Bulgari Profit Misses Second-Quarter Estimates on Falling European Revenue

Bulgari SpA, the world’s third- largest jeweler, reported second-quarter profit that missed analysts’ estimates on declining sales in Europe and confirmed its full-year revenue forecast of at least 5 percent growth.

Net income was 600,000 euros ($780,000) compared with a loss of 11.2 million euros a year earlier, the Rome-based company said today in an e-mailed statement after markets closed. The average estimate of 10 analysts surveyed by Bloomberg was 7.7 million euros. Revenue increased 12 percent to 244.2 million euros.

Bulgari, which is introducing more entry-priced jewelry and high-end men’s watches, is taking longer than its peers to recover from the recession as retailers continue to clear inventories of old stock. LVMH Moet Hennessy Louis Vuitton SA, the world’s largest maker of luxury goods, said July 27 that second-quarter sales at its watch and jewelry unit increased 24 percent.

“Bulgari embraced too many projects” before the economic slowdown, HSBC analysts Antoine Belge, Erwan Rambourg and Sophie Dargnies wrote in a note before the release of the results. They have a “neutral” rating on the stock.

The first-half results are “in line” with Bulgari’s forecasts, Chief Executive Officer Francesco Trapani said in the statement. On the basis of July sales trends, Trapani confirmed Bulgari’s full-year forecast for “mid-single-digit” revenue growth, excluding currency swings.

Asia Sales

Second-quarter sales of jewelry, Bulgari’s largest product category, increased 18 percent, while perfume and cosmetics sales rose 7.6 percent. Sales of accessories jumped 28 percent and watch sales dropped 1 percent.

Sales gained 65 percent in the Americas, 12 percent in Japan and 23 percent in the rest of Asia, where the jeweler said in March it will open seven directly operated stores this year. Sales fell 2.5 percent in Europe and 11 percent in the Middle East.

Bulgari will raise prices on all its products by about 3 percent on a full-year basis from April 1, Trapani said in March. The increases should widen the gross margin to 63 percent in 2010, about the same as in 2008, he said at the time.

Bulgari shares have risen 9.2 percent this year and closed at 6.29 euros at 5:30 p.m. in Milan trading today, giving the company a market value of 1.89 billion euros.

To contact the reporter on this story: Andrew Roberts in Paris at aroberts36@bloomberg.net

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