Brunello Cucinelli Forecasts Record Year, Relying on Strong Pipeline to Drive Revenues

MILAN — Merchandise demand is exceeding supply, according to Brunello Cucinelli.

Relying on a strong manufacturing pipeline is a key added value that has caused the entrepreneur to expect a 25 percent increase in revenues for the year and a 10 percent gain in the top line for 2023 based on the order intake for the men’s and women’s spring 2023 collections.

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“During and despite the pandemic over the past two years, we did not lay off anyone and having our production and sales facilities at full capacity is giving us a competitive advantage to cope with the large quantity of goods requested by the market where, in general, demand exceeds supply,” remarked Cucinelli, marveling at the general speed of the recovery after the pandemic. “There is no way you can rebuild a pipeline in a short time, you need those skills built over years.”

Cucinelli was speaking to analysts during a call on Wednesday evening to comment on a 27.7 percent increase in revenues of his namesake company in the first nine months of the year, which reached 642 million euros.

“The results of the first nine months of 2022 are really splendid: we are indeed achieving great results thanks to the image that the brand enjoys worldwide for its style, way of working and humanistic idea of business,” he observed.

Cucinelli said he had also stocked raw materials in time, which also allows the company to respond to the market and catch business opportunities. He pointed to the weakness of the euro and the short production chains that are also benefiting the entire Italian fine manufacturing sector.

“This shows how strong our welfare state is. We are one of the countries that best handled the pandemic,” he asserted.

Cucinelli then proceeded to highlight a key project for the future, called “Universal working conditions for human beings,” elevating not only the moral dignity of work, but also the economic conditions of artisans, raising their salaries to close to 2,000 euros a month. This will help ensure the future of Made in Italy production.

“To work in a plant where you can see the sky and use natural light will improve the well-being of the artisans and their creativity. But they also need to be paid well, or this could be a dying art.”

Analysts remarked on the likely possibility that Cucinelli will double sales ahead of his 10-year plan revealed in 2019 and he introduced a new five-year plan beginning in 2023, considering 2022 a “non-linear year.”

Growth in all markets and in the company’s retail and wholesale channels, as well as increases in both the women’s and men’s divisions, now representing almost a 50/50 balance, contributed to the strong nine-month performance.

In the period ended Sept. 30, sales in Europe climbed 21.6 percent to 184.2 million euros, representing 28.7 percent of the total. Resort towns benefited from the rapid and robust recovery of international tourism, especially from North America.

Revenues in Italy were up 10.2 percent to 78 million euros, accounting for 12.2 percent of the total. Wholeasalers increased their requests for the fall 2022 collections in June to meet the demand in the face of limited market supply, boosting the performance in the first six months of the year.

Sales in the Americas jumped 45 percent to 233.8 million euros, accounting for 36.4 percent of the total, boosted both at retail and wholesale and benefiting from the comparison with last year as a base, in which the weight of sales was proportionately higher in the second half than in the first.

Revenues in Asia grew 22.6 percent to 146 million euros, accounting for 22.7 percent of sales. Cucinelli expressed satisfaction with the business in China and a growing interest in the brand. Japan reported an increase in line with the trend of the first six months of the year; the Middle East and South Korea confirmed the strong results of the first half of the year.

Retail sales rose 43.2 percent to 379.4 million euros, accounting for 59.1 percent of sales. With the opening of the boutique in Palo Alto, California, in the third quarter, the number of stores increased to 118 compared with 113 boutiques as of Sept. 30 last year.

Wholesale revenues rose 10.5 percent to 262.6 million euros.

The digital channel was up 25 percent.

Cucinelli said he expects 2022 to be a record year with revenues growing close to 25 percent. “We consider 2022 to be the year of ‘total rebalancing,’ and along with the strong advancement in revenue after the pandemic period, we expect margins to completely rebalance, returning to ‘normal’ levels pre-pandemic.”

Cucinelli also said he is not running after the youngest generations, “who easily jump onto other brands after a couple of years,” saying that the brand’s “solid clientele” is aged at between 35 and 50.

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