January 17, 2011 / 5:11 AM / 9 years ago

Italy jewelers to relaunch with foreign cash

* India Gitanjali to buy 4 Italian brands by start of Feb * Italian brands sales to jump in 2011-2013; regain markets * Rosato sees revenue growth with Buffett’s cash support

(Rewrites with Rosato interview, comments from Gitanjali)

By Svetlana Kovalyova

VICENZA, Italy, Jan 16 (Reuters) - Debt-laden Italian jewelers battered by economic crisis plan to boost sales and regain export market share with financial support from major foreign investors that have bid to buy them, their top management said.

The capital injections from cash-rich investors, including U.S. billionaire investor Warren Buffett, come at a time when many Italian jewelry makers are struggling to keep up sales as consumer demand is impacted in the wake of the global economic crisis and traditional local bank support dried up.

Gitanjali Gems Ltd (GTGM.BO), India’s biggest jewelryretailer, lastSeptember bought jeweler Valente Milano and said it would spend about $21 million on four other Italian brands it plans to buy by the first week of February [ID:nLDE70F07S]

“With the new investor, Gitanjali, the brands will be able to push ahead with marketing investments (and) create new products,” Stefano Solaro, chief executive of the holding company BLU, which unites the four brands, told Reuters.

The four brands — Stefan Hafner, IO Si, Porrati, Nouvelle Bague — were previously owned by now bankrupt DIT Group, a unit of debt-heavy Dubai jewelry group Damas International DAMAS.DI.

BLU was set up to help the four keep working when DIT sought to restructure debt, Solaro said in an interview at a key international jewelry fair in northern Italy.

Under the bankruptcy settlement, Gitanjali’s funds would go toward partial debt repayment to DIT’s creditors, including Italian banks Intesa Sanpaolo (ISP.MI), Banca Monte dei Paschi di Siena (BMPS.MI), Popolare di Verona, part of Banco Popolare group BAPO.MI and Popolare di Vicenza, Solaro said.

Under a 2011-2013 business plan, the four Italian brands plan to boost sales 50 percent a year to return to pre-crisis annual revenue of between 20 million euros ($26.77 million) and 25 million, up from 7 million in 2010, he said.

Many jewelers and industry officials at the fair welcomed arrival of deep-pocketed foreign investors to the cash-strapped Italian jewelry sector as long as they keep production in Italy, maintaining jobs and Italian design of products.

Solaro said Gitanjali would keep the identity of the four brands, ranging from a diamond-rich Stefan Hafner with price tags reaching as high as 300,000 euros, to a colourful enameled gold and diamond Nouvelle Bague with prices ranging from 1,200 euros to 10,000.


Italian jeweler Rosato, known for its playful gold and enamel jewelry advertised by actress Elizabeth Hurley, plans to renew collections and raise sales due to funds of its new owner, U.S. jewelry maker and distributor Richline, its founder Simona Rosato told Reuters.

Richline group, a unit of Buffett’s Berkshire Hathaway (BRKa.N), has agreed to buy Rosato as part of its expansion push in Europe, the companies said on Friday. [ID:nLDE70D1PG]

“They will give us financial support to grow, to buy metal which was difficult to find in conditions of the economic crisis and practically closed bank financing,” Rosato told Reuters.

She said financial details of the deal were yet to be worked out and there were no particular targets set for the company for after the acquisition period, but the company expected to strengthen positions on its key markets, including Russia, and tap new markets.

Rosato sales dropped 30 percent to 40 percent to 20 million euros in 2010 despite strong demand because the debt-heavy company could not afford to buy enough gold to meet incoming orders, she said.

Rosato said she was not sorry to give up ownership of her company to become its top manager: “That will allow me to focus more on creativity.”

($1=.7472 Euro)

(Editing by David Holmes and Maureen Bavdek)

((svetlana.kovalyova@thomsonreuters.com; +39 02 661 29450; Reuters Messaging: svetlana.kovalyova.thomsonreuters.com@reuters.net)) Keywords: ITALY GITANJALI/JEWELERY

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