MILAN — Brunello Cucinelli’s namesake company logged another quarter of strong growth in the first nine months of the year, with sales climbing 8.8 percent — but the entrepreneur was just as keen to talk about building relationships and the new section on the brand’s web site called “Ideals for Life and Work” as he was the bare numbers.
The chairman and chief executive officer of the Italian fashion group characterized 2019 as “an excellent year.” Revenues in the nine months ended Sept. 30 rose to 459.2 million euros, compared with 422.1 million euros in the same period last year and, based on this performance and thanks to a “very good” sell-out rate, Cucinelli said he expected for the full year to see sales of more than 600 million euros; a “more than proportional” earnings before interest, taxes, depreciation and amortization; an increase in profits; a “very good” tax rate between 30 percent and 31 percent, and dividends of 45 percent of profits.
He also provided forecasts for 2020 and 2021 with an 8 percent increase in sales, a more than proportional EBITDA and profits and investments of around 8 percent of sales, and dividends of 50 percent of profits, each year. This would be in line with the company’s 10-year plan. In March, Cucinelli said he was looking to double his company’s revenues over the next decade.
“We are increasing our investments from 6 or 6.5 percent of sales in the past, as we need to remain contemporary,” said Cucinelli during a conference call with analysts on Thursday at the end of trading in Milan. “Everything is photographed and ages quickly. We feel quite solid and we believe real luxury requires great investments, and we must renovate both the physical and the online worlds.”
Cucinelli has revisited the brand’s site, with a section dedicated to his “Idea of Humanistic Capitalism.” Under the “Harmony With Creation and Human Sustainability” title, Cucinelli explains how “Harmony was once a Greek goddess. The daughter of Aphrodite and Ares, she married Cadmus, son of the Phoenician king Agenor, Europe’s brother. Together they founded Thebes and Jupiter admitted the married couple to Elysium’s eternal life.” He continues with quotes from his beloved Socrates and explores the topics of guardianship, profit and giving back, among others. In addition, Cucinelli maps out his “Ideals for Life and Work” and 10 rules, which range from “love and respect Mother Earth” to the belief in “the moral and economic dignity of human beings” or “universalism” and “fair change.”
“These are not impositions, we want to share our thoughts,” said Cucinelli. “There is a strong desire to understand what lies behind a company, how it works, if it’s equitable. First you present the company and then the product. Of course the product must be good, but if that works well yet it does not reflect the parameters the customer is looking for, it won’t have a future.”
He also talked about teenage environmental activist Greta Thunberg. “The eyes of a child will make you change your mind, nobody would resist that,” he said, urging to accept changes, “as Voltaire suggested,” even if that could ever mean a hefty tax on cashmere. “You must know how to react.” Incidentally, after a recent visit to his headquarters in Solomeo by Italy’s Prime Minister Giuseppe Conte, Cucinelli said he will meet with the Pope next week.
As reported, Cucinelli has forged strong personal relationships with Silicon Valley titans, as well as Amazon ceo Jeff Bezos, and has become the tech world’s go-to luxury brand. In May, the first “Symposium on Soul and Economics” was held in Solomeo and attended by Bezos and several influential executives and entrepreneurs, from Dick Costolo, former ceo of Twitter, to Reid Hoffman, cofounder and executive president of LinkedIn, for example. On Thursday, in an interview with WWD, Cucinelli said he is gearing up for Thanksgiving and hosting a dinner at his home for three of these friends and their families, but shied away from providing particulars — except gastronomic.
“We have to try out a turkey recipe first, but the dinner will be half Italian and half American,” he said amiably. “They will be at my house on one of the most important days for them, so we want to pay homage to that moment.”
Cucinelli did not have details about the next symposium, expected to be held at a Bezos residence, but offered that the group all keeps in touch. “It’s a strong relationship.” For example, he said Salesforce founder Marc Benioff had sent him a copy of his recent book “Trailblazer” ahead of its distribution as he wished to have Cucinelli’s opinion.
In March, Cucinelli revealed he planned to take a step back in a year and become executive chairman and creative director. He would be flanked by two co-ceo’s: Riccardo Stefanelli, 38, the husband of his eldest daughter Camilla, who has 13 years of experience within the company, and Luca Lisandroni, 41, who joined three years ago from Luxottica. Asked about this decision, he said the board will elect the two ceo’s in April.
Returning to the figures, in the first nine months of the year, sales in Italy gained 2.2 percent to 76.1 million euros, representing 16.6 percent of the total. Revenues in Europe climbed 9.6 percent to 139.5 million euros, accounting for 30.4 percent of the total.
Sales in North America were up 9.2 percent to 148.2 million euros, representing 32.2 percent of the total. The performance was lifted by the monobrand and multibrand channels. Underscoring how multibrand and department stores were the first to help build the brand’s success, Cucinelli said he sees “a very strong request of high quality ready-to-wear” in the U.S. and said he was very pleased with that market and the relationship with the stores.
China was up 14.4 percent to 43.5 million euros, representing 9.5 percent of the total. Responding to an analyst, Cucinelli said China was growing “very well” and admitted Hong Kong is still a small market for the brand and that the difficulties caused by the social unrest there were compensated by a strong performance in Macau, Shanghai and Beijing. After saying that Japan has also been responding well to the brand, he noted that “in a global world, not everything goes as it should. One year there’s an issue in Paris, another time it’s in Hong Kong, and yet another it’s the [SARS] infection in Korea,” touting flexibility and finding ways to navigate such issues.
Sales in the Rest of the World increased 11.3 percent to 51.9 million euros, accounting for 11.3 percent of the total.
Cucinelli believes this is a moment when his products are in line with a desire for “products in good taste,” and said he himself grew up and was inspired by “the good taste of Jil Sander, Giorgio Armani, Yohji Yamamoto, and Max Mara.”
In the nine months, the monobrand channel grew 11.2 percent to 229.2 million euros, representing 49.9 percent of the total.
In the third quarter, like-for-like sales were up 4 percent, said Cucinelli.
As of Sept. 30, the company counted 103 boutiques, three more than at the end of September last year. Cucinelli said he has secured two locations, one in Paris on Avenue Montaigne, after seeking one for more than five or six years, and the other in New York in the Meatpacking District, next to the Hermès boutique. The two banners are expected to open over the next few months. The company has invested 4 million euros in the projects, “an advance on the 2020 investments,” he said.
Retail accounts for around 50 percent of sales and the company plans to keep this balance. Online accounts for about 7.5 percent of sales.
The wholesale monobrand channel was up 3.2 percent to 25 million euros, representing 5.4 percent of the total. The network consisted of 29 boutiques compared to 27 at the end of September last year.
The wholesale multibrand channel gained 6.9 percent to 205 million euros, accounting for 44.7 percent of the total. The label is carried in about 500 multibrand stores.