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After ‘Perfect Storm,’ Luxury Titans Foresee Some Sunshine Ahead

Italian luxury executives said they saw a strong pickup in June’s sales at the Altagamma conference in Rome on Friday.

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ROME — It may not be “la dolce vita,” but it’s looking better.

During a conference here Friday, executives from Italian luxury goods companies said they saw a strong pickup in June sales after a brutal first quarter, while high-end American retailers outlined sales strategies for a challenging economy.

Chief executives from Gucci Group, Bulgari, Ermenigildo Zegna, Ferragamo and Brioni attending the Altagamma luxury- goods conference said external factors such as SARS and the war in Iraq, which critically cut into March and April numbers, have started to subside.

“The luxury market is resilient and it seems in June that business was returning to normal,” Bulgari chief executive Francesco Trapani said, adding that Bulgari’s new jewelry collection, Allegra, was performing particularly well.

Gucci’s chief executive Domenico De Sole echoed the sentiment. “There’s been a great improvement in May, June and early July,” said De Sole, who admitted that stores in cities highly dependent on tourism were still going through a rough period. De Sole was particularly pleased with business in Japan, which he said was “moving forward.”

De Sole’s comments came only slightly more than a week after Gucci reported a drop in net profits of 96.6 percent to only $1.4 million on a 6.7 percent decline in sales to $655.9 million in the first quarter ending April 30. He said the dismal business conditions in the first quarter resulted from “the perfect storm.”

Held at a restored Roman temple, the conference sought to not only analyze past market data but to offer guidance for the short- and long-term future of the luxury industry. Altagamma, Italy’s luxury goods association, organized roundtable discussions between U.S. retailers and Italian manufacturers, as well as honored luxury goods players for the first time in its 11-year history.

While no one denied the difficulty of the past 18 months, retailers and Italian executives attending the conference were guardedly optimistic for 2004.

“Luxury is not dead, it’s actually very much alive,” said Burt Tansky, president and chief executive officer of Neiman Marcus Group. “There is no evidence that customers are trading down — once you are accustomed to quality, you demand more of it.”
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