"I want that necklace," hisses Doris Dubois, eyeing "a rare, colorful Bulgari piece in red, gold, and steel, bright porcelain, and deep ruby." Doris is a protagonist in a gilded tale of glamour and greed entitled The Bulgari Connection, a novel about to hit bookstores in Britain and the U.S. Nothing new in that, except that the book, by British author Fay Weldon, was commissioned by Bulgari Chief Executive Francesco Trapani as a giveaway for clients attending a store opening in London last September. The 44-year-old descendant of the Italian jewelry dynasty has no qualms about marketing imitating art: He is delighted that the book has recently been picked up by a serious publisher. "Exposure of the brand name is key," says Trapani.
Whether the book sells or not, Trapani is spinning a scintillating tale of his own. Installed at the helm of Bulgari in 1984 at the tender age of 27, after a stint studying business administration in New York, Trapani has transformed the small, family-run business into one of the world's fastest-growing luxury brands, taking it public on the Milan stock exchange in 1995. Sales have doubled over the past five years, to $615 million in 2000, elevating it to No. 3 behind Cartier and Tiffany & Co. Bulgari's market capitalization now tops $3.3 billion, and in August it joined the MIB 30, the main index of the Milan stock exchange.
Once little known outside Italy, Bulgari now boasts an international clientele that includes Madonna and Bill Gates. Even as the global economy sput- ters, profits were up an estimated 39% in the first half of 2001, to $45 million. Analysts expect a 20% rise in sales for the year as a whole, which is below last year's 39% spurt but above the industry average.
Yet Trapani is not satisfied. He is on a quest to best Cartier by transforming Bulgari into a so-called lifestyle brand. During the 1990s, he engineered Bulgari's successful move into perfumes and leather goods. He also multiplied the number of Bulgari stores from five in 1983 to 130 now. "People who had never heard of Bulgari in 1992 know the name today," says Claire Kent, an analyst at Morgan Stanley in London.
So Trapani is taking a bolder--and riskier--step to extend Bulgari's glamorous image around the globe. Earlier this year he inked a $140 million joint venture with Marriott International Inc. to create Bulgari Hotels & Resorts. The deal calls for seven exclusive hotels in cities such as Paris, London, New York, Miami, and Milan. Analysts point out that even boutique hotels are less profitable than jewelry, watches, and other luxury accessories, where top performers average margins of 25% or more. Indeed, the stock sank 5% the day the deal was announced, though it has since recovered. "The hotel venture is the only thing that has shaken my confidence in Bulgari," says Andrew Gowen, luxury-goods analyst at Lehman Brothers Inc.
Trapani brushes off such criticism as short-sighted. Sitting in his office at Bulgari's tony Rome headquarters, he says that his objective is "to create a public relations machine for the Bulgari brand." While fashion icons such as Gianni Versace and Ralph Lauren have invested in single resorts bearing their names, Bulgari is the first to try a branded chain. Marriott's Luxury Group, which operates the five-star Ritz-Carlton hotels, will run the new properties, where rooms will go for about $500 a night. Trapani will be responsible for the hotels' architecture, interiors, and restaurants. "Bulgari is a bold, contemporary Italian brand--very impressive from a design point of view," says Leonardo Inghilleri, a former Ritz-Carlton executive who's been appointed brand manager for Bulgari Hotels & Resorts.
VETO POWER. It's clear that this scion is not fulfilled watching over the family jewels. Last year, he teamed up with Renato Preti, a former director at investment firm Deutsche Morgan Grenfell Private Equity, to launch Opera, a $230 million private-equity fund that invests in medium-size Italian companies in fashion, retail, interior design, and tourism. With an 11% stake in Opera and 50% of the management company, Trapani helps oversee the fund and has veto power over its investments. On Aug. 29, Opera took control of upmarket Italian shoemaker Bruno Magli, and it is now eyeing fashion house Valentino.
Some analysts want Trapani to devote his full attention to Bulgari. "You could say [that] founding Opera was `strike one,"' says one, who worries that dabbling in hotels and fashion houses will diminish Trapani's focus on jewelry and watches. By melding aluminum and rubber into a $1,500 watch, Trapani has proven that he can turn humble materials into gold. But he'll need all his alchemy to overtake the competition.
By Gail Edmondson in Rome, with bureau reports
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