AS EUROPE begins to shake off the effects of the longest recession since World War II, Hong Kong company Dickson Concepts is poised to reap the rewards. The publicly listed luxury goods retail and wholesaling outfit, controlled by entrepreneur Dickson Poon, generates about 40 per cent of earnings from Britain, France and Germany, where the economies are in varying stages of recovery. Its most visible acquisition, the upmarket department store Harvey Nichols in London's fashionable Knightsbridge, is enjoying a profit upswing while French and German operations are beginning to show signs of a spending turnaround. According to brokers Salomon Brothers, the fundamentals are now in place for an acceleration in earnings growth. Harvey Nichols, which accounts for 15 per cent of earnings, is expected to become a ''significant'' contributor to profits while the expected rebound in France and Germany should generate higher wholesaling profit contributions in the near future. ''We believe Dickson's European operations may now have the worst behind them and will reap clear benefits from a rebound in consumption,'' Salomon Brothers said. Wholesale operations in Europe had been dragging earnings down over the past 12 months although profit contributions have been maintained by improving margins. A recovery-driven turnaround in wholesaling in Europe will contribute substantially higher profits to the group, according to Salomon. In Asia, Dickson Concepts has continued to expand rapidly with 50 new retail outlets opening last year. With brands such as Guy Laroche, Harvey Nichols and Karl Lagerfeld, the group is well positioned to take advantage of rising levels of affluence in Asia. Hong Kong remains a steady source of cash flow for the group with rent and labour costs undercutting rivals such as Joyce, Esprit and Giordano. The combination of a stable, well managed Hong Kong operation, combined with expanding Asian regional operations, represent the core of Dickson's business. But the sharp resurgence in earnings from the recovery of the European economies and the strong performance of British operations warranted a re-rating of the share price, said Salomon. ''The upside potential for Dickson outweighs the downside risks.''