Shares in Bulgari Spa, the world's third largest fine jewellery company, fell after quarterly profits did not achieve previous advised estimates. They fell as much as 3.6 percent in Milan after reporting second-quarter profits that missed estimates in addition that they may not meet their full-year gross-margin forecast also ensured the fall. Not great news in a compounded way given the ongoing positive announcements that have been made over recent weeks with the LVMH Group's excellent results and on Friday last, PPR SA's fine performance.
A lot of pressure lies on the shoulders of the Chief Executive Officer Francesco Trapani, his recent strategy has been to introduce lower priced jewellery and higher priced timepieces which may have a longer term benefit however according to an article in Bloomberg Trapani said "Bulgari may not reach its 63 percent-gross margin forecast because of rising gold prices and its geographic mix. The margin was 61.1 percent in the second quarter." It's going to be a tougher road ahead for the Italian brand, whilst they returned to positive revenue this year with net income at 600,000 euros compared with a loss of 11.2 million euros in previous year, the general consensus is not so optimistic hence the share price fall and overall market valuation is down.
Bulgari has a diversified production portfolio with ties, scarves, handbags, small leather goods however the lions share of revenue comes from its jewellery, followed by watches and if these crucial product categories are trading down, well the result is thus.
Image credit: Francesco Trapani, newyorktimes.com
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