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MILAN — Brunello Cucinelli SpA closed the year of its initial public offering with an increase in profits and sales.
This story first appeared in the March 13, 2013 issue of WWD. Subscribe Today.
Expansion at both the retail and wholesale channels outside Italy helped the luxury firm increase net profits by 26.2 percent to 26.5 million euros, or $34 million, excluding nonrecurring costs related to the IPO, and compared with profits of 21 million euros, or $29.2 million, in 2011. Costs related to the IPO totaled 6.2 million euros, or $8 million, and were incurred as part of the listing process.
In the 12 months ended Dec. 31, sales gained 15.1 percent to 279.3 million euros, or $357.5 million, compared with 242.6 million euros, or $337.2 million, in the previous year. Dollar amounts have been converted at average exchange for the periods to which they refer.
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Chairman and chief executive officer Brunello Cucinelli defined 2012 as a “particularly special” year, in light of the company’s listing in April and the foundations set for future growth.
“The 2011-15 major investment plan is bearing fruits: we have achieved excellent results in terms both of sales and operating profit,” said Cucinelli.
In a conference call with analysts, Cucinelli conceded that he was initially concerned about “having partners” after 24 years, but that he has “enjoyed being a public company.” He said that 2012 “finished very well,” with a strong performance of the fall collection.
He underscored that “accessories, which account for 14 percent of sales, are important in terms of look and taste but will always remain a marginal part; we want to be identified as an apparel company.”
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Sales in markets outside Italy gained 25.5 percent, accounting for 75.4 percent of total revenues. In the U.S., sales grew 28.4 percent, accounting for 31.7 percent of total sales. New openings last year included units in Chicago and Aspen, Colo., bringing the total number of stores in America to 14 by the end of the year. “There is an increasing penetration in luxury stores in the U.S.,” said chief financial officer Moreno Ciarapica during the call.
Sales in Europe rose 20.4 percent, accounting for 32.2 percent of revenues. The company underscored strong sales in Russia and East European countries, noting the relevance of Russian tourists shopping around the world. Significant openings in 2012 included Madrid, Amsterdam, Zurich, Berlin, Bucharest, Romania, and Baku, Azerbaijan.
In Greater China, sales rose 21 percent, accounting for 3.7 percent of total sales. The company opened six boutiques in the region, including one in Shanghai and a second unit in Hong Kong. Six stores were converted to directly operated units as of Oct. 1, following an agreement with Sichuan Lessin Department Stores Ltd.
In the rest of the world, sales increased 40 percent, accounting for 7.8 percent of revenues. Ciarapica singled out Japan and South Korea as noteworthy, also mentioning Mexico and the Middle East.
Cucinelli said that he was “about to close a venture with a serious company in India.”
In Italy, sales dropped 8.2 percent to 68.6 million euros, or $87.8 million. “Italy is showing a two-track performance in main cities and resort towns, which show a good growth rate, also lifted by tourists, while cities in the provinces see a reduction in consumption,” said Cucinelli. “People tend to buy more in bigger cities.” However, he said the mood in Italy “is not negative. The worst is over for the country.” He said he believed in the passion of Italians and in the country, coming out of the elections. “This seems to be a very interesting time for our marvellous Italy, the homeland to many respectable people that work with daily patience, sacrifice and dedication to improve mankind. The seed of economic, moral, civil and human renewal has sprouted,” he said.
Globally, the retail monobrand channel saw a 42.9 percent increase in sales to 76.9 million euros, or $98.4 million, while the franchised monobrand channel grew 20.3 percent and sales of the multibrand channel rose 5 percent.
The number of stores in the monobrand network rose to 81, of which 46 are directly operated and 35 franchised at the end of December. Agreements have been signed for the opening of 15 new monobrand locations in the next 12 months.
Capital expenditures in the year totaled 27.3 million euros, or $35 million, mainly aimed at the development of its network of stores, and starting works to extend the company’s factory in Solomeo, Italy. “We are doubling the size of our headquarters, and we expect to finish in May or June 2014,” said Cucinelli. The entrepreneur said he planned to invest 70 million euros, or $91 million at current exchange, over the next three years, including 48 million euros, or $62.4 million, for the group’s retail network.