Mar 22, 2003/ FWD/ --- Luxury goods group Compagnie Financiere Richemont warned yesterday that its operating profits for the financial year ending March 31 may drop by as much as 40 percent.

The Geneva, Switzerland-based group blamed the continued decline in consumer confidence, current economic conditions, and the significant weakening of both the dollar and the yen against the Euro -- the group's reporting currency -- as having an adverse impact on sales and margins. It cited its core business areas of jewelry and watches -- encompassing names such as Cartier, Van Cleef & Arpels, and Officine Panerai -- as especially hard hit.

In implementing a restructuring plan, the group will scale back the US retail operations of Dunhill in favor of focusing primarily on wholesale activities stateside.

Similarly, with Lancel, which it purchased in 1997 as the Vendome Luxury Group, Richemont states that, "steps have been taken to eliminate certain loss-making activities in Belgium, the United States and elsewhere." The total cost of restructuring for both Lancel and Dunhill is estimated at being around 50 million Euro in the current financial year.

Operating profit for 2002 was 482 million Euro on sales of 3.86 billion Euro. In 2001, operating profit was 712 million Euro on 3.68 billion Euro in total sales. Richemont had previously announced sales down two percent for the quarter ending December 2002 when calculated in Euros. In local currencies, underlying sales rose four percent.

Following the news of the profit warning, Richemont shares on the Zurich stock exchange fell 9.4 percent to 20.25 Swiss francs. The group's share price has lost 21.5 percent of its value since the beginning of the year.