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MILAN — Brunello Cucinelli SpA said Monday that net profit in the first quarter increased 8.7 percent, to 9.6 million euros, or $13.2 million, as sales climbed in all its markets except Italy.
This story first appeared in the May 13, 2014 issue of WWD. Subscribe Today.
In the January-to-March period, net revenues at the Solomeo, Perugia-based brand jumped 12.2 percent, reaching 99.6 million euros, or $136.5 million.
In a statement released after the close of trading in Milan, where Cucinelli is listed, the company said the first-quarter results “confirm the solid, gracious, sustainable and ethically correct growth plans, in line with the basic principles of the business model and corporate strategy.”
Founder, chairman and chief executive officer Brunello Cucinelli said that — based on the “very positive feedback” on the women’s and men’s fall 2013 collections and on orders already collected for the 2014 fall season — “we would like to reaffirm our optimism for this year.”
Cucinelli pointed to the firm’s attention to product, highlighting the brand’s positioning in the absolute luxury segment and selective distribution strategy as the drivers of its performance. He referred to them as the “foundations of our daily work.”
In geographic terms, Cucinelli continues to remain an export powerhouse, with sales outside Italy representing some 77 percent of the total, up 17.6 percent on the year-ago period.
In terms of single markets, Cucinelli said sales in North America increased 13.2 percent, to 25.8 million euros, or $35.3 million, representing some 26 percent of total revenues, up slightly on the year-ago period.
Dollar amounts have been converted at average exchange for the periods to which they refer.
In Europe, sales rose by 16.5 percent, to 33.4 million euros, or $45.8 million, representing 33.5 percent of the total, up slightly.
The company pointed to an “increase in sales for the same perimeter and sell-out results” as drivers of turnover, together with more monobrand store openings over the past 12 months.
In Greater China, sales jumped 25.9 percent, to 6.3 million euros, or $8.6 million, representing 6.3 percent of the total. Growth followed four store conversions from the wholesale network to the wholly owned network over the past year, the company said, as well as to the good performance of existing locations.
Turnover in the rest of the world rose 27.7 percent to 11.3 million euros, or $15.5 million, accounting for 11.3 percent of revenues.
In the weak Italian market, sales decreased 2.7 percent to 23 million euros, or $31.5 million. The firm pointed to “the significant flow of foreign tourists” as a key driver of sales in the company’s boutiques in “leading Italian cities and most exclusive resorts.”
Cucinelli reported growth in all its distribution channels, with retail monobrand revenues up 24.1 percent, wholesale monobrand sales up 10.4 percent and multibrand distribution up 6.3 percent.
The company reported an increase in its operating margin, with earnings before interest, depreciation, taxes and amortization up 13.5 percent in the period, to 18.3 million euros, or $25.1 million, reaching 18.1 percent of sales, compared with 17.9 percent in the first quarter of 2013.
The increased EBITDA followed the “dynamics of business development” and the “changes in distribution mix,” with directly operated stores accounting for 33.1 percent of net revenues in the first quarter compared with 29.9 percent in the year-ago period, Cucinelli said.
The company pointed to recent openings of boutiques in Vienna and Seoul this month, which brought the total monobrand network to 100 locations, and said that sales at stores open one year were up 5.5 percent in the first 18 weeks of this year.
However, the company also said that operating costs as a percentage of turnover increased in the first quarter to 38.2 percent of sales from 37.1 percent in the year-ago period on the back of increasing rental and payroll costs.
The company said net financial debt in the first quarter doubled to 28.3 million euros, or $38.8 million, following “significant investments made and a sound, solid management of commercial working capital.”
Cucinelli said investments as of the end of March amounted to 11.7 million euros, or $16 million, following development of the sales network and the expansion of production and logistics operations at the firm’s Solomeo plant. The new premises have been in partial use since April, the company said, with complete use “forecast over the next months.”