Bulgari Sees Loss in Quarter

Italian jeweler Bulgari SpA vows layoffs, cutbacks.

MILAN — Bulgari SpA confirmed a loss in the first quarter after revenues fell 23 percent, although the Italian jeweler said sales improved in April.

This story first appeared in the May 13, 2009 issue of WWD.  Subscribe Today.

After warning shareholders last month that red ink was to be expected, Bulgari on Tuesday reported a loss of 29.3 million euros, or $38.3 million, from net profits of 22.8 million euros, or $34.2 million, in the first three months of last year. Revenues fell to 178.1 million euros, or $233 million. The decline was deeper than analyst forecasts.

Dollar figures were converted at average exchange rates for the periods to which they refer.

Bulgari chief executive officer Francesco Trapani attributed the slump to “persistence of the crisis on the worldwide markets.” He said sales in directly owned stores had improved in April, due largely to demand for jewelry, the company’s core business, as had sales via third-party distributors, but “to a lesser extent.”

Net debt increased to 339 million euros, or $443.4 million, from 304 million euros, or $428.6 million, as of Dec. 31. Bulgari said it had consolidated 53 million euros, or $72.2 million, of debt, with maturities ranging from 18 months to 10 years, and signed a preliminary loan agreement with a pool of banks for 180 million euros, or $244.8 million, with a three-year maturity. The agreement will be concluded by the end of the month.

All product categories registered sales decreases worldwide, which the company attributed to the financial crisis and “the strong de-stocking activity in the wholesale channel, [which] has significantly penalized” performance.

Jewelry sales fell 15.3 percent to 79.7 million euros, or $104.3 million, while sales of watches decreased 30 percent to 42.1 million euros, or $55.1 million. Perfume and cosmetics sales declined 25.6 percent to 35.1 million euros, or $45.9 million, although Bulgari noted the category had increased market share.

Accessories sales were hit hardest, falling 33.5 percent to 14.2 million euros, or $18.6 million, although revenues remained “substantially stable in Bulgari stores exclusively dedicated to this category or in twin stores,” the company said.

By region, sales were down 36.5 percent in the Americas, 16.8 percent in Asia and 24.1 percent in the Middle East. Sales fell 25.5 percent in Europe.

Trapani told WWD in March that Bulgari would cut jobs, reduce the number of products and close unprofitable stores this year after the company’s earnings fell 45.1 percent to 82.9 million euros, or $122 million, in 2008. He reiterated that Tuesday, and said the reduction in costs and investments was “in line with our expectations.”

Bulgari released the quarterly results after the close of trading in Milan, where the company’s stock fell 2.4 percent to 4.15 euros or $5.65.