Bulgari Fourth-Quarter Sales Miss Estimates as Growth Slows
Bulgari SpA, the worlds third-
largest jeweler, reported fourth-quarter sales that missed
analysts estimates after North American revenue growth slowed
and the dollar fell against the euro.
Sales increased 7.4 percent to 347.7 million euros ($516
million) from 323.6 million euros a year earlier, the Rome-based
company said today. That was below the 356.1 million-euro median
estimate of seven analysts surveyed by Bloomberg and behind the
third quarters 13 percent pace.
Chief Executive Officer Francesco Trapani today declined to
give sales or earnings targets for this year, saying hell
“refine the companys long-term forecast for “double-digit
yearly growth when Bulgari posts annual results in March. A
consumer slump in the U.S., where house prices are falling, has
spread to luxury-goods demand and hurt sales at rival jeweler
Tiffany %26amp; Co. and watchmaker Cie. Financiere Richemont SA.
“The weakness of the U.S. dollar and the slowdown in the
U.S. are making me think he is talking about a downgrade to
something more in line with the wider luxury market — targets
of growth between 7 and 9 percent, John Guy, an analyst with
MF Global Securities in London, said in an interview.
The dollar has fallen 12 percent against the euro in the
past 12 months, diminishing the value of sales in that currency
when translated back into euros on the companys balance sheet.
Bulgari fell 4 cents, or 0.5 percent, to 7.72 euros in
Milan trading today. The shares have slid 19 percent this year
after dropping 11 percent in 2007, the first retreat in five
years. Bulgari released figures after Italian trading ended.
“I am very confident about the net profit target already
given for the year just ended, Trapani said in an interview.
North America
Demand was steady in the U.S. between October and Jan. 20,
according to the CEO. Trapani said a slowdown in reported
revenue from North America was because of seasonal deliveries
and the timing of wholesale bookings, rather than any slackening
in U.S. demand.
Full-year sales advanced 8 percent to 1.09 billion euros
and gained 14 percent at constant exchange rates, beating the
companys November forecast for 12 percent gains in 2007 revenue
and profit on that basis.
By region, sales rose 2.9 percent in North America, the
source of about 15 percent of the total, slowing from the third
quarters 12 percent increase. At constant exchange rates, sales
rose 14 percent in the region, down from the third quarters 20
percent pace.
Europe, Japan
Tiffany has reported a drop in holiday same-store sales
this month, and Richemont has said third-quarter sales growth
slowed after wealthy Americans and Japanese bought less Cartier
jewelry. Confidence among luxury consumers in the U.S. has
dropped to the lowest in at least four years, signaling weaker
spending in 2008, research firm Unity Marketing said Jan. 24.
Sales gained 11 percent in Europe, speeding up from 8.8
percent in the third quarter. Sales in Bulgaris home Italian
market fell 0.8 percent.
Japanese revenue fell 2.9 percent after a third-quarter
gain of 9 percent. Outside Japan, Asian sales rose 4.5 percent.
“The Japanese market improved in the second half, as we
had predicted, Trapani said. “We hope we can count on a
slight increase this year.
Bulgaris 100-million euro investment plan aimed to stoke
growth with openings from Tokyo to New York last year. The
company added two Japanese stores the end of 2007 and a shop for
accessories in Rome near its first outlet on Via Condotti.
Italy, Japan Disappointment
The decline in Italy was “surprising, while Japan was
“softer than expected given the new store openings, JPMorgan
Chase %26amp; Co. analyst Melanie Flouquet said in an e-mailed note.
Fiscal 2007s profit forecast is a “done deal, but what about
2008? she added. Bulgaris overall sales missed her estimates.
Earlier in 2007, the jeweler reopened its flagship on New
Yorks Fifth Avenue, across the street from Tiffanys
headquarters.
Fourth-quarter jewelry sales gained 14 percent to 148.3
million euros, helped by the introduction of $15,000 Elisia
necklaces. Watch revenue rose 2.6 percent to 91.4 million euros
on demand for $12,000 Assioma D timepieces in red gold.
Sales at the perfumes division climbed 10 percent to 76.9
million euros, helped by new skin creams costing as much as 250
euros. Revenue from leather handbags and other accessories fell
7.6 percent to 24.3 million euros.
