Brunello Cucinelli Again Raises 2023 Sales Guidance
MILAN — “Quiet luxury represents us.”
So believes Brunello Cucinelli, and this trending movement is helping him to once again raise the 2023 sales growth estimates for his namesake company.
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On Thursday, the executive chairman and creative director of the fashion house said he expected to close the year with an increase in revenues of between 17 and 19 percent, compared with the previous forecast of 15 percent. In December last year he expected 2023 sales to grow 12 percent.
“The first half of this year ended with more than excellent results. We like to think that we are reaping what the brand stands for in its style and in the way of conceiving the balance between work and the relationship with creation,” Cucinelli said. “Thanks to the strong demand for handcrafted and exclusive products, we continue to have a very positive outlook on the absolute luxury world market.”
In light of the “excellent” sell-out of the spring 2023 collections and “the significant order intake” for the men’s spring 2024 collection so far, Cucinelli believes the company will report 10 percent growth in revenues in 2024.
In 2023, operating profit is expected to stand at 15 or 16 percent of sales and net profit at around 10 percent.
Expected sales of around 1.1 billion euros in 2023 will mean doubling sales in three years, said Cucinelli, although based on his oft-touted gradual growth, including a constant opening of around two to three stores and three or four expansions a year.
Cucinelli spoke during a conference call with analysts on Thursday at the end of trading in Milan, where the company is publicly listed, to comment on the preliminary sales in the first half of the year.
In the first six months ended June 31, revenues rose 31 percent to 543.9 million euros, compared with 415.3 million euros in the same period last year.
Sales in the second quarter were up 27.5 million euros to 278.6 million euros.
He highlighted the growth across geographies and channels for both the brand’s men’s and women’s collections, and the “very interesting volume of reassortments during the season.”
In the second quarter in particular, “the more than punctual delivery progress on the fall 2023 collections contributed to the excellent performance in the wholesale channel,” he said.
In the first half, sales in Italy rose 23.7 percent to 60.8 million euros, accounting for 11.2 percent of the total.
Revenues in Europe amounted to 202.7 million euros, up 22.9 percent compared with the first half, and representing 37.3 percent of the total, lifted by strong and high-end tourism, particularly from North America.
Sales in the Americas rose 23.9 percent to 189 million euros, accounting for 34.7 percent of revenues.
The second quarter was very positive for the company in North America, almost equivalent to the first three months, which were already very strong and even considering last year’s basis of comparison, when the second quarter showed an increase of 67 percent. Cucinelli once again proudly noted he had received the Neiman Marcus Award.
Revenues in Asia soared 55.6 percent to 152.2 million euros, representing 28 percent of the total, reflecting a very strong sales trend particularly in China.
Co-chief executive officer Luca Lisandroni said “Chinese mobility outside the country is still limited” conversely to that seen on a regional basis and that Hong Kong and Singapore were performing better than in 2019.
Japan and South Korea maintained solid growth on an almost exclusively domestic basis, and the Middle East continued to report very strong growth.
The retail channel registered a 41.6 percent increase in sales to 344.6 million euros, accounting for 63.4 percent of the total.
The retail network includes 124 direct shops, with the only new opening being the flagship in the Mall of Emirates in Dubai in the second quarter.
Wholesale sales rose 15.8 percent to 199.3 million euros, representing 36.6 percent of the total.
On July 10, works started on the new 48,600-square-foot plant in Penne, Italy, that is expected to be operating in the first quarter of 2025, employing 300 tailors working on men’s suits.
Cucinelli said he expected a “normalization” of growth in the second half of the year, also taking into consideration last year’s strong comparative base.
“Another element that we believe should be taken into account is the currencies dynamics, which had a slightly positive effect in the first six months of the year, while we expect a negative impact in the second half of the year.”
Cucinelli made a reference to the deal signed in May with Bruno Pavlovsky, Chanel president of fashion, for a long-term agreement with Piergiorgio Cariaggi, president and CEO of Cariaggi Lanificio SpA.
Under the deal’s terms, the Cariaggi family will retain control of the namesake company with 51 percent of the shares, while Brunello Cucinelli and Chanel will each have a 24.5 percent stake.
This was a new development in a deal that was signed last year by Cariaggi and Cucinelli, the latter’s first such M&A. At that time, Cucinelli revealed he was buying a 43 percent stake in Cariaggi, his longtime cashmere supplier.
Cucinelli also touched on the subject of artificial intelligence, saying that he expects it to be “at the service of humankind” and that he has formed a dedicated team that will study its potential also with the goal “to improve the conditions of the artisans.”
Speaking of the brand’s product extension, Cucinelli pointed to the eyewear collections produced by EssilorLuxottica and the two first fragrances in a licensing agreement with EuroItalia. The deal between the two parties was inked in 2020 but was kept under wraps until this spring.
The perfumes are currently on sale, in its direct boutiques in Europe and in 90 independent, high-end Italian perfumeries.
Beginning in the second half of July, with a focus on the domestic market, the advertising campaign will also begin to take shape.
During the summer the fragrances will begin to be distributed in the multibrand channel in the rest of Europe. “We also expect to start serving the North American and Middle Eastern markets from the fall and the Asian markets with the beginning of 2024,” he said.
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