Byline: Luisa Zargani

MILAN — Italian jeweler Bulgari saw its sales and profits go in different directions in 2001 as a second-half slowdown cut into the bottom line and U.S. sales.
Net income fell 29 percent to $59.8 million as sales gained 13 percent over those of 2000 to $671.6 million. Dollar figures have been converted from the euro at current exchange rates.
Francesco Trapani, chief executive officer of the group, viewed the increase in sales as “very positive,” coming on top of 2000 results which were, he said, “particularly brilliant.”
Trapani described 2001 as an “atypical year. The first half of the year was characterized by excellent sales and profits, while the second half was influenced by the tragic events of Sept. 11 and by a deteriorating social-economic environment and was therefore much more difficult.”
In addition, Trapani attributed the drop in net profits to “extraordinary expenses,” and to a negative impact of taxes. “Profits realized in several high-tax countries and net losses in other markets penalized the net profit,” said Trapani.
While sales in the U.S. fell 16 percent, all other markets registered gains, with a significant 59 percent growth in sales in the Mideast. Sales in Italy rose 19 percent and, throughout the rest of Europe, 24 percent. Japan increased 14 percent and the Far East 17 percent.
For the year, sales of all product categories grew except for watches, which dropped 6 percent. Accessories grew 48 percent, perfumes 37 percent and jewelry 26 percent. Operating profits dropped 17 percent to $89.4 million and the operating margin sank to 13.3 percent from 18.2 percent in 2000. Trapani said these results were affected by marketing activities carried out throughout the year, the launch of the Lucea jewelry line and the BLV Homme perfume. Promotions and brand support expenditures totaled $89.4 million, 24.3 percent higher than the previous year. Trapani said that the operating profit before promotion and brand support expenses was $178.8 million, only marginally lower than the previous year’s figure of $179.7 million.
Trapani said he expects 2002 “will be a year of transition, characterized by further increases in sales volumes, even if moderate, which together with a careful cost control program will allow us to obtain a significant increase in profits. I am convinced that the fundamentals of the luxury business remain untouched and that they will keep rewarding the Bulgari strategy with a strong expansion in the future.”