MILAN — Brunello Cucinelli is thinking long-term and is expecting his namesake company to reach sales of 1 billion euros in 2024, two years ahead of plans.
As is customary for the executive chairman and creative director of the luxury fashion group, commenting on first-half preliminary revenues on Tuesday, Cucinelli insisted on “a healthy and balanced” growth, but to be sure the company is marching full steam ahead, seeing gains in all markets and distribution channels.
In the six months ended June 30, Brunello Cucinelli SpA’s revenues were up 32.3 percent to 415.2 million euros, compared with the first half of 2021.
After paying tribute to Luxottica Group founder Leonardo Del Vecchio, who died on June 27, the entrepreneur said during a conference call with analysts that he expects to close 2022 as “a record-breaking year,” forecasting sales growth of around 15 percent. He reiterated his expectations of 10 percent growth in 2023.
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Comparing the performance of the full year 2022 to 2019, considering that last year was still impacted by the restrictions caused by the pandemic, sales are seen growing 35 percent. For the second half of 2022, the expected growth compared to 2019 is around 30 percent.
“For 2022, we fully confirm our expectations of a complete rebalancing of margins, which we expect to return to pre-pandemic ‘normal’ levels, a healthy 18 percent EBITDA margin [earnings before interest, taxes, depreciation and amortization], with a cash generation capable of absorbing the significant investments planned, to which we have added the acquisition of the 43 percent stake in the prestigious Lanificio Cariaggi Cashmere [in March],” said Cucinelli.
Cucinelli is sharing the wealth, revealing that in 2022 he will offer 1 percent of the company’s EBITDA to the salaries of those employees who earn less than 2,500 euros a month, as “a gesture of gratitude and support at a time of higher inflation.”
Sales in the second quarter jumped 46.4 percent, reaching 218.3 million euros, ”improving a very positive trend reported in the first three months of the year, undoubtedly aided by the limited counter value of 2021, enabling us to achieve our best quarterly performance ever,” said Cucinelli.
He touted the importance of “product, exclusivity, limited exposure and protection of the brand,” and said the company was continuing to invest in its Schools of Arts and Crafts with the aim “on the one hand of restoring moral and economic dignity to these skills” and, on the other, of ensuring the generational continuity of the artisans. “The problem is not who will we sell to in the future, but who will make the products?” wondered Cucinelli, who opened the first school in 2013.
Strong demand in Europe, North America and the Middle East balanced the effects of the restrictions applied to the Russian market due to its invasion of Ukraine and the lower-than-expected growth in the Chinese market, impacted by recent lockdowns.
That said, revenues in Asia rose 27.2 percent to 97.8 million euros, accounting for 23.5 percent of the total. “The second quarter showed an excellent sales performance, which further increased the positive growth trend of the first quarter.” The Middle East, Japan and South Korea all showed a solid performance, and China also posted “an excellent growth,” said Cucinelli.
Chief executive officer Luca Lisandroni said “more customers in China are looking for exclusivity and the centrality of clothes is stronger as the interest in logos is waning.”
In the first half, sales in Europe were up 20.7 percent to 115.7 million euros compared with the same period last year, accounting for 27.9 percent of the total. The second quarter showed further improvement over the first, despite the continuing restrictions on sales to Russian clients. Strong business in both the big cities and in the provinces mainly covered by the wholesale channel, the start of sales in the resorts, local consumer spending and an initial return of international customers contributed to the solid performance.
Revenues in Italy rose 19.7 percent to 49.1 million euros, accounting for 11.8 percent of the total. Multibrand stores performed well and Cucinelli saw “a strong upturn in international tourism,” especially from the U.S. and the Middle East in recent weeks.
Sales in the Americas climbed 52.7 percent to 152.6 million euros, representing 36.8 percent of the total. “We remain very confident about the contribution the American market can continue to make to our short-, medium- and long-term growth path,” said Cucinelli. The company is planning an opening in Palo Alto, California, in mid-July, catering to the brand’s already strong Silicon Valley customer base.
Cucinelli insisted on balanced pricing, tweaked only twice a year with new collections as a way to assume the same level of profit between Europe, the Americas and Asia, with mark-up differentials essentially covering additional commercial costs, including transport and duties.
In the first half, sales in the retail channel rose 47 percent to 243.2 million euros, accounting for 58.6 percent of the total.
As of June 30, the company had 117 boutiques, compared to 112 at the end of June last year, and 42 hard shops, one additional unit. Cucinelli is remodeling the brand’s Zurich store and will open a boutique in the United Arab Emirates.
In addition to Casa Cucinelli stores and events spaces in Solomeo, Milan, Paris, New York, London and Tokyo, additional units are slated for Hong Kong, Shanghai and Dubai.
Sales from the wholesale channel were up 16 percent to 172 million euros, accounting for 41.4 percent of the total. Cucinelli touted the very positive sellouts and orders for the spring 2022 and fall 2022 collections.