half, especially the new line of Cartier Bordeaux leather goods, the company said. Perfume sales dropped 18.7 percent, but the second half will be boosted by the introduction of So Pretty de Cartier, which was introduced in October.
Geographically, the main growth came in the Far East, where sales rose 9.6 percent over a year ago. The Far East remains Vendome’s major market, accounting for 40.1 percent of sales. Sales in the Americas rose slightly in the first half, while those in Europe dropped by a small amount. — Fairchild News Service