MILAN — Gains across most product categories and geographic markets, with the exception of Japan, helped Bulgari SpA narrow its loss in the first quarter to 8.3 million euros, or $11.4 million.
This story first appeared in the May 11, 2010 issue of WWD. Subscribe Today.
This compares with a loss of 29.3 million euros, or $38 million, in the same period last year. Revenues in the quarter ended March 31 rose 11.8 percent, to 199.1 million euros, or $274.7 million, from 178.1 million euros, or $231 million. At comparable exchange, sales would have risen 12.6 percent.
The increase in sales and a cost-containment strategy helped the company post earnings before interest, taxes, depreciation and amortization (EBITDA) of 17 million euros, or $23.4 million, compared with a loss of 7.4 million euros, or $9.6 million, in the same period last year.
Dollar figures are converted at average exchange rates for the periods to which they refer.
Francesco Trapani, chief executive officer of the Italian jeweler, said the “positive indicators from the market in the first part of the year were confirmed by the results of the first quarter of 2010.”
The executive underscored a positive contribution from directly owned stores and at wholesale, “which showed a general recovery after massive destocking over the last year.” Trapani also pointed to “encouraging signs” at Baselworld, where orders for Bulgari watches and jewelry rose by 60 percent over last year.
“We were also very satisfied with the performance of accessories, especially handbags, which confirms the success of initiatives to boost image, creativity and investments,” said Trapani. In March, the Rome-based firm tapped Matthew Williamson to design a capsule collection of handbags that will bow for spring 2011 during Milan Fashion Week in September — Bulgari’s first collaboration with a fashion designer.
The firm’s accessories collections are designed by a team based in Florence, where they are also manufactured. Gianluca Lera, who helped spearhead the company’s push into accessories, exited Bulgari last fall.
In the first quarter, sales of accessories rose 22.5 percent, accounting for 8.7 percent of revenues. Sales of jewelry grew 10.6 percent, to 88.2 million euros, or $121.7 million, and accounting for 44.3 percent of total sales. Perfume and cosmetics grew 28.8 percent to 45.2 million euros, or $62.4 million, accounting for 45.2 percent of sales. Sales of watches slipped 1.4 percent to 41.5 million euros, or $57.2 million, generating 20.9 percent of revenues, while the hotel business showed a 5.4 percent decrease in sales to 3.6 million euros, or $4.9 million, accounting for 1.8 percent of the total.
Geographically, sales grew 5.6 percent in Europe to 68.2 million euros, or $94.1 million, and 40.5 percent in the Americas to 27.2 million euros, or $37.5 million. In a conference call, Trapani said this market “surprised” him. “The U.S. performed extremely well, fueled by a much better general environment, the economy is growing again and sales results were frankly above our expectations,” he said.
Sales in Asia rose 10.6 percent to 91.6 million euros, or $126.4 million, accounting for 46 percent of sales. Of this figure, revenues in Japan showed a 10.1 percent fall, while the rest of Asia grew 29.7 percent. Greater China now accounts for 15.7 percent of revenues, with revenues in directly owned stores growing 46 percent. Sales in the Middle East and elsewhere gained 6.4 percent.
As of March 31, Bulgari’s net debt stood at 238.7 million euros, or $329.4 million, compared with 338.9 million euros, or $440.5 million, at the end of March 2009.
Bulgari made investments in the quarter totaling 9.9 million euros, or $13.6 million, down 26 percent compared to 13.4 million euros, or $17.4 million, the previous year.
In the call, Trapani said a price increase in April will have a 3 percent impact on an annual basis. Also, he said sales last month were up 15 percent compared with April 2009.
The executive said that, given recent events like “Greece, the volcano [in Iceland], the financial markets, to make a forecast or give a qualitative number would be very difficult” for the rest of the year. However, Trapani concluded that “in light of the trends in this first quarter and the positive data received in April, I continue to look at the months ahead with cautious optimism.”