Bulgari cited lower watch sales, while jewelry improved in the quarter.

Surging sales in all categories and markets, in China in particular, helped the firm return to the black in the first half.

MILAN — Surging sales in all categories and markets, in China in particular, helped Bulgari SpA return to the black in the first half with a net profit of 9.1 million euros, or $13.2 million, compared with a loss of 7.7 million euros, or $9.4 million, in the same period last year.

This story first appeared in the July 26, 2011 issue of WWD. Subscribe Today.

Revenues climbed 23.6 percent to 548 million euros, or $794.6 million, from 443.3 million euros, or $540.8 million. Bulgari also attributed the improved performance to the group’s exchange rate hedging.

High jewelry, including the B.zero1 line and its extension in ceramics, helped boost Bulgari’s core jewelry business by 20.2 percent to 243.5 million euros, or $353 million, accounting for 44.4 percent of revenues. Watches continued their upward trajectory, gaining 25.9 percent to 111.1 million euros, or $161.1 million, accounting for 20.3 percent of sales, led in particular by the women’s Serpenti timepiece and the men’s complicated and Octo models. Perfumes also gained, showing 26.9 percent growth, to 129.7 million euros, or $188.1 million, boosted by the launches Mon Jasmin Noir and Man. This division is Bulgari’s second most important, accounting for 23.7 percent of revenues. Accessories grew 24.2 percent to 44.9 million euros, or $65.1 million, accounting for 8.2 percent of sales.

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

Revenues in Europe and the Americas gained 18.6 and 16.1 percent, respectively. Europe had sales of 178.1 million euros, or $258.2 million, while the Americas had sales of 72.2 million euros, or $104.7 million. Asia showed 28.1 percent growth to 254.1 million euros, or $368.4 million, representing Bulgari’s main market, accounting for 46.4 percent of total sales. Of this figure, revenues in Japan grew 4.6 percent to 84.4 million euros, or $122.4 million, while the rest of the continent continued to grow quickly, showing a 44.2 percent spike to 169.7 million euros, or $246.1 million. Sales in Greater China rose 59.5 percent. The Middle East and other areas reported an increase of 34.3 percent to 43.6 million euros, or $66.1 million.

Total operating costs, excluding those for advertising and promotion, increased 10.8 percent to 245.6 million euros, or $356.1 million, from 221.6 million euros, or $272.5 million, a year ago.

Promotional and advertising expenses amounted to 58 million euros, or $84.1 million, and as a percentage of turnover grew to 10.6 percent from 9.6 percent last year as activities in support of product launches saw a greater concentration during the first part of the year. To support such launches, Bulgari’s brand campaigns have recently been fronted by the likes of Julianne Moore and Kirsten Dunst, the face of the fragrance Mon Jasmin Noir. Bulgari just signed Rachel Weisz as the face of its new Jasmin Noir fragrance campaign due out in August.

A focus on controlling costs helped boost operating profit to 15.3 million euros, or $22.2 million, compared with 12.3 million euros, or $15.1 million, in the first half of 2010.

However, Bulgari underscored that this result was impacted by non-recurring costs of 15.8 million euros, or $23 million, incurred for consultancy activities relating to the firm’s purchase by LVMH Moët Hennessy Louis Vuitton.

The company said Bulgari’s board “has expressed a favorable opinion on the offer [by LVMH] and has confirmed the fairness of the consideration offered equal to 12.25 euros [$17.58] per ordinary share.”

Earlier this month, the relevant competition authorities, namely the European Commission, cleared LVMH’s purchase of 50.4 percent of Bulgari in a cash-and-share swap valued at more than $6 billion. LVMH has made a bid for the remaining shares.

On Monday, an LVMH spokesman said the luxury conglomerate has contacted Italy’s Bourse watchdog, Consob, to clarify an issue connected to an additional number of shares in the transaction. LVMH said the Bulgari family brought 57,000 shares to the deal belatedly because they had initially overlooked them. LVMH still plans to launch a tender offer at 12.25 euros per share and rumors that it might raise the price were “unfounded,” he added.

“In consultation with Consob, LVMH confirms that the formal rectification of the number of Bulgari shares brought to LVMH by the Bulgari family on June 30 does not constitute a new deal and therefore has no impact on the pricing of the IPO,” the spokesman added.

Last week, three funds, which hold minority stakes in Bulgari, sent letters to Consob in reference to this issue, according to Sunday’s Il Sole 24 Ore. The funds state that an additional 57,000 shares were sold by mistake from brothers Paolo and Nicola Bulgari to the French luxury conglomerate at 13.45 euros, or $19.30 at current exchange, and not at the price agreed upon, which was 12.25 euros. Because of this alleged mistake, said the funds, not all shareholders were treated equally. LVMH will also launch a tender offer for the remaining shares.

As of June 30, net debt stood at 159.1 million euros, or $230.7 million, compared with 290.2 million euros, or $357 million, at the end of June last year.

Bulgari’s former chief executive officer Francesco Trapani assumed his new post as head of the watch and jewelry division at LVMH on July 1.

The jeweler’s shares closed up 0.16 percent Monday at 12.32 euros, or $17.68 at current exchange.

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