MILAN — Bulgari SpA posted a large jump in first-half profits thanks to higher prices, a lower cost base and a more efficient production and distribution process.
Net profits for the six months ended June 30 rose 53.5 percent to 44.4 million euros, or $54.6 million. Sales rose 15.1 percent to 447.8 million euros, or $550.8 million, in line with preliminary figures released in July. An upbeat Bulgari also boosted its full-year forecasts, calling for 10 percent growth in net profits and sales.
Operating profits for the six months rose 36.9 percent to 52.7 million euros, or $64.8 million. Investments in the retail network caused operating costs to spike 15.1 percent to 180.5 million euros, or $222 million.
Advertising and promotional expenses decreased 3.7 percent to 53.2 million euros, or $65.4 million, which is equal to 11.9 percent of revenue. A Bulgari spokesman said advertising and promotional expenses for the full year are seen coming in at 12 percent of sales. In the second half of the year, Bulgari will absorb the costs of launching its Kate Moss television and print ads for the restyling of the Bulgari Pour Femme fragrance.
Bulgari chief executive Francesco Trapani called for double-digit growth in the full year.
“I am confident that — in presence of a good sales performance in the year-end holiday season and in absence of extraordinary events — the Bulgari Group can reach in 2006 a growth of 10 percent at comparable exchange rates for turnover and net profits,” Trapani said in a statement.
Back in March, Trapani stated that full-year sales would grow by 8 to 9 percent, while profits should advance at a similar pace in the “high single digits.”
Elsewhere, the brand is evaluating the possibility of launching a skin care line, which would complement Bulgari’s well established fragrance business. Trapani broke that news in a conference call to analysts Wednesday. A Bulgari spokesman stressed that plans for a skin care collection have not been finalized, and he specified that such a product launch wouldn’t happen before late next year at the earliest.