Raising its profile in a fast-growing market, Bulgari SpA said Tuesday it has signed a five-year agreement with Hengdeli Holdings Ltd. to distribute high-end watches through more than 50 multibrand watch stores in China.
The partnership will allow Bulgari to further increase the visibility of its timepieces in China as the multibrand stores open over the next five years. Hengdeli will be the sole distributor of Bulgari watches in the country.
Bulgari chief executive officer Francesco Trapani said the deal was “very important” for the Rome-based firm because it helps “to even more effectively cover the watch market, in an area with a huge potential such as mainland China,” where Bulgari already counts 20 monobrand stores. “On the other hand, this agreement, signed with one of the most important companies in the world for the distribution of international high-end watch brands, proves that our strategy for the watch business is correct and extremely competitive.”
China has been particularly resilient during the global economic downturn and it ranked first among world markets with the highest potential for retail development in A.T. Kearney’s ninth annual study of areas ripe for expansion.
In the three months ending Sept. 30, Bulgari reported a 24.3 percent rise at comparable exchange in Greater China, versus the same period last year. Sales in Asia, which grew 24.7 percent in the quarter, helped the Italian jeweler more than double its net profits to 16.6 million euros, or $21.4 million, at average exchange rate. In the third quarter, revenues increased 14.9 percent to 267.9 million euros, or $345.6 million.
“Greater China is extraordinary,” said Trapani, commenting on the results.
In the period, Bulgari’s watch sales decreased 1.8 percent, but the company said new products this year were available starting in September, compared with launches last year beginning in the second quarter. In October, watches showed a 6 percent growth. Watches accounted for 19.9 percent of sales, representing the third category for the company, after jewelry and perfumes and cosmetics.
Bulgari also underscored a recovery in the wholesale channel in October, after last year’s destocking. The company touted the performance of the women’s Serpenti watch collection. The steel version was available beginning in September, followed by the gold version last month.
Founded in 1957, Hengdeli is listed on the Hong Kong Stock Exchange. The company has a network of 302 sales outlets in China and Hong Kong, and it also owns three private labels.
Cheung Yuping, chairman of Hengdeli, said one of the group’s “important goals” is to work with “top international brands to develop” China’s luxury market, adding that the agreement with Bulgari was “a very important milestone.” Yuping added, “Bulgari is a distinguished brand name in the international luxury market and produces wonderful watches. We believe, with this agreement, that both companies can further develop their business and consumer recognition.”
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