MILAN — Trust Brunello Cucinelli to speak of being “humanists, artisans of the web.” During a conference call with analysts to comment about his namesake company’s revenues in the first nine months, the Italian entrepreneur emphasized the relevance of the brand’s new online store, which will be unveiled in January.
“The new web site will on the one hand tell our story and describe what happens in our hamlet [Solomeo, in central Italy, where the company is based] because it is very important to communicate in a special way,” Cucinelli said. In terms of e-commerce, after working with the Yoox Net-a-porter Group, Cucinelli is bringing its online store in-house.
“We want to focus on special packaging, handwritten notes, show you the dress we are sewing for you, how to combine a jacket with pants for men, for example, or send a bottle of our oil because we know one another, but this will all be very artisanal. We devised at the end of 2014 the expression that we are humanists, artisans of the web.”
The collections will continue to be available on Net-a-porter and Mr Porter, “the most beautiful online boutiques in the world, with which we have a beautiful relationship,” Cucinelli said. Online sales with YNAP represented 0.7 percent of sales for his company, he added.
Discussing the performance of the company in the nine months ended Sept. 30, Cucinelli took the time to thank all those that had expressed their concern following the deadly earthquake that hit central Italy at the end of August and the ongoing aftershocks. Referring to the company’s business in the period, Cucinelli said he was “very, very happy.”
All markets and distribution channels helped Brunello Cucinelli SpA report a 9.7 percent gain in revenues in the first nine months of the year. In the period ended Sept. 30, sales totaled 348.4 million euros, or $386.7 million, compared to 317.6 million euros, or $352.5 million, in the same period last year.
“Having reached November, we can already say that we expect another particularly positive full year in terms of both revenues and profit,” Cucinelli said. During the call, he said he expected a 10 percent gain in sales in 2016, earnings before interest, taxes, depreciation and amortization “more than proportional,” and a net financial position of between 56 million and 58 million euros, or $62.1 million and $64.4 million.
By the end of the year, the company will have invested between 33 million and 34 million euros, or $36.6 and $37.7 million. “This is the end of a great project,” he said about the investments, including the expansion of the company’s manufacturing plant, over the past three years for a total of 160 million euros, or $177.6 million.
For the period 2017 to 2019, Cucinelli said he forecast investments of 80 million euros, or $88.8 million, mainly earmarked for “commercial purposes,” as the company is expected to generate cash. Quoting his friend Andrea Guerra, former chief executive officer of Luxottica Group, Cucinelli said “even in normal times, companies should invest between 4 and 5 percent of sales to remain brilliant and contemporary.”
Dividends at the end of the next three years are expected to be distributed in the range of between 35 and 40 percent with a negative financial position of between 25 million and 30 million euros, or $27.7 million and $33.3 million, or 4 to 5 percent of sales, Cucinelli said.
“Moreover, we are very satisfied with the spring 2017 sales campaign; the unanimous excellent feedback received from both the buyers and the press specializing in product style, craftsmanship and quality, together with the more than positive sellout rate of this winter season, prompt us to envisage a very positive 2017 with a healthy growth in terms of revenues and profitability,” Cucinelli said. “Balance and soundness must keep representing the future development of our company, with extreme focus both on product quality — as always, the result of a balance between style and contemporary features — and on a very careful choice of distribution channels, aiming for a fair balance between ‘selected multibrand’ and ‘monobrand’ boutiques located in prime and prestigious locations. All this enables us to work serenely and in harmony with the creation.”
In the nine months, sales in Italy grew 7.3 percent to 64.3 million euros, or $71.3 million, representing 18.4 percent of total revenues. “I am particularly happy about this performance in Italy because it means our product is contemporary,” Cucinelli said.
Sales in Europe rose 7.1 percent to 105.2 million euros, or $116.7 million, accounting for 30.2 percent of total.
North America was up 7.2 percent to 122.5 million euros, or $136 million, representing 35.2 percent of total.
Sales in Greater China increased 18.4 percent to 21.4 million euros, or $23.7 million, representing 6.1 percent of total. While noting the market is still small, Cucinelli was very positive about the spending trend, said Hong Kong had also reported a sound performance and that there has been growth of prestigious multibrand venues in China.
Sales in the Rest of the World area climbed 29.1 percent to 35.1 million euros, or $39 million, representing 10.1 percent of total. In particular, the company flagged two boutiques opened in Japan in the past 12 months, extended floor space in that country in luxury department stores, and high-end tourists from China, a strong performance in South Korea, and a new boutique in Dubai that opened in April.
The company’s monobrand channel was up 15.1 percent to 156.4 million euros, or $173.6 million, representing 44.9 percent of total. As of the end of October, like-for-like sales had risen 3.8 percent. The wholesale monobrand channel grew 4.2 percent to 29.4 million euros, or $32.6 million, representing 8.4 percent of total. Over the past 12 months, the number of boutiques in the monobrand channel network rose to 122 from 116 at the end of September 2015. Cucinelli said the idea is to continue to open between three and five stores a year around the world.
The multibrand sales channel grew 5.9 percent to 162.6 million euros, or $180.4 million, representing 46.7 percent of total.
Asked about prices, Cucinelli said they should be “balanced” and without “strong differentials.” “We cannot produce at low cost. That would be detrimental to the brand. I bought a beautiful Bentley for 220,000 euros [$244,200], I always look at it and wonder who made it so beautiful. I would be disappointed if Bentley or the same with Ferrari, would go and make a low-cost [model]. In fashion, it’s the same, everything must generate desirability and exclusivity.”