Press Releases
Bulgari Group: second quarter 2009 improving results compared to the previous quarter
- Turnover: 218.3 million Euro (-20.5% at current exchange rates)
- Gross margin: 61.8% (63.9% in the second quarter 2008)
- Operating profit: -8.2 million Euro
- Net profit: -11.2 million Euro
Rome, 30 July 2009 – The Board of Directors of Bulgari S.p.A. approved today the Bulgari Group’s Half-Year Financial Report at 30 June 2009, which recorded turnover of 396.4 million Euro (-21.7% at current exchange rates and -28.9% at comparable exchange rates), an operating loss of 32 million Euro and a net loss of 40.5 million Euro.
A detailed analysis of the second quarter figures shows turnover of 218.3 million Euro, down 20.5% at current exchange rates (-27.7% at comparable exchange rates) compared to the same period of the previous year.
However, it must be noted that sales in directly owned stores recorded a definitely stronger performance than the wholesale channel, and went up 3.3% at current exchange rates compared to the same period of the previous year. It is then important to report that the quarter that just ended progressively proved to be better than the first quarter 2009, although the market was even more difficult, and a profit was recorded in the month of June.
All of the changes reported below are stated at comparable exchange rates unless otherwise indicated.
Revenues by product category
Following continuation of the world financial market crisis and its effects on the demand of goods and services, all product categories continued to record a drop in sales during the second quarter. Jewellery posted a 24.7% drop; watches 36.2%; accessories 37.5% and perfumes 20.4%.
As previously seen in the first quarter, intensive de-stocking in the wholesale channel penalized sales performance of all product categories also during the second quarter. A partial exception is the perfumes category, which recorded a significant increase in orders from thirdparty distributors, to such an extent that the division’s turnover at current exchange rates in the month of June 2009 went up over June 2008.
Revenues by geographical area
All geographical areas in the second quarter as well posted a sharp slowdown in sales, profoundly affected by the shrinkage of orders in the wholesale channel, but at the same time there was also positive performance in directly owned stores in some countries. In ever more difficult local markets, the United States (-51.6%) and Japan (-42%) suffered downturns compared to the previous quarter, even if there was a marked recovery of the directly owned store network in Japan.
Europe posted an overall 22.7% decrease, improving slightly over the -25.5% of the first quarter. The directly owned stores recorded significant growth in the major countries during the period considered compared to the same period of the previous year, except for Spain.
Performance in the rest of Asia showed signs of improvement (-15.6% versus -22.3% during the first quarter of the year), particularly obvious in South Korea and China, which confirmed to be continuously growing notwithstanding the basis of comparison with 2008 is distinctively penalizing in view of the excellent sales results of the same period of the previous year. The Middle East/Other recorded 27.7% growth at current exchange rates during the quarter (versus -24.1% during the first quarter of the year), and this is also due to Australia's outstanding performance.
Profit & Loss highlights
The gross margin of the quarter – down from 175.5 million Euro in 2008 to 134.9 million Euro in 2009 (-23.1%) – also decreased in terms of impact on revenues (61.8% in second quarter 2009 versus 63.9% in second quarter 2008). Considering the recent performance of turnover, during the quarter the Group set aside a prudential allocation higher than estimated to cover the risk of inventory obsolescence. This measure decreased the gross margin and hence took the half-year figure to 249.8 million Euro (63.0%) versus 331.0 million Euro in 2008 (65.4%). However, it is expected that this allocation may be reabsorbed during the year, so the goal of 64% remains attainable throughout 2009.
Total operating costs, excluding advertising and promotional activities, in the quarter recorded 5.9% growth, up from 110.2 million Euro in the second quarter 2008 to 116.7 million Euro in the second quarter 2009. It should be emphasised that exchange rates being equal, these costs actually recorded a 0.6% decrease. This result is to be attributed to the attentive cost containment policy initiated last year, the effects of which will augment during the second half of the year. The combined figure at June therefore totalled 231.7 million compared to 217.9 million in 2008 (+6.3% at current exchange rates, -0.6% at comparable exchange rates).
Advertising and promotional expenses, dropping sharply compared to the second quarter 2008 (-27.1%), slightly reduced their incidence in terms of percentage on turnover (12.1% versus 13.2% in 2008).
Operating profit, equal to 29 million Euro in the second quarter 2008, turned into an 8.2 million Euro loss during the second quarter 2009 and a combined loss equal to 32 million Euro at June.
Lastly, net profit was equal to an 11.2 million Euro loss, compared to the 31.4 million Euro net profit in the second quarter 2008, and a combined loss of 40.5 million Euro at June.
Balance sheet highlights
The Group’s net financial indebtedness at 30 June 2009 totals 351.6 million Euro, compared to 303.6 million Euro at 31 December 2008 and 292.2 million Euro at 30 June 2008. It is covered 100% by long-term loans and committed lines of credit with expiry dates greater than 24 months. Shareholders' equity at end of June 2009 amounts to 748.4 million Euro, compared to 825 million Euro at 31 December 2008 and 759.7 million Euro at 30 June 2008. The financial position positively benefitted from containing working capital and the selective investment strategy compensated by distributing dividends totalling 30 million Euro in May 2009. The gearing between net indebtedness and shareholders’ equity holds steady at absolute solidity levels (47%).
Despite the normal seasonality of the business that requires product stocks to be established during the first part of the year and the difficulties that have struck the market, particularly in watches, the Group was able to keep the inventory level basically stable by initiating measures aimed at control and at the same time increasing the range offered in order to ensure full incisiveness on the market.
Francesco Trapani, Chief Executive Office of the Bulgari Group, commented on these results: “The results of the second quarter, which improved compared to the previous quarter and are particularly encouraging in terms of growing performance of the directly owned stores, demonstrate that Bulgari is basically attaining its cost control, investment and working capital goals that were previously announced and have been diligently pursued since the beginning of the year, and that the company’s product portfolio continues to meet the favour and taste of its customers.
During these months, we also redefined our worldwide organisation. The implementation of this new organisation commenced in early July and will be completed at the end of the year to make the company more effective, streamlined, efficient and thus less costly.
We are indeed expecting this operation to lead to structure costs in 2010 being considerably lower than in 2009. At the same time, in order to stimulate demand and with the inspiration provided by the 125-year anniversary of the company, we are intensively working on products, by giving a strong boost to that creativity that has made Bulgari famous around the world, on customer service – before, during and after the sale – and on brand image in order to make it increasingly stronger and appealing.
What with the positive sales signals recorded in our stores in July as well, I am therefore convinced that Bulgari is tackling this difficult economic situation in the right way, and when it has ended the company will be even more solid and competitive."
Bulgari is one of the global players on the luxury market. In 2008 the Group posted a turnover of 1,075.4 million Euro. Bulgari relies on a stores network in the most exclusive shopping areas in the world and on selected distributors. As of 31.03.2009 the number of the Bulgari stores in the world was 268 of which 167 as directly owned stores. Bulgari has a product portfolio that ranges from jewels and watches to accessories and perfumes. The Group is controlled by the Bulgari family, holding about 52.0% of the share capital. The remaining 48.0% is floating on the Milan Stock Exchange.
BULGARI GROUP
| EUR M. | H1 2009 | H1 2008 |
| REVENUES | 396.4 | 506.4 |
| EBIT | -32.0 | 50.9 |
| NET PROFIT | -40.5 | 54.2 |
BULGARI GROUP
| EUR M. | Q2 2009 | Q2 2008 |
| REVENUES | 218.3 | 274.7 |
| EBIT | -8.2 | 29.0 |
| NET PROFIT | -11.2 | 31.4 |
BULGARI GROUP – REVENUES BY PRODUCT CATEGORY – H1 09
| H1 09 | H1 09/ H1 08 | H1 08/ H1 07 | ||||
| REVENUES BY PRODUCT CATEGORY | EUR M. | % On Revenues | % REPORTED | % COMP. FX | % REPORTED | % COMP. FX |
| Jewelry | 176.5 | 44.5% | -17.0% | -23.7% | 3.0% | 7.7% |
| Watches | 89.3 | 22.5% | -29.1% | -36.8% | -4.9% | -1.5% |
| Perfume&Cosmetics | 88.0 | 22.2% | -18.9% | -25.1% | 18.4% | 24.3% |
| Accessories | 28.8 | 7.3% | -30.2% | -40.9% | 2.0% | 5.7% |
| Hotel | 7.9 | 2.0% | -17.1% | - | 47.4% | - |
| Royalties & Other | 5.9 | 1.5% | -31.7% | - | -11.5% | - |
| TOTAL | 396.4 | 100% | -21.7% | -28.9% | 4.0% | 8.3% |
BULGARI GROUP- REVENUES BY GEO AREA H1 2009
| H1 09 | H1 09/ H1 08 | H1 08/ H1 07 | ||||
| REVENUES BY GEO AREA | EUR M. | % On Revenues | % REPORTED | % COMP. FX | % REPORTED | % COMP. FX |
| EUROPE | 148.7 | 37.5% | -24.0% | - | 7.5% | - |
| of which Italy | 48.7 | 12.3% | -16.2% | - | -9.3% | - |
| AMERICAS | 40.6 | 10.2% | -41.1% | -48.4% | -16.2% | -4.8% |
| ASIA | 172.9 | 43.6% | -17.3% | -30.1% | 8.1% | 13.1% |
| of which Japan | 79.7 | 20.1% | -24.0% | -39.9% | 3.8% | 4.6% |
| of which Rest of Asia | 93.2 | 23.5% | -10.5% | -18.8% | 12.8% | 23.1% |
| MIDDLE EAST/OTHER | 34.2 | 8.7% | 4.0% | - | 11.0% | - |
| TOTAL | 396.4 | 100% | -21.7% | -28.9% | 4.0% | 8.3% |
BULGARI GROUP – REVENUES BY PRODUCT CATEGORY – Q2 09
| Q2 09 | Q2 09/ Q2 08 | Q2 08/ Q2 07 | ||||
| REVENUES BY PRODUCT CATEGORY | EUR M. | % On Revenues | %REPORTED | % COMP. FX | % REPORTED | % COMP. FX |
| Jewelry | 96.7 | 44.3% | -18.4% | -24.7% | 5.4% | 10.5% |
| Watches | 47.2 | 21.6% | -28.2% | -36.2% | -11.0% | -7.8% |
| Perfume&Cosmetics | 52.9 | 24.2% | -13.7% | -20.4% | 25.8% | 32.2% |
| Accessories | 14.6 | 6.7% | -26.6% | -37.5% | 2.3% | 7.0% |
| Hotel | 4.1 | 1.9% | -14.6% | - | 38.1% | - |
| Royalties & Other | 2.8 | 1.3% | -38.9% | - | 6.3% | - |
| TOTALE | 218.3 | 100% | -20.5% | -27.7% | 4.8% | 9.4% |
BULGARI GROUP - REVENUES BY GEO AREA - Q2 2009
| Q2 09 | Q2 09/ Q2 08 | Q2 08/ Q2 07 | ||||
| REVENUES BY PRODUCT CATEGORY | EUR M. | % On Revenues | % REPORTED | % COMP. FX | % REPORTED | % COMP. FX |
| EUROPE | 84.1 | 38.5% | -22.7% | - | 11.7% | - |
| of which Italy | 27.2 | 12.4% | -16.6% | - | -4.5% | - |
| AMERICAS | 21.2 | 9.7% | -44.8% | -51.6% | -21.1% | -9.5% |
| ASIA | 90.2 | 41.3% | -17.7% | -29.8% | 9.8% | 14.7% |
| of which Japan | 40.1 | 18.4% | -28.3% | -42.0% | 6.7% | 7.4% |
| of which Rest of Asia | 50.1 | 22.9% | -6.7% | -15.6% | 13.2% | 23.5% |
| MIDDLE EAST/OTHER | 22.8 | 10.5% | 27.7% | - | 10.6% | - |
| TOTAL | 218.3 | 100% | -20.5% | -27.7% | 4.8% | 9.4% |
The manager in charge of preparing the corporate accounting records, Flavia Spena, declares that pursuant to paragraph 2 of article 154 of the Consolidated Finance Law the accounting information contained in this release corresponds to the books, records and accounting entries.
For further information
| Media relations | Relations with analysts/investors |
| Paolo Piantella | Renata Casaro |
| Corporate Financial Press Office Director | Investor Relations Director |
| tel. +39 06 68 810 593 | tel. +39 06 68 810 467 |
| e-mail paolo.piantella@bulgari.com | e-mail renata.casaro@bulgari.com |
| www.bulgari.com | http://ir.bulgari.com |