MILAN — Bulgari saw its full-year 2003 revenue slip 1.9 percent as a strong euro-to-dollar exchange rate and a double-digit drop in watch sales hurt the jeweler’s top line. Still, chief executive Francesco Trapani expressed optimism that market conditions would improve this year.

This story first appeared in the January 30, 2004 issue of WWD. Subscribe Today.

Bulgari sales for the year ended Dec. 31 shed 1.9 percent to $948.3 million, or 759.1 million euros, from $967 million, or 774 million euros, the year earlier, but the company said that revenue would have risen 4.9 percent at constant currency rates. Dollar figures have been converted from the euro at current exchange rates.

Revenue for the fourth quarter alone shed 3.1 percent to $318.6 million, or 255 million euros, in what Trapani characterized as a tough comparison with strong year-earlier figures. Bulgari said that fourth-quarter sales would have grown 3.4 percent at constant exchange rates.

“I’m optimistic for 2004,” Trapani told WWD. “If nothing else happens, such as a widespread epidemic, a large terrorist attack or a war, meaning that things stay as they are now, then I think the top-line growth of 8 to 10 percent that the financial community is expecting is reasonable.”

Sales of watches, one of Bulgari’s biggest categories, were especially weak in the fourth quarter, falling 15.5 percent to $104.1 million, or 83.3 million euros.

Trapani said the watch market continues to be sluggish but he’s starting to see improvement and he’s confident that a new watch line bowing at the Basel watch fair in April will help drive sales.

“Watches continue to be weak but every month they are less weak,” he said, adding that watches had a difficult comparison with the last quarter of 2002, when sales rose 27.9 percent.

On a brighter note, jewelry sales for the fourth quarter rose 0.4 percent to $123.9 million, or 99.2 million euros, while those of perfume grew 12 percent to $56 million, or 44.8 million euros. Accessories, a category Bulgari is pushing, also saw a growth in sales, rising 15.6 percent to $19.9 million, or 15.9 million euros.

Bulgari said that weak tourist flows penalized sales in Europe, the brand’s largest market. Fourth-quarter sales in Italy fell 4.1 percent to $43.1 million, or 34.5 million euros, while those in the rest of Europe dropped 2 percent to $69.6 million, or 55.7 million euros.

Unfavorable currency exchange rates hurt numbers out of the Americas and Asia. Sales in the Americas grew 4.4 percent in the quarter to $49.5 million, or 39.6 million euros, but would have risen 21.2 percent at constant currency rates. Those in Japan fell 6.6 percent to $70.8 million, or 56.7 million euros, but would have grown 0.2 percent, stripping out foreign-exchange rate effects. Bulgari also noted that rising sales in the tourist mecca of Hawaii bit into Japanese sales.

Sales from the rest of Asia, excluding Japan, rose 7 percent to $58.3 million, or 46.7 million euros, but would have grown 18.7 percent at constant currency rates.