Brunello Cucinelli Touts Strength in Luxury, Stands by 2022 Growth Expectations
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MILAN — Brunello Cucinelli never holds back from delivering personal messages during his calls with analysts and his latest on Wednesday evening — to comment on the first-quarter performance of his namesake company, which saw revenues climb 19.6 percent — was no exception.
He briefly touched on the Champion’s League; expressed his “faith in the wisdom of men,” hoping for an end to the war in Ukraine as soon as possible, and remembered his father, who died aged 100 last weekend, as “the great adviser” in his life. He also congratulated competitor LVMH Moët Hennessy Louis Vuitton on its most recent set of results, released Tuesday.
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All the while, Cucinelli conveyed his confidence in the resilience and strength of the luxury goods sector. This, on top of “excellent spring sellouts” and strong orders for fall, led him to confirm a 12 percent growth target for the full year, 10 percent growth in 2023 and to imagine doubling revenues, initially forecast in the 2019-28 period, by as early as 2026.
The estimate for 2022 takes into account the war between Russia and Ukraine, which has no impact on Cucinelli’s Italian supply and production chain.
“We have assumed that the Russian market will account for around 4 percent of total sales in 2022, a significant reduction compared to the results for 2021 and 2020, years that we considered extraordinary due to the pandemic. We have imagined that the weight of this market could return in 2022 to incidence values very similar to those historically reported before the pandemic. In the five-year period 2015-19, the average incidence of the value of exports to Russia was in the range of 4 to 5 percent,” said Cucinelli.
“I think that the economies are so interconnected that a solution will be found,” he added.
Reporting revenues of 196.9 million euros, which compared with the first quarter of 2019 rose 22.8 percent, Cucinelli once again spoke of his hopes for the development of the company in the long term. To this end, he has finalized the purchase of a large area covering 8 hectares on the outskirts of the company’s headquarters in Solomeo, where an industrial complex built in the 1970s operated until about 30 years ago.
The area will be completely redeveloped. “We have already started to work on recovering the land, and this will be followed by the building conversion plan that will allow us to gradually build up to about 40,000 square meters [430,550 square feet],” said Cucinelli.
“These large spaces will accompany the growth of the company in the years to come, allowing us to expand, as needed, for the next 50 years,” he said, proudly adding that this is only the group’s latest project that helps develop the territory by converting abandoned industrial areas and improving existing plots of land. The first buildings will be erected in 2023, he estimated. “We want to emphasize the importance of the Italian industry, producing in the right time frame and with the best quality.”
In March, as reported, in the first merger and acquisition for Cucinelli, the company bought a 43 percent stake in cashmere specialist Lanificio Cariaggi “to guarantee the best raw materials,” he said.
Cucinelli said he did not feel pressured to increase prices, which takes place twice a year with the presentation of the seasonal collections, “avoiding any kind of speculation,” nor did he believe there was a shortage of raw materials. But he admitted there was more attention paid to inventories.
In the three months ended March 31, sales in Europe rose 14.5 percent to 58.3 million euros, accounting for 29.5 percent of the total, lifted by domestic spending, existing and new customers and a balance between retail and multibrand channels. The positive trend was seen not only in the major European luxury capitals, but also the second-tier cities of central-northern and Mediterranean Europe, with international tensions having an impact limited to the Russian market in the latter part of the quarter.
Revenues in Italy amounted to 24.2 million euros, up 2.8 percent compared with the same quarter in 2021, and representing 12.3 percent of the total.
Sales in the Americas rose 37.7 percent at constant exchange to 66.9 million euros, accounting for 34 percent of the total. The performance was strong across the board, with solid business in Aspen, Colo.; Palm Beach, Fla.; Miami, Los Angeles, and New York, among other cities.
Revenues in Asia were up 14.5 percent at constant exchange to 47.6 million euros, accounting for 24.2 percent of the total. China is currently the country most affected by the pandemic, but despite this, the quarter was positive.
Chief executive officer Luca Lisandroni said he was very happy with the results in China. “Ready-to-wear is consolidating more and more, and there is an ever-increasing research for no-logoed sobriety and extreme quality. We are not worried about a structural change, it’s a market that has a very strong vitality, which has no equal in any other geography. I spend most of my day speaking to landlords in presentations of huge malls and we are developing our business both at retail and wholesale.”
Japan, South Korea and the Middle East also performed well.
At constant exchange, retail sales rose 36.4 percent to 100.2 million euros, accounting for 50.9 percent of the total. In comparison with the first quarter of 2019, the channel was up 40.8 percent.
As of March 31, there were 115 boutiques, compared to 110 boutiques at the end of March last year.
Wholesale sales were up 6.1 percent to 96.7 million euros, representing 49.1 percent of the total. Compared to the first quarter of 2019, the channel rose 8.4 percent.
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