By Tom Arnold
The Italian jeweller has seen its stock slide, but Damiani hopes the Gulf's rich appetite bodes well for the future.
Italy's largest jeweller has seen its stock slide since listing in Milan last year, but CEO Guido Damiani is hoping the Gulf's super rich appetite for luxury bodes well for future business.
Shares in his luxury jewellery firm may have slumped by 70 percent since the beginning of the year but Guido Damiani has managed to retain his sense of humour.
The president and CEO of Damiani SpA, the biggest selling jeweller in Italy, insists he is not worried when asked about the dismal performance of its shares on the Milan stock exchange.
"The value of the jewellery in our inventory is higher than the value of our market cap, so it doesn't make any sense.
"Maybe you should suggest to your readers, it's a good investment and very cheap," he says with a laugh.
But while Damiani makes light of the gloom surrounding the plight of the company's shares, he is serious about his company's growth plans for the Gulf, a key emerging market for the family-run firm. Jewellery sales in the GCC are estimated to account for around 10 percent of global sales, while according to the World Gold Council the UAE has one of the largest per capita rates of gold jewellery consumption in the world.
Super-wealthy Gulf consumers' appetite for luxury goods shows little sign of diminishing, despite global projections showing the market is likely to slip between 3 percent and 7 percent in 2009, to between $214.9bn to $224.13bn in sales, according to a new study by consultants Bain & Co.
On the back of the success of Damiani's existing boutique in the Burjuman Centre, Dubai, it is opening a second store in Dubai Mall this week.
It will further boost its presence in the Gulf with new stores planned for Jeddah in Saudi Arabia and Qatar within the next six months and Abu Dhabi in 2009.
Damiani has already overseen the opening of a boutique in Thuraya Mall in Kuwait City in March.
Having flown into Dubai in the morning for a two day visit, by the time we meet in the afternoon, Damiani has already visited both the Burjuman boutique and the new outlet.
And despite the affects of jetlag and the headache of delays to the opening of Dubai Mall, Damiani says he is "very excited".
"For us, the Middle East is quite a new market but we believe it will be one of our best markets," he says. "We just opened in Dubai last year and will double next month. In the area we are quite new even though as a company we are 84 years old and have a long tradition.
"Dubai Mall is a great mall, it's a fantastic place and I believe it will be a very successful place as it looks great. All the best brands are there and our location is good."
The next day he will speak at the prestigious Leaders in Luxury conference on celebrity branding, a subject close to his heart. Hollywood star Sharon Stone is the latest in a string of famous names to be the face of the brand.
Damiani was founded in 1924 by the current CEO's grandfather, Enrico Grassi Damiani, in Valenza, a small town in the north west of Italy, where according to Damiani "everybody is in the jewellery business". Enrico began designing and producing jewellery, drawing his influences from Art Deco styles.
With the company quickly becoming renowned throughout Italy, Enrico's son Damiano Grassi Damiani took the company over, introducing technical innovations and new marketing and advertising strategies.
Leaving behind a successful career in the real estate sector, Guido Damiani joined the family business in 1994, initially taking care of the sales network in Italy and marketing.
Two years later he took charge of the whole company and today he is president and CEO, working alongside his siblings, Giorgio and Silvia, together with their mother Gabriella.
Now, the biggest selling jeweller in Italy, Damiani has expanded its operations overseas and has 54 outlets in over 50 countries worldwide.It posted a 16.6 percent jump in retail sales in the first quarter of its financial year that started on April 1.
Damiani also holds the unbeaten record of 22 Diamond International Awards, 18 for Damiani and four for its Calderoni 1840 brand. Every jewel created by Damiani is handmade by traditional craft techniques.
Its boutiques can be found in many of the playgrounds of the super-rich including Hong Kong, Moscow, Taipei, Tokyo, New York and Kazakhstan.
It recently opened a boutique in Rodeo Drive, Beverly Hills, the self-named "epicentre of luxury fashion", and next up is St Moritz, Switzerland, an exclusive ski resort popular with Russians and Arab holidaymakers.
Damiani reveals the company is looking for a location in Bond Street, London, to open its first UK store.
A signal of Damiani's global ambitions was its $9.81m acquisition in September of high-end jewellery and watch retail chain Rocca SpA, which with 22 directly operated outlets in Italy and Switzerland is expected to enable the firm to triple retail sales.
It opened its store in the Burjuman Centre last November and although Damiani is reluctant to detail sales figures, he is positive about its success.
"It's been good for sure," he enthuses. "It's only one boutique and we have to enlarge our presence to get more known around the country and this is what we are going to do."
He said Damiani will also have a point of sale within Harvey Nichols store in the Mall of the Emirates, Dubai, before the end of the year.
Its partner in the Middle East is Dubai-based Al Tayer Group, which represents over 600 leading luxury global brands in the region, and is providing part of the financial backing for the expansion, although Damiani refuses to say how much.
"It is very important to have the right partner," he says. "We believe Al Tayer is the top retailer in the area, maybe one of the top in the world. So we are very honoured and proud to work with this company. We believe that with ourselves doing the collection and the advertising and them doing the retailing we will have success."
One of the challenges facing Damiani is raising awareness about the brand in a region where competition between some of the globe's leading upmarket players is intensely fierce.
A major international advertising campaign featuring actress Sharon Stone should go some way to evoking the glamour and style Damiani's name is associated with in Italy, where it is a leading luxury brand.
Stone follows Sophia Loren, Isabella Rossellini, Jennifer Aniston and Gwyneth Paltrow as the latest famous face to advertise the brand.
Actor Brad Pitt even co-designed Damiani's D.Side collection after he expressed an interest in helping to design his engagement ring for ex-wife Aniston.
"We are doing a lot of advertising and at the moment Sharon Stone is our spokesperson and we are running an international campaign which is also running here in the emirates," says Damiani. "She may be coming here at some point.
"We were one of the first brands to use a celebrity and we have been doing it for a very long time. But it's not just a case of paying a celebrity, there is always a friendship between us. They start of as customers and they like our jewellery and buy our jewellery, they meet the family and then after that we ask them to model for us."
But with a global recession looming, Damiani admits some of the firm's ambitious expansion plans may be hit, with boutique openings stalled.
"For sure," he says. "Some could be delayed. In this kind of period you have to be a little bit more conservative but it doesn't mean we stop the company. We are still opening boutiques everywhere. We are going on opening and investing."
However, he is concerned the global economic turmoil may weaken consumer sentiment, leaving the luxury goods sector vulnerable to a severe downturn, although he believes the market will rebound when the first signs of economic recovery emerge.
"Usually luxury goods go into recession later than other categories," he says. "Although we cannot say luxury goods are out of it as when there is a big economic crisis around the world, luxury items feel it as the mood of the consumer is not good.
But, on the opposite side, luxury items are usually the first to come out from this kind of crisis as people become a little more confident they start spending a lot and jewellery is one of the best ways to spend because it lasts for ever."
And he believes the cash-rich Middle East market will remain more robust amid the economic turbulence.
"The Middle East is one of the best areas and is feeling less the economic situation. The economies of Europe, the United States and Japan are softening a lot," he says.
Investors in the region may also be able to breathe new life into Damiani's shares, which have slid by 73 percent since the start of 2008. It has been listed on Milan's stock exchange since November last year.
Damiani is not the only luxury goods retailer whose shares have nosedived since the turn of 2008, with experts warning of another tough year ahead for the industry.Bulgari SpA, the other listed Italian jewellery maker, has seen its shares slide by 39 percent, shares in Gucci Group, the Italian fashion and leather goods label, have fallen by 47 percent.
London-listed Burberry Group has experienced a 57 percent drop, while shares in LVMH, whose stable includes Louis Vuitton, Dior and Veuve Clicquot, have slumped by 42 percent.
But Damiani insists he has no regrets about the firm's decision to go public.
"Everyone is doing badly and we are doing more or less the same as everyone else but maybe a little bit worse as we are a company with a small cap and new on the market," he says.
"But we are not worried about it, we believe it's a moment and now everybody is afraid there is a kind of panic but I believe it will soon stop," he continues.
"At the moment our stock value is much lower than the book value but we are not worried as we don't want to sell the company.," he insists.
"It may be a bit frustrating but maybe it could be a good opportunity for somebody to buy some of our shares and become a partner.
"Being public means we are more attractive to managers with partners and it increases brand awareness," Damiani adds. "We are a small family company with great ambition and we want to grow a lot in the future and this region is part of that growth."
Indeed, with Damiani buying a house on Palm Jumeirah which will be completed next year, in the future he says his yearly trips to the Gulf will become more frequent.