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Richemont Posts Drop in Profits

FashionWindows IconNEW YORK, Jun 7, 2002/ — Swiss luxury goods group Richemont announced sluggish results for the year ended March 31, 2002 today. Sales for the year increased five percent, from $3.488 billion to $3.654 billion, largely due to the inclusion of a full 12-months of results for Jaeger-LeCoultre, IWC and A. Lange & Söhne, which were acquired in December 2000.

On a like-for-like basis, sales revenues fell one percent.

A nine percent increase in operating costs, pertaining to Richemont’s new acquisitions and the effects of the lethargic global economy, has taken its toll on the Group, which includes Cartier, Van Cleef and Arpels and Montblanc, among others.

Operating profit decreased by 32 percent, from $673 million to $456 million.

Jewelry sales overall were down two percent, from $829 million to $813 million. Sales of gold and jewelry watches, helped by the newly added brands, were up nine percent, and achieved the largest gains in the Group’s product line.

European sales were up 13 percent, 11 percent of which is attributable to the inclusion of the three new watch lines.

Asian sales overall were only up by one percent, with Japanese sales contributing a three percent gain.

The Americas presented the biggest loss by region, falling six percent, to $671 million, and accounting for only 18 percent of the worldwide total.

In his statement, Group Chief Executive Johann Rupert called the results disappointing, and pointed to the overall slowdown in the luxury goods industry, especially in the United States.

However, Rupert stood firm on the company’s recent development work in terms of manufacturing, distribution and support infrastructure as a long-term benefit.

The company has invested over $140 million into expanding the production facilities of the Group’s watch brands alone over the past three years.

Rupert also announced plans to restructure Swiss operations, including merging several companies into one legal entity.

He noted that the restructuring efforts would not incur any layoffs. In addition, Rupert announced a proposal to move corporate headquarters of Compagnie Financiere Richemont AG from Zug to Geneva, which will be decided by shareholders at the Annual General Meeting this September.

At that same meeting, Chairman Dr. Niklaus Senn will stand down. Rupert will step in as Executive Chairman upon Senn’s retirement, by request of the Board.