MILAN — Brunello Cucinelli SpA had double-digit increases in profits and sales last year — and is predicting the same for 2014.
This story first appeared in the March 11, 2014 issue of WWD. Subscribe Today.
“We strongly believe in the absolute luxury segment, and as we are still a very young company, we think an interesting and serene working future lies ahead for our people, our suppliers we really care about and our territory,” said founder, chairman and managing director Brunello Cucinelli as his company reported a 10.9 percent increase in net profits to 29.6 million euros, or $39 million, for the year ended Dec. 31.
This compares with a normalized figure of 26.7 million euros, or $34.1 million, in 2012. The latter figure does not include the nonrecurring costs incurred for the firm’s 2012 initial public offering. Net profit would have jumped 32.1 percent if the IPO nonrecurring costs had been included.
Revenues rose 15.5 percent to 322.5 million euros, or $425.7 million. This compares with revenues of 279.3 million euros, or $357.5 million, in 2012.
Cucinelli defined 2013 as “a very important year under the image viewpoint; the great appreciation for a Made in Italy product featuring great craftsmanship, quality and creativity, focusing on the topic of exclusive distribution, seems to be very strong to us.” Based on the “excellent results” seen with the fall men’s and women’s collections, Cucinelli said he expected “a double-digit” increase in profits and sales for this year as well.
In 2013, exports accounted for 79.3 percent of total revenues. “We are starting to like this [percentage] very much,” said Cucinelli during a conference call with analysts. The U.S. grew 23.2 percent to 109.1 million euros, or $144 million, representing 33.8 percent of total sales. Europe gained 20 percent to 107.9 million euros, or $142.4 million, accounting for 33.4 percent of the total. Italy, however, showed a 2.9 percent decrease to 66.7 million euros, or $88 million, representing 20.7 percent of the total. That said, Cucinelli underscored the relevance of the local market, “especially because of the high value of Italians judging our collections — if they find them interesting and modern,” and how “foreigners see and perceive the clothes worn in Italy.” He also believes in “a renaissance in Italy, with revenues growing here, and globally” in 2014.
In 2013, Greater China jumped 52.5 percent to 15.7 million euros, or $20.7 million, accounting for 4.9 percent of sales. The Rest of the World grew 5.7 percent to 23.1 million euros, or $30.5 million, representing 7.2 percent of the total. “We export in 60 countries now,” said Cucinelli proudly.
Dollar amounts have been converted at average exchange for the periods to which they refer.
Both retail and wholesale channels showed gains. The retail monobrand channel grew 50 percent to 115.4 million euros, or $152.3 million, representing 35.8 percent of the total, driven by like-for-like gains, nine new openings and six conversions to the direct channel.
The wholesale monobrand channel rose 1.2 percent to 33.1 million euros, or $43.7 million, accounting for 10.3 percent of the total.
The multibrand sales channel grew 2.5 percent to 174 million euros, or $230 million, representing 53.9 percent of the total.
At the end of December, the company had 98 boutiques, compared with 81 at the end of December 2012, of which 61 were direct monobrand stores and 37 wholesale monobrand stores. “We have always paid extreme attention to our distribution, as we believe true luxury should be gracefully distributed,” said Cucinelli, referring to the company’s strategy of selective distribution. “We expect the first quarter to close very positively, and we plan to change absolutely nothing, opening five to six directly operated stores in 2014, and two or three franchised units.”
He cited the opening this year of directly operated stores in San Francisco, Atlanta and São Paulo, among others. Cucinelli also said that there are plans to “open very few stores in China; we want to offer a special service.”
He noted that by the end of the year, multibrand revenues should account for 51 percent of sales, and the monobrand channel for 49 percent, of which 10 percent will come from franchised stores.
During the call, Cucinelli said he has earmarked between 35 million and 39 million euros, or $46.2 million and $51.5 million, in investments for 2014. “This will be the third consecutive year of significant investments,” he remarked, pointing to 27 million euros, or $34.5 million, spent in 2012, 40 million euros in 2013 and the figure set aside for 2014, adding up to 105 million euros, or $138.6 million, by the end of 2014. “In 2015, we expect to return to ordinary expenses of 25 million euros [$33 million],” he said.
Net capital expenditure totaled 39.5 million euros, or $52.1 million, compared with 26.9 million euros, or $34.4 million, in 2012, mainly related to the opening of monobrand boutiques and to the extension of the company’s factory and logistics hub in Solomeo, Italy. Cucinelli noted that the move to the new plant will take place in two weeks.