MILAN — Bulgari has bought a handbag maker and a watch strap supplier to boost its internal manufacturing capacity and fuel its foray into the accessories business.
The jewelry firm has acquired 100 percent of leather goods firm Pacini, a Tuscany-based company that specializes in bags made of leather, reptile skin and customized fabrics. It also has purchased 51 percent of Prestige d'Or, which makes steel and precious metal watch straps.
The Italian jeweler did not disclose the prices it paid for the two companies.
While Bulgari has been buying up jewelry and watch companies as part of an ongoing vertical integration, the diversification into leather goods manufacturing is a first for the group. Bulgari has been growing its nascent accessories business through outsourcing, but chief executive officer Francesco Trapani said the purchase of Pacini, along with recent hires on the design team and a plan to open accessories-only boutiques, will help Bulgari better compete with the likes of Gucci and Prada.
"We want to become a very serious player in the accessories business," Trapani said in a phone interview.
Pacini, which has been renamed Bulgari Accessori Srl, will source all of the materials, coordinate manufacturing procedures such as cutting and produce a portion of the handbag collection, while Bulgari will continue to outsource to other companies for the remainder. Bulgari said it plans to ramp up the accessories unit's headcount to 50 from 15 in the coming months.
Trapani said Bulgari's handbag collection will expand from about 70 models at present to about 400 within a matter of weeks. He said Bulgari wants to diversify out of its core rigid shapes and logo patterns into a wider variety of materials, colors and forms.
"If you look at the market leader, which is definitely Louis Vuitton, within its product offering you have things that are younger and more fashion-driven and you have things that are more classic and timeless. There are things that are more expensive and less expensive," he said.
Bulgari also is rolling out a new retail format as it diversifies its product range. Next month, the company will open its first accessories-only boutique in the Osaka department store Shinsaibashi Sogo. The nearly 1,300-square-foot store will link to a similarly sized Bulgari jewelry and watch boutique opened in September. Trapani said another accessories-only store will open in Ginza before Christmas while a few more will open, possibly in Europe and the U.S., in the first half of next year.Currently, sales of handbags, scarves and men's ties make up slightly more than 9 percent of Bulgari's turnover. The company's first-half revenue from accessories rose 33.9 percent to 36.2 million euros, or $46.7 million at average exchange. Trapani said accessories will generate about 80 million euros, or $96.8 million, of Bulgari's full-year revenue.
As for the Prestige d'Or acquisition, it will bolster Bulgari's expertise in watchband manufacturing. The purchase is similar in strategic scope to another Bulgari purchase made earlier this year. In April, Bulgari bought 50 percent of Swiss watch dial maker Cadrans Design S.A.
Switzerland-based Prestige employs 64 people and posted 2004 revenue of 5 million euros, or $6.2 million. The company supplied the watch straps to Bulgari for models such as Bulgari-Bulgari, Ergon and Assioma. Jean Claude Probst, the company's founder and production manager, holds the remaining 49 percent stake of the company. He will continue to head up manufacturing operations and will report to Bulgari's watch business unit.
Trapani said the acquisition will allow Bulgari to produce high-quality timepieces in-house and develop "bold" designs to win over customers.
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