MILAN — Despite a 4.6 percent drop in first-quarter earnings, brought on by sales decreases in Italy and the United Kingdom and the weak dollar, Italian luxury group Bulgari SpA on Thursday confirmed its guidance for 2008, pending no further deterioration in macroeconomic conditions.
For the three months ended Mar. 31, net profits fell to 22.8 million euros, or $34.1 million at average exchange, which Bulgari chief executive officer Francesco Trapani said were “even higher” than company expectations and benefited from the positive effects of the hedging transactions on currency exchange rates.
Revenues for the quarter were “in line” with company forecasts, Trapani said, gaining 3 percent to 231.7 million euros, or $347 million — although the trends were “negative” in the U.K. and fell 14.8 percent in Italy and 8.9 percent in the Americas. Stripping out currency fluctuations, sales in the Americas gained 1.8 percent.
In a telephone interview with WWD, Trapani said following double-digit revenue growth in January and February, March was “bad for inexplicable reasons.”
However, “in light of [the better than expected results], of the outstanding orders recorded at the Basel [watch and jewelry] fair…and of the excellent performance in the emerging markets, I am confident in the sales trend for the forthcoming months and, in absence of a further deterioration of the economic environment, I can confirm the guidance for 2008,” Trapani said, adding revenues had picked up in April.
Bulgari has forecast full-year sales, operating profit and net profit increases of between 8 and 12 percent on a comparable-exchange rate basis.
The luxury group generated revenue growth — albeit marginal for the most part — in all product categories, with cosmetics again the standout performer.
Sales of Bulgari perfumes and high-end cosmetics gained 10 percent to 47 million euros, or $70.4 million, although this compared with a 27.4 percent hike in the same period a year before.
Trapani said the lower sales increase was due in part to wholesalers, particularly in Italy, holding back from placing orders until the new men’s fragrance Aqua Marine hit shelves in June.
He added that Bulgari would launch the new women’s scent Jasmine Noir in September.
Sales of jewels, which represented the majority of group turnover (over 40 percent), edged up 0.4 percent to 94.4 million euros, or $141.4 million.
Watch revenues grew 2.8 percent to 60.2 million euros, or $90.2 million, and sales of accessories increased 1.6 percent to 21.4 million euros, or $32.1 million.
Trapani confirmed Bulgari would raise prices across all product categories after the summer, but did not say by how much. The company has already done so this year for jewelry and watches to protect margins because of soaring material costs — notably gold — and unfavorable exchange rates.
Sales in Europe were up 2.7 percent to 86.7 million euros, or $130 million, with “positive results” particularly in France and Germany compensating for slowdowns elsewhere in the region, Bulgari said.