By  on November 15, 2006

MILAN — Bulgari SpA saw double-digit profit growth in the third quarter, but chief executive officer Francesco Trapani warned that comps will be tougher in the last three months of the year during the critical holiday season.

Net profit rose 29.4 percent to 34.1 million euros, or $43.7 million, for the three months ended Sept. 30. Sales advanced 9.6 percent to 239 million euros, or $305.9 million, but the company said growth would have been 11.2 percent at comparable exchange rates.

Dollar figures have been converted from the euro at average exchange rates for the period to which they refer.

Trapani reiterated the company's previous full-year forecast for 10 percent growth in net profits and sales at comparable exchange rates, even though some analysts have more aggressive targets.

"Christmas is a very important season for our company. Yes, we could do better, but we could also do worse. Growth of 10 percent is the best estimate we can give for the end of the year," Trapani told WWD, noting the company has a tough comparable base for the remainder of the year. The launch of the Assioma watch helped push fourth-quarter sales last year.

Trapani declined to specify advertising expenditures for the third quarter, but said that much of the year's spending will be concentrated in the latter part of the year to promote the restyled Bulgari Pour Femme fragrance with television and print ads featuring Kate Moss.

Third-quarter operating profit for the three months advanced 32.8 percent to 42.3 million euros, or $54.1 million.

Sales rose in every product category except accessories. Bulgari blamed that drop on a glitch with production capacity, which cut into deliveries at third-party retailers. Trapani said the problem has been solved and the company is investing in its accessories manufacturing facilities to ramp up capacity.

Bulgari has been pushing its accessories business, broadening its product line to include more handbag shapes and sizes and opening dedicated retail stores for those items. Accessories sales dropped 18.2 percent to 15 million euros, or $19.2 million.

Trapani said Bulgari may buy some small component manufacturers. The executive also issued his umpteenth denial that Bulgari is for sale, responding to recurring speculation that France's PPR or other groups are looking to buy the Italian jeweler.Elsewhere, Trapani said Bulgari may reduce its stake in closed fund Opera, but he stressed that talks with potential investors are preliminary.

Bulgari owns half of Opera Management SA, the Luxembourg-based company that manages two funds, Opera 1 and Opera 2. It has had a mixed track record, succeeding with some investments, such as furniture company B&B Italia, and stumbling with others, such as footwear brand Bruno Magli and watch company Sector, the latter of which it just sold to jeweler Morellato.

Third-quarter revenue from jewelry rose 7.7 percent to 92.5 million euros, or $118.4 million, while that from watches advanced 13 percent to 71.8 million euros, or $91.9 million. Sales of perfume rose 18.4 percent to 52.9 million euros, or $67.7 million. Trapani reiterated that Bulgari is researching a skin care line, but there won't be news on that front until spring at the earliest.

Sales momentum increased in several regions from the first half of the year, including the Americas, but dropped off in Italy and Japan.

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