Why is it that Bulgari Spa's stock prices (the owner of Bulgari the Roman jewellery company established in 1884) is not in line with most of the other luxury goods conglomerates such as LVMH Group, PPR SA, Richemont and Prada and Hermes? Bulgari, the world’s third-largest jeweller, fell 2.6 percent to 5.72 euros, the stock’s lowest price in almost three months. According to a Bloomberg.com article Standard & Poor’s Equity Research reiterated a “sell” recommendation on the stock, saying in a note that “we fear that a relatively slower-than-peers business recovery could disappoint investors betting on Bulgari’s late- cyclicality and leveraged operating profile.” Bulgari's peers have been tracking ahead of forecasts mostly consecutively over the past four quarters ensuring positive news stories and commensurate positive stock prices for those listed brands.
As reported in The MO Down earlier this month "Bulgari Finding Things Tougher Than French Counterparts" Snr Trapani, the brand's CEO is certainly not sitting back, he is being pro-active and has already introduced some lower priced jewellery items in addition to increasing the prices of 'some' timepieces. The issue that seems to be handicapping Bulgari's return to stronger growth is in fact its timepieces. As reported on the Bulgari Group 29 July Press Release, "during the half year in question, all product categories, with the sole exception of watches, contributed positively to growth. Jewellery rose by 10.5% at comparable exchange rates (+14.8% at current exchange rates)." However, watch (timepiece) sales decreased by 4.6% (-1.2% at current exchange rates).
The company goes on to say if sales of Roth and Genta brand watches were eliminated and sales of the watches exhibited at Basel which at that time were delivered in the second quarter - the watch category actually grew by 14%. The next quarter and half year results will ensure this comment is justified and cleansing some other branded inventory timepieces within their portfolio should ensure Bulgari Spa has a cleaner slate and will commence to operate in line with its luxury stable mates. With timepieces representing 24% of the revenue it is the second and most significant product category.
Image credit: www.bulgari.com (Bulgari moon-phase watch for ladies)
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