MILAN — Despite the ongoing war in Ukraine and COVID-19 pandemic, Brunello Cucinelli continues on a roll and now expects to double its sales two years earlier than previously forecast.
Reporting its fourth-quarter and year-end results on Thursday after the close of the Milan Stock Exchange, the company said that it is confident it will achieve its 10-year plan goal unveiled in 2019. Cucinelli now expects to double its turnover by 2026 rather than 2028 as originally planned. The company also said that it is prepared for raw material price volatility, stocking cashmere two years in advance and with a budget earmarked for unexpected fluctuations in taxes or other headwinds.
“This year opens with a quarter that is now drawing to a close with some particularly interesting results. The order intake for men’s and women’s winter collections in 2022 was really significant. All this prompts us to envisage yet another year of good, balanced growth, with an increase in turnover of around 12 percent,” Brunello Cucinelli, executive chairman and creative director of the brand, told analysts, adding that he also expects balanced growth in 2023 of around 10 percent.But no results presentation from Cucinelli would be complete without the entrepreneur taking a philosophical approach. During the full-year results conference call, Cucinelli addressed the “winter of struggles,” quoting his father — who turns 100 this year: “I have firm faith in the wisdom of men.”
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Cucinelli was confident that the company was poised to face the closure of retail spaces in Russia, which represents 4 percent of the brand’s total business and where it has three directly operated stores — one in St. Petersburg and two in Moscow. The company books 70 percent in wholesale, with longstanding clients, and 30 percent in retail in the region. While all three stores are currently closed, the company continues to pay its employees, with a renovation project of one of its Moscow stores originally slated for completion in May.“At the most, going forward, the Russian market could amount to 2.4 percent of turnover [instead of 4 percent] of which 1.6 percent is wholesale and 0.8 percent is retail,” he added.Spring 2022 deliveries to Russia have already been completed, while shipments of the fall 2022 are expected to start in June.Noting a strong first-quarter performance in terms of turnover and margins, full-year net profit totaled 56.3 million euros compared to a loss of 32.1 million euros in 2020 and a profit of 53.1 million euros in 2019. Last year the company reported a full-year adjusted net profit of 2.7 million euros, due to accounting effects of the application of IFRS 16 and the extraordinary provision of 31.7 million euros relating to the new “Brunello Cucinelli for Humanity” project for the donation of clothing left unsold due to the pandemic.Revenues in 2021 amounted to 712.2 million euros, up 30.9 percent compared to 544 million euros in 2020, 17.2 percent higher compared to 607.8 million euros in the pre-pandemic year of 2019.In the 12 months ended Dec. 31, earnings before interest, taxes, depreciation and amortization more than doubled to 193.3 million euros compared to 89.5 million euros in 2020 and 169.6 million euros in 2019.Operating profit amounted to 77 million euros compared to a loss of 14.8 million in 2020 and an 83.4 million operating profit in 2019.In 2021, sales in Europe grew 26.6 percent to 219.2 million euros, compared with 2020, representing 30.8 percent of the total. Compared with 2019, sales climbed 23.9 percent. Balanced retail and multibrand sales contributed to the performance.In January, the company said the main European luxury capitals, such as Paris, Milan and London, showed a significant rebound and pointed to the customers’ desire to return to physical stores and to events, citing the inauguration of the brand’s New Bond Street boutique in London and that of Avenue Montaigne in Paris.In January, Cucinelli had also cited “excellent” results in Russia, which has significantly contributed to the brand’s growth in Europe.Revenues in Italy climbed 23.3 percent to 84.2 million euros compared with 2020, accounting for 11.8 percent of the total. Compared with 2019, they declined 6.1 percent.Retail sales rose 56.2 percent to 419.8 million euros, or 58.9 percent of the total. As of Dec. 31, the store network consisted of 114 boutiques, up from 107 boutiques at the end of December 2020. Cucinelli expanded its boutiques located in London, Paris, Moscow, Saint Petersburg, Shanghai, Tokyo and New York in 2020 and 2021.Sales in the Americas were up 36.7 percent to 238.2 million euros compared with 2020, representing 33.4 percent of the total. Revenues in the region rose 15.8 percent compared with 2019.A growing desire to “dress well” for both men and women, a balanced presence and domestic tourism all contributed to the performance, with resorts in the U.S. becoming a reference point for exclusive stays. Online sales also helped drive sales, complementing revenues in the physical channel.Sales in Asia grew 32.9 percent to 170.6 million euros, representing 24 percent of the total. Sales were up 26 percent compared with 2019.“We believe that our approach to China, in full respect of its millenary culture, can give us beautiful and sustainable growth in the coming years. Exclusive product offering and ‘no logo’ proposition fully meets the demand of the most exclusive luxury segment: very solid results were achieved in South Korea and in South East Asia,” the company said.Sales derived from the wholesale channel amounted to 292.4 million euros, or 41.1 percent of the total, up 6.2 percent. Retail sales climbed 56.2 percent to 419.8 million euros compared with 2020, representing 58.9 percent of the total. Compared with 2019, the channel was up 23.7 percent.As of Dec. 31, investments amounted to 61.6 million euros up from 51.6 million euros in 2020. Commercial investments amounted to 45.9 million euros, while other investments totaling 15.7 million euros were channeled into IT, digital, production and logistics software.At the end of 2021, net financial debt stood at 23 million euros compared to 93.5 million euros at the end of December 2020, due to the company’s ‘solid corporate structure, the generation of cash and excellent results.”In 2021, the company’s approach to humanistic capitalism and human sustainability is expected to be even more pronounced through its two company foundations.Brunello Cucinelli has been investing in its “Casa Cucinelli” project, where it aims to recreate that same atmosphere and lifestyle experience — including Italian cuisine — of the Solomeo headquarters. This has led to the creation of multifunctional spaces in Milan, London, Paris and New York. The goal is also to open additional ones in the future in Shanghai and Tokyo.