MILAN — Bulgari SpA had slowing sales growth in the fourth quarter, but remains optimistic about the current year's prospects and its foray into the world of skin care products.
Bulgari's fourth-quarter sales rose 4 percent, to 323.6 million euros, or $417.4 million, lower than some analysts' forecasts. For the year ended Dec. 31, sales rose 10 percent, to 1.01 billion euros, or $1.27 billion.
Dollar figures have been converted from the euro at average exchange rates for the period to which they refer.
Tough comps, currency woes and a weak Japanese market hurt Bulgari in the fourth quarter. Still, the Rome company beat its own full-year guidance on a constant currency basis, Bulgari chief executive officer Francesco Trapani stressed. Excluding the effect of exchange rates, full-year sales would have increased 12 percent, surpassing a previous target of 10 percent growth.
Trapani said he did not see signs of a market slowdown anywhere except in Japan.
"Based on what I'm seeing, things are going very well everywhere except Japan ... The United States, Europe and the other large Asian countries are performing very, very well," Trapani told WWD. "If the overall macroeconomic market doesn't change drastically, I don't see why the luxury market should suffer."
Fourth-quarter jewelry sales rose 9 percent, to 129.6 million euros, or $167.2 million. Sales of watches were down 7.3 percent, to 89.2 million euros, or $115 million. Trapani blamed the drop on a challenging comparable base, since Bulgari launched its Assioma product range in the last quarter of 2005. Sales of accessories, including handbags and scarves, rose 17.6 percent, to 26.3 million euros, or $33.9 million.
Bulgari is gearing up to launch a collection of skin care items. Distribution will start in Italy in the fall and the line will be rolled out to other countries in the coming years, the ceo said, adding that Bulgari would develop the line in-house and work with a series of production partners.
Trapani said it was too early to discuss the size or scope of the product range. He also declined to disclose a more concrete timetable for the rollout. It will take years for Bulgari to see a significant financial impact from the project, the executive said. A press presentation is slated for late spring."This is a significant opportunity for us, if one considers the size of our fragrance business," Trapani said. Bulgari has become a leading name in the prestige fragrance market. Fourth-quarter perfume sales rose 3.9 percent, to 69.9 million euros, or $90.2 million, and full-year revenue increased 10.5 percent, to 201.6 million euros, or $260.1 million.
Bulgari's fourth-quarter sales suffered considerably in Japan. They were down 8.3 percent, to 76.7 million euros, or $98.9 million; nearly all the loss was attributable to a weak yen-to-euro exchange rate. Trapani said it was becoming increasingly difficult for large, established brands to grow in Japan, but two new flagships there should translate into sales growth next year.
Fourth-quarter revenues in Italy rose 5.7 percent, to 46.5 million euros, or $59.99 million, and revenues in other European countries advanced 6.7 percent, to 83.7 million euros, or $107.97 million. Despite a weak dollar-to-euro exchange, revenues in North and South America advanced 9.6 percent, to 51.4 million euros, or $66.3 million. Sales in Asian countries excluding Japan gained 22.7 percent, to 51.5 million euros, or $66.4 million.
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