Creating Golden Opportunities Amid Austerity

MILAN - The Damiani boutique occupies a prime corner here on Via Monte Napoleone, an obligatory halt for elegant shoppers strolling along the chic avenue, oblivious to the clouds of austerity hanging above.

A Burlesque Masterpiece cuff bracelet. Damiano makes all its jewelry at its factory in Valenza, near Milan.

But Damiani, a family-controlled jeweler that is an institution in Italy, has faced challenging domestic conditions in recent years as the country has sunk into a lingering recession. The company's saving grace has been its foresight to tap into public financing and expand its presence in foreign markets on a large scale.

Even so, “We are an Italian company, and this is still our first market,” Guido Damiani, the president and chief executive of the Damiani Group, said in an interview at his 19th-century villa high above the hills of Valenza, about 80 kilometers, or 50 miles, south of Milan. The company has 11 stores in Italy.

The 88-year-old Damiani Group has reported annual revenue of "151.6 million, or $193.3 million, and has diversified into a number of niche jewelry brands, including Alfieri & St. John, Bliss, Calderoni, Rocca and Salvini, allowing it to cover the spectrum from haute joaillerie and watches to lines aimed at a young clientele.

Damiani, although family controlled, is a public company, a rarity in an industry made up mostly of local artisans. Since 2008, as Italy has struggled with an economic crisis while gold prices have risen, the jewelry group has been less hopeful about its home-turf business and increasingly has been eyeing foreign markets.

“I am positive about our future because of what we are doing abroad,” Mr. Damiani said. “Even if it is not a fantastic period around the world, it is better than in Italy.”

Damiani operates about 50 boutiques in major cities, mainly in Europe and North America. By early next year, the group plans to open four more stores in China, adding to its existing eight there.

This past summer, Damiani reported that it had become the first - and so far the only - jeweler to obtain state authorization to hold a 51 percent controlling interest in an India-based entity, Damiani India. Foreign retailers in India are typically not allowed to hold majority stakes in their own local businesses.

In February, the Japanese multinational trading company Itochu announced a capital alliance with Damiani Japan, acquiring a minority stake of 14 percent in that entity, in order to help develop Damiani's retail business in Japan.

Still, with a manufacturing base in Italy, the company is not indifferent to the plight of its local market. “The gross domestic product here has been on a downward slope for years, and the Italian market is very depressed,” Mr. Damiani said.

This year, Damiani has posted sliding but respectable results in an unforgiving economic climate. In its financial statement for the first six months this year, the company reported a drop of 4.5 percent in revenue compared with the same period a year earlier: While foreign revenue was up 18.3 percent, its domestic revenue fell 11.9 percent.

The company's resilience, according to the family, comes in part from its having first developed its own production capabilities before expanding into retail outlets, avoiding the need for vertical integration.

“We have great value in our manufacturing, which is a big advantage for us as a brand,” Giorgio Damiani, the vice president of the Damiani Group and Guido's brother, said in an interview at the Place Vendôme boutique in Paris.

Last September, Damiani presented a collection of its most spectacular creations in a show titled “Masterpiece Couture,” an invitation-only event at which the jeweler showcased its design capabilities and the skill of its artisans, all of whom are based in its factory in Valenza.

A quick drive through the countryside south of Milan, the town of Valenza is internationally known for its jewelry production and for being a hub for family-run goldsmithing workshops.

A version of this article appeared in print on November 27, 2012, in The International Herald Tribune.