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Leaders of Jewelry Market: First Half of the Distance

20 october 2009


Bulgari has shuttered three U.S. stores, including a prime location on Madison Avenue in Manhattan, but it is opening another three locations in the United States by the end of the year, a Bulgari spokesperson has confirmed, according to

In addition to shuttering the New York store, the Italy-based jeweler closed stores in Aspen, Colo., and Palm Beach, Fla., this year.

Meanwhile, new stores are expected to open by the end of 2009 in three new markets: Dallas, Las Vegas and San Francisco, said Paolo Piantella, Bulgari SpA's corporate financial press office director.

In July, Bulgari Group released its half-year financial report, which stated sales totaled 396.4 million euros ($568.4 million), a drop of 20.5 percent over the previous half-year and a decline of 28.9 percent at current exchange rates. The company also reported an operating loss of 32 million euros ($45.9 million) and a net loss of 40.5 million euros ($58.1 million) for the half year.

The company noted in a media release that sales in directly owned stores recorded "a definitely stronger performance" than the wholesale channel, with sales in the former increasing 3.3 percent at current exchange rates compared to the same period the previous year.

Broken down geographically the United States and Japan were Bulgari's more difficult local markets in the second quarter, with the former experiencing a 51.6 percent fall in sales and the latter experiencing a 42 percent drop.

Europe posted a 22.7 percent decrease, while performance in the rest of Asia showed signs of improvement (down 15.6 percent versus a 22.3-percent drop  for the first quarter of 2009). The Middle East/Other recorded 27.7 percent growth at current exchange rates, primarily due to outstanding performance in Australia, the company said in a release.


Luxury group Richemont warned that the company’s profitability for the first half of the fiscal year would be “significantly below” that reported in 2008, said. “Although the rate of decline in sales is slowing, we still urge caution,” said group chairman Johann Rupert. "The comparative figures for the second half of last year are already lower than for the first half and set a lower hurdle in terms of performance.”

The company reported Wednesday that total sales fell 16 percent in the first five months of its fiscal year that ended August 30. Richemont did not provide actual sales figures for the period, expounding only on the percentage declines at its respective business units.

The company’s jewelry maisons saw sales drop 14 percent in the five months, while its specialist watch sales fell 18 percent. The company also deals in writing instruments and leather and accessories, where sales decreased 17 percent and 1 percent, respectively.

Richemont noted that the Americas was the worst performing region for the company, with a decline of 36 percent, while sales in Europe, a category that includes the Middle East, fell 22 percent and dropped 7 percent in Japan. Sales in the Asia Pacific region, including China, grew 5 percent.

Rupert said that the company would wait until it sees some evidence of a broader economic recovery before speculating on the likelihood of a better second fiscal half, “particularly when it comes to the wholesale business.”

Richemont sales grew 2 percent to $7.4 billion (EUR 5.4 billion) in the fiscal year that ended March 31, 2009, while its net profits declined 31 percent to $1.5 billion (EUR 1.1 billion). Richemont's shares fell 4.3 percent to CHF 28.72 a share in Wednesday morning trade on the Swiss Stock Exchange.


Second quarter net sales by U.S. luxury retailer Tiffany & Co. beat company expectations, yet still fell 16 percent to $612.5 million, informed. Net earnings were $56.8 million, down 29.7 percent from the $80.8 million earnings in the prior year.

Tiffany, usually immune from recessionary woes, was hit together with other high-end retailers by the recent financial crisis.

On a constant-exchange-rate basis, which excludes the effect of translating foreign-currency-denominated sales into U.S. dollars, worldwide net sales declined 14 percent and comparable store sales declined 16 percent.

In the Americas, sales declined 23 percent to $324.9 million in the second quarter. Comparable U.S. store sales declined 27 percent and while sales in the New York flagship store declined 30 percent.

Combined Internet and catalog sales in the U.S. declined 8 percent in the second quarter.

Sales growth in the Asia-Pacific region was hurt by continued declines in Japan. As a result, regional sales declined 1 percent to $211.9 million. In Europe, sales decreased 4 percent to $68.3 million.

“We are pursuing a more modest pace of store expansion this year, in light of economic conditions, but will nevertheless increase the number of Company-operated stores by about 6 percent,” said Chairman and CEO Michael J. Kowalski.

In its outlook, Tiffany said sales trends in August are meeting expectation. For the full year, the company expects a worldwide sales decline of approximately 10 percent, including regional sales declines in the mid-teens percentage in the Americas, a low-single-digit percentage in the Asia-Pacific region, a low-single-digit percentage in Europe, as well as (d) a 50 percent decline in other sales.

It further expects annual net earnings from continuing operations of $1.65 - $1.75 per diluted share, this compared to the previous forecast of $1.50 - $1.60 per diluted share.