major headaches for Bermuda firms which import much of their stock from the other side of the Atlantic.

Some of Bermuda's top firms are seeing their profit margins disappear due to international market forces beyond their control.

One UK pound was now worth just over $2 locally yesterday and Trimingham's, Smith's, Cooper's, and Bluck's are just a few of many stores on the Island which are suffering.

So far, most haven't raised prices because stock they are currently selling was purchased several months ago when the dollar was much stronger than its current chronically weak state.

But if the dollar stays soft, particularly against sterling, for a few more months then retailers have warned that prices on European imported goods could be on sale for 25 percent more next year.

No company in its right mind would buy any new stock at today's rates, said Mr. Warren Brown, Jr., chief of Bermuda's local Marks and Spencer's store, which imports virtually all of its stock from Britain and Europe.

"There is the uncertainty of the US presidential election, there's a recession, the pound could be devalued and the dollar is weak anyway,'' he said.

"We're lucky because we buy six months in advance and the banks gave me a good rate.'' But his company still had to pay Customs duty at the current exchange rate, he added.

"It's a pretty bad strain at the moment which is of great concern,'' said Mr.

Brown.

All the firms we spoke to said they had not passed on extra costs to the public.

"We're pricing goods at levels we can sell them at,'' he said. "It's a case of keeping volume up and accepting a lower profit margin.'' Despite everything, sales at Marks and Spencer's were actually up this year compared with 1991, he said.

Mr. Michael Darling admitted his company, Bluck's, was "taking a licking'' on exchange rates.

But he said additional costs were being borne by the firm itself rather than being passed on to its customers, most of whom are American tourists.

Bluck's imports china and crystal, including top brands such as Wedgwood and Waterford, from countries such as England, Ireland, Italy, Sweden, Germany, Denmark and Hungary.

"Fortunately, most of the goods we're selling were purchased months ago,'' he said. Like Smith's, Bluck's buys the bulk of its inventory in the spring. "We hope that the exchange rate swing will soon go the other way so we can buy inventory for next year at a reasonable cost,'' he added.

"I fear, though, that costs will be significantly higher. I think you can add a 25 percent increase on the price of merchandise next year.'' Unless stores in the US were also forced to raise prices, stores in Bermuda which sell predominantly to tourists would have problems maintaining sufficient sales volumes, he added.

"The only way Bermuda will be able to sell its goods to tourists will be if the US wholesale and retail prices also go up,'' he said. "We can't sell something in Bermuda for more than it's sold in the US. We have to sell for less.'' Although none of the store owners we spoke with said they were dropping lines as a result of hard times, many said they were either considering whether to reduce the numbers of stock of each item or had already done so.

Mr. Henry Vesey, head of H. A. and E. Smith's, said: "If these poor exchange rates continue into next year you will definitely find reductions in the size of orders.''