WWD.com/globe-news/financial/bulgari-profit-goal-in-sight-468011/
government-trade
government-trade

Bulgari Profit Goal in Sight

Bulgari SpA said Thursday it would likely reach its double-digit profit target for 2007, after beating full-year revenue forecasts.

MILAN — Bulgari SpA said Thursday it would likely reach its double-digit profit target for 2007, after beating full-year revenue forecasts.

“We should get there,” Bulgari chief executive officer Francesco Trapani told WWD, referring to the profit target of about a 12 percent increase at constant exchange.

For the year ended Dec. 31, Bulgari’s sales climbed 8.2 percent to 1.09 billion euros, or $1.49 billion at average exchange, exceeding company forecasts by nearly 2 percent at constant exchange. Fourth-quarter revenues increased 7.4 percent to 347.7 million euros, or $503.5 million, although a drop in accessories sales and a sluggish Japanese market penalized growth.

Trapani said Bulgari saw “no signs of a slowdown.” Also, he was not worried about the share price, which has lost almost 20 percent this month.

“The company is doing some very positive things that put it in a position of strength,” Trapani said. “The financial markets don’t listen to reason.”

However, he added the uncertain macroeconomic environment and market volatility would force Bulgari to refine its 2008 guidance on March 11, when 2007 profits are released.

Bulgari released the sales figures after the end of trading on the Italian stock market Thursday. The company’s stock closed down 0.5 percent to 7.73 euros, or $11.42.

Fourth-quarter sales of jewelry, Bulgari’s core business, rose 14.3 percent to 148.3 million euros, or $214.7 million, which the company described as “outstanding.”

Difficulties in sourcing technical components dented watch revenues, Bulgari said, although sales still increased 2.6 percent to 91.4 million euros, or $132.3 million. The company highlighted “the excellent sales” of the “Assioma D” women’s model.

Perfume sales climbed 10 percent to 76.9 million euros, or $111.4 million.

Accessories revenues dropped 7.6 percent to 24.3 million euros, or $35.2 million. Trapani blamed the drop on wholesale channels and Japan, Bulgari’s most important market for the product category.

Trapani said Bulgari was upgrading its accessories range in terms of quality and price and that sales were “very strong” via retail channels. He added revenue growth for the product category outside of Japan was double-digit, “super aggressive in all countries,” and accelerated over the Christmas period.

Bulgari’s fourth-quarter sales in Japan dipped 2.9 percent to 74.5 million euros, or $107.8 million, due to the euro-yen exchange rate. At constant exchange revenues climbed 4.5 percent.

The company opened two major stores in Tokyo in November, including the 10-floor Ginza tower. Trapani hoped these two units would boost revenues in the region this year.

Trapani added Bulgari would introduce a limited edition range of diamond engagement rings this year, exclusive to Japan.

In Europe, fourth-quarter revenues climbed 10.5 percent to 144 million euros, or $208.5 million, while dipping less than a percent in Italy. Although a strong euro bit into sales in the Americas, revenues there advanced 2.9 percent to 52.8 million euros, or $76.5 million. At constant exchange they grew 13.5 percent.

Sales in Asian countries excluding Japan gained 15.5 percent to 59.4 million euros, or $86 million. In the Middle East and the rest of the world they climbed 22.4 percent to 17 million euros, or $24.6 million.