According to Associated Press, Bulgari celebrated its 125th anniversary with a retrospective that pulled together more than 500 one-of-a-kind pieces, including baubles collected by Elizabeth Taylor — but it's the future that is more worrying. The Italian maker of luxury jewels posted its first quarterly loss in a decade this year, with analysts expressing concern over whether it is in a position to cut costs dramatically enough to survive the economic slowdown.
Francesco Trapani, company chief executive officer (CEO), told a gala opening in Rome for the retrospective this week that the company is confronting the crisis by restructuring, watching its costs and cutting travel and entertainment, and that it would consider whether or not to go ahead with a dozen store openings planned for this year. Bulgari has been hit by the high cost of gold, but also by falling demand due to the worldwide recession.
"We believe the difficult decision for management is not whether to cut costs, but how to do so in a way that strengthens Bulgari's competitive position," Merrill Lynch wrote. Thomas Chauvet, a Citigroup analyst, wrote, "The timing of any Bulgari turnaround is increasingly uncertain," citing a combination of cyclical issues and company-specific structural woes, including heavy exposure in the U.S. and European markets, where consumer spending has slowed dramatically.
In the first quarter, Bulgari said sales of its jewelry, which was 44 percent of sales, fell 22 percent, with watches, about a quarter of the company's business, down 37 percent. Bulgari SpA said it lost $39.9 million in the first quarter, compared with a net profit of $31.8 million (EUR 22.8 million), its first quarterly loss since 1999.
Bulgari is the smallest of the major luxury watch and jewelry makers. It was started in 1884 by Greek immigrant Sotirios Bulgari, who opened the flagship Via Condotti store in Rome in 1905, and has expanded to more than 260 stores. Most of all, Bulgari is known for jewelry, like the 1967 gold, emerald, ruby and sapphire necklace worn by Keira Knightley at the Oscars in 2006.
An entire room at the retrospective at Rome Palazzo delle Esposizioni, which runs through September 13, was devoted to Elizabeth Taylor's Bulgari collection, including an 18-karat emerald brooch surrounded by diamonds, the only piece of jewelry she wore to her first wedding to Richard Burton. Bulgari retains its appeal among today's stars, with Ginnifer Goodwin, Jessica Alba and Jason Lewis attending Wednesday's gala opening of the retrospective. "I am sure that even in the diffuclt months that await us in 2009, Bulgari will be able to overcome these challenges and achieve further success," Chairman Paolo Bulgari wrote to investors this year.
