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Trapani has catapulted Bulgari into a premier luxury goods house in a decade
Susan Owens

Francesco Trapani is not 'chic,' at least not in the slightly effete way that Robert Altman portrayed the Bulgari set in his 1994 film Pret-a-Porter. The Bulgari CEO is more definite than that: strik-ingly elegant, from his pin-sharp grey Prince of Wales suit to his hand-cut, hand-stitched aubergine silk tie.

And that's just as it should be. The great grandson of a Greek silversmith who migrated to Rome in 1879, changing his name from Boulgaris to Bulgari en route, elegance is not only Trapani's birthright (his mother was a Bulgari) but also his vocation. Over the two decades he has spent at the helm, he has turned Bulgari into one of the fastest growing companies in the Italian luxury goods sector. Even as the economy languished under Silvio Berlusconi, Bulgari managed a 2005 turnover of 919mn euros, not to mention a 2005 dividend that doubled the previous year's. The company's 2006 half-year results, announced late September, increased to US$566mn reflecting a strong 21.3 per cent growth in the Middle East, which is the second largest market after Japan.

At a time when the Italian luxury industry is typified by small, faltering family companies skilled in old-world craftsmanship, Trapani has catapulted Bulgari from a small to medium sized luxury goods house in a decade, outrunning and absorbing peers and competitors along the way. The Bulgari share price has soared: 106 per cent this year alone. That meteoric rise in large part reflects the reality of a global luxury goods industry dominated by a handful of huge cong-lomerates that spent the nineties eating the name houses of Europe. Bulgari now finds itself supping with the lions.

"When our share price goes up, it's on rumours that amount to the fact that we can, in theory, be bought by conglomerates like (Bernard Arnault's) LVMH or (Francois Pina-ult's) PPR," says Trapani, seated in his office on a sunny Roman afternoon in late summer. But, as he never tires of telling reporters, Bulgari is not for sale. The CEO clearly prefers the organic, very Italian way that the company has evolved. "There is a difference between French and Italian luxury goods companies – the French have much larger, more structured companies."

Not that Trapani is peddling any of the usual cliches about Italian style, underlying the success of the country's luxury goods companies. "Style differs from company to company; if you look at just two, Armani and Versace, they're totally different." “Similarly,” he says, "I don't think we can say quality is the key to Italian success. The image Italians have is of being particularly good at defining style in a way that is appreciated on a worldwide basis."

Up until the 1970s, Bulgari was little known outside its homeland, other than to jewellery connoisseurs such as Audrey Hepburn, Grace Kelly and Sophia Loren and an elite male clientele that included Kirk Douglas and Tony Curtis.

The firm's beginnings in Rome were modest. Sotirio Bulgari first sold a steady stream of trinkets from the window of a friend's shop. In 1905 he opened at what remains the flagship store today, number 10, Via Condotti. Sotirio burst upon the world with delicate diamond art deco styles in the 1920s and 1930s which evolved to elaborate pieces set with gemstones in the soft, round cabochon cut which would become a hallmark of the firm.

In the mid-60s, Bulgari revived the tradition of ancient gold, sliver and bronze coins set in jewellery, proudly reflecting its Hellenic origins. With each passing decade the designs became heavier, the colours more vivid. The haphazard combinations of amethysts, citrines, tourmalines, corals and pearls caused Andy Warhol to remark that he headed to Bulgari every time he visited Rome: "Because it's the best exhibition of contemporary art."

As the face of a new generation, Trapani brought a boldness to the company's mana-gement. He is one of three members of the dynasty who, along with his uncles Paolo and Nicola Bulgari, collectively hold a 52 per cent controlling interest. In 1984, Paolo and Nicola became, respectively, chairman and vice cha-irman when they appointed their nephew – just 27 and fresh from studying business administration at New York University – CEO.

The company he took on had finally expan-ded outside Rome in the 1970s, when it opened jewellery shops in New York, Geneva, Monte Carlo and Paris. For a decade, he trod lightly. Then, in 1993, Trapani flagged a new diversification beyond the core jewellery business when he introduced a fragrance. Two years later, the family listed the company on the Milan stock exchange and three years after that Trapani introduced a collection of silk scarves and ties, followed by leather goods, watches and finally eyewear. In a decade, he has taken the brand to an enviable position: it is now in the third place, behind Cartier and Tiffany in terms of sales.

In 2001, Trapani announced that the comp-any would follow Versace's lead and branch into the hotel business through the Bulgari Hotels & Resorts (BH&R) chain. Opened in 2004, the venture spans two properties – the first in Milan, will break even this year as per forecasts, a second opened in Bali in late September. Why hotels? "It nourishes the Bulgari style."

After Trapani had shored up the core Bulgari brand, he began looking at a wider canvas, cas-ting his eye across the entirety of the Italian luxury goods sector. He has formed a private equity group with a former director of Deutshe Morgan Grenfell. Their Euro250mn fighting fund (Bulgari invested Euro20mn) called Opera is throwing a management and financial line to companies threatened with losing market share, being taken over or worse, failing.

Opera has taken the shoemaker Bruno Magli under its wing (buying 90 per cent of the business); sport's watchmaker Sector Group (96 per cent); the leading outdoor furniture maker Unopiu (75 per cent), and high-end furniture maker B&B Italia (51 per cent – and not a bad synergy for a hotel owner).

Trapani sees the potential to protect and boost these brands while allowing them to retain a healthy, independent handwriting. "We are helping companies to manage and grow in a difficult market but this is not sentimentality. When you are managing funds for public investors, you do your best to maximise profit to satisfy them."

Apart from the softness of the wider econ-omy, Trapani sees the comparative weakness of the Italian luxury goods sector as a function of eat-or-be eaten globalisation. "Italy used to be extremely successful because of the small companies and their artisans but today the global market requires you to be seen as big," he says. "If you are too small, you don't have the means to invest and you run the risk of not being a protagonist in your industry. So companies that remain small have to be particularly good at proposing something that is distinctive."

Bulgari has followed a strategy of vertical integration that has proved successful for the great French houses (in recent years, Chanel has bought six small specialist companies and Hermes, a tanning company and milliner. They did so to preserve and control the dying artisan skills that underpin their bespoke products). "We are like Chanel in that way," says Trapani.

In 2000, Bulgari made a direct investment to acquire Gerald Genta and Daniel Roth, high-end Swiss watchmakers. Over 2003 and 2004 it acquired Crova, a small, family-owned luxury jewellery maker in Piedmont. In 2004, it entered a 50-50 partnership with a subsidiary of the Leviev Group, the world's largest supplier of cut diamonds. The venture promises a continuous supply of stones, including the coloured stones Bulgari is famed for. And acquisitions continued last year with a 50 per cent interest in Cadrans Design, a 51 per cent interest in Prestige d'Or and 100 per cent purchase of the Italian leather goods company, Pacini.

Meanwhile, the company has had a major store expansion. Late in 2005, a new store opened in Paris in the Place Vendome; a new remodelled store will open on Fifth Avenue next year; and a ten-storey Bulgari Ginza Tower is planned for Tokyo. In the Middle East increased tourism – some six million tourists visited Dubai last year – and high oil prices are having a direct relation to sales.

As his empire continues to grow in leaps and bounds, Trapani thinks Bulgari's family shareholding strikes about the right balance. "Bulgari is a very good blend, because the CEO is in charge of the family name. But it's a listed company, 50 per cent is in the hands of third parties; all the management except for the CEO is external and the CEO knows that he can lose his job if he's not performing."