MILAN — While many other luxury brands are having difficulty expanding sales in the first quarter — by even low-single-digits — Brunello Cucinelli SpA saw double-digit revenue growth in the period.
Reporting results Wednesday after the close of trading in Milan, where Cucinelli is listed, the Umbria-based luxury apparel maker – which this year marks its fifth anniversary as a listed company — said net sales in the first three months of 2017 reached 134.1 million euros, or $142.2 million, up 10.1 and 9.5 percent at constant currencies. Dollar amounts have been converted at average exchange for the periods to which they refer.
Revenues increased in all markets and in all sales channels. Founder and chief executive officer Brunello Cucinelli said based on orders for the fall season and “overall quality of sales,” the company could “envisage another particularly good year ahead, with double-digit growth in terms of revenues and profitability.” This confirmed the guidance issued in March, when the company published its full-year 2016 figures and Cucinelli forecast full-year 2017 revenues would reach some 500 million euros, or $545 million.
Offering a bit of insight into the latest sales trends, the company said like-for-like revenues in the first 17 weeks of the year, through April 30, were up 3.9 percent compared to the year-earlier period, “thanks to the positive sell-outs of the spring-summer 2017 collection, which will be coming to an end in the next few weeks.”
During a conference call with analysts Wednesday evening, Cucinelli offered slightly more detail on guidance: “We confirm we are expecting another particularly good year of double-digit revenue growth and EBITDA [earnings before interest, taxes, depreciation and amortization growth] slightly more than proportional.”
During the call, Cucinelli said management was pleased with the company’s performance after five years of being listed on the stock exchange. He spent a significant portion of the call praising the role of multibrand retailers, not only as partners, but also as windows into consumers’ tastes, which offer crucial feedback into what shoppers want. He said he had just returned from a trip to New York, where he carried out what he called a “road show for the press,” meeting with publications, adding that whenever he returns from these trips, “I have a feeling I see a load of opportunities in the world from an economic and human point of view.”
During the call, Cucinelli said all markets performed very well. He singled out Italy, which represents just shy of 20 percent of total turnover, as being very important — despite its slower growth (revenues increased 4.9 percent in the period) compared to other markets — for it is the foundation of the brand’s image. “I’m always fascinated by the value of our splendid Italy, the world holds Italy in a really high regard, it appreciates our handcrafted goods,” he said.
In Europe, the company’s largest geographic market (representing some 31.1 percent of sales), revenues increased 8.8 percent. Sales were up in all countries, in both monobrand and multibrand channels, with purchases being driven by tourists and local customers.
In North America, the second largest market, worth some 30 percent of sales, Cucinelli said revenues increased 9.8 percent, driven by demand for the “fine luxury offer of Italian prêt-à-porter, to be worn especially during the day.” He highlighted the “extremely positive results” in the multibrand channel, where there is a constant search for “special products of the utmost quality, craftsmanship and handwork, but above all something not overdistributed.” He also credited the performance of the company’s monobrand network in North America and its ability to offer collections which are “constantly evolving, ‘integrating’ perfectly with the clothes already to be found in one’s wardrobe.”
In Greater China — which represents just under 8 percent of total turnover — revenues jumped 35.2 percent, on the back of strong sales in monobrand stores and “the rise in prestigious spaces reserved and dedicated to the brand in the most exclusive multibrand stores, which are gradually developing and growing.” He said the brand worked well in China, especially among “top-quality Chinese clients” who were drawn to “that exclusive, refined and sought-after offer, which we believe is fully captured by the brand.”
Referring to developments in the multibrand channel in Asia, during the call Cucinelli said the company had 18 new accounts for the fall collections in China and Korea, and the quality of these locations was increasingly improving.
Regarding China, he said: “We really believe very much in expansion of multibrands in that part of the world.” He later added that potential in China “is huge and untapped. I can envisage at least 3,000 great accounts in China dealing with true luxury.”
The company also offered some insights into its new online store (its online monobrand store was managed by Yoox Net-a-porter Group until last year), saying it was registering “very good sales results, even though starting from limited volumes.” During the call, Cucinelli said the new e-commerce platform’s aim was not only to generate sales, but “to help us safeguard our brand in the web. The idea is to convey to the web the physical experience we have offered for 39 years of real life,” Cucinelli said.
In terms of online platforms, Cucinelli singled out Mr Porter, Net-a-porter and Mytheresa.com for special praise: “These are true stores on the web, they buy on their own risk and their packaging is really extraordinary.…They are really good at mixing and matching; they are fast and good. I think they can be ranked among the best multibrands worldwide, in the same league as department stores in New York.”