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“They reexamined a little the growth rate of the market,” noted one analyst, who said Bulgari wasn’t as studious on production and warehouse efficiency in the boom years of the late Nineties. “They never looked at those things before.”
Bulgari said tinkering with inventory levels enabled it to more than halve its net debt to $156.8 million at the end of 2002 from $327.5 million the year before. Bulgari’s current market capitalization stands at about $1.52 billion.
Among other operating cost cuts, Bulgari sliced its advertising and promotional expenses in 2002 by 25 percent to $87.6 million. The company said it chose to spend less on ads because it didn’t have as many new products to launch as in years past. But some analysts warn that fewer pages in glossy magazines could relegate Bulgari to the back of customers’ minds.
Advertising cuts or not, it looks as though Bulgari is going to have to stay lean for now. Last month, chief executive Francesco Trapani warned shareholders that the SARS outbreak could cause the jeweler to miss its financial targets for 10 percent profit and revenue growth this year.
Bulgari may be one of the first companies to admit SARS will hurt its business, but most in the market agree it won’t be the only casualty if the epidemic spreads further.
“For 2003, we had forecast a positive result and until just recently we were in line with those objectives,” Trapani said at the group’s annual meeting. “But now there are fears that it could go differently.”