Growth in all its geographical markets and in all its distribution channels helped Brunello Cucinelli SpA log in a 9.1 percent increase in revenues in the first quarter. Sales totaled 121.8 million euros, or $134 million, compared with 111.7 million euros, or $125.1 million, in the same period last year.
Exports grew 9.8 percent and represented 79.6 percent of total sales. The European market, including Italy, accounted for 51.9 percent of the total.
“The current year is going really well. We are very pleased with both revenues and the image of the brand at global level,” said chairman and chief executive officer Brunello Cucinelli. “We have the impression that the product and also the way in which our group behaves towards the community are enjoying very positive feedback. As a result, we can be confident and expect healthy double-digit growth in both sales and profit in 2016. A special thought goes to our magnificent country, Italy, which is gradually rediscovering its great civil, human, spiritual and economic dignity.”
The figures were released on Tuesday at the end of trading in Milan, where the company is publicly listed. In accordance with a new European directive, public companies are no longer obliged to report first- and third-quarter financial figures. The Solomeo, Italy-based company has opted for not releasing first- and third-quarter earnings.
During a conference call with analysts, the entrepreneur, founder of the namesake firm, said investments in 2016 will total between 33 and 34 million euros, or $37.5 and $38.7 million at current exchange, a net financial position of 56 million euros, or $63.7 million, and earnings before interest, taxes, depreciation and amortization “growing more than in proportion to sales.” He added he viewed a 10 percent growth by 2017 and 2018. “Debt by 2018 will stand at between 30 and 35 million euros [$34.1 and $40 million], or around 6 percent of sales.”
In the three months ended March 31, revenues in Italy gained 6.4 percent to 24.9 million euros, or $27.4 million, representing 20.4 percent of total revenues, supported both by local customers and tourists.
In Europe, sales rose 9 percent to 38.4 million euros, or $42.2 million, representing 31.5 percent of total. An interesting performance was reported in all geographical areas in the Mediterranean area, Continental Europe and in all countries of the European market, including Eastern Euro, Russia and the countries of the former Soviet Union.
Revenues in North America increased 9.2 percent to 37.7 million euros, or $41.4 million, representing 31 percent of total. The company attributed the growth to gains at its existing boutiques, as well as the new venues, including the recent openings in Palm Beach and Houston, and the performance of luxury department stores. In the U.S. especially, said Cucinelli, there is a strong request for “particular, not-evergreen products with little distribution.”
Sales in Greater China climbed 11.1 percent to 7.7 million euros, or $8.4 million, accounting for 6.3 percent of total, relying on the performance of existing boutiques, as there were no openings over the past 12 months. “Tourist flows of the most exclusive Asian customers, constantly directed toward the top luxury locations, remain in line with the trend seen in previous quarters, with a well-balanced pricing policy as always in the various geographical areas,” said the company.
Sales in the rest of the world grew 13 percent to 13.2 million euros, or $14.5 million, representing 10.8 percent of total.
Dollar figures were converted from the euro at average exchange rates for the periods in question.
This growth was supported by the solid sales performance at existing boutiques and the new openings, on an homogenous basis, since the conversion of the business in Japan to direct management starting Sept. 1, 2014, with the shift of three boutiques and 13 points of sale in department stores to the retail channel.
Revenues at the retail monobrand channel increased 11.4 percent to 48.8 million euros, or $53.6 million, representing 40.1 percent of the total. Like for like sales rose 3.4 percent.
The direct store network comprises 84 boutiques. This included 10 new openings. As of March 31, the monobrand network consisted of 120 boutiques with 10 openings over the past 12 months.
Flanked by other executives, including chief financial officer Moreno Ciarapica, aged 54, Cucinelli said there is a “generational pact” within the company whereby nobody aged more than 60 holds the role of cfo or ceo. “They will automatically become senior councilors,” he said, adding with a small laugh that he is the exception as he is 62. The number of employees totals 1,450 and the average age stands at 38, and for managers at 41.
Cucinelli underscored that the company’s digital project is “almost complete,” and due to bow in early 2017. The goal is to “transfer the world we physically live in to the Web and to share it globally” he said. However, he observed that “we are not always well-disposed toward the digital noise” and that the company is working on reining in the amount of photos and information to send to customers. “In a couple of weeks, we will hold a meeting dubbed “the art of endearing” [customers]. We want to avoid annoying them, we don’t want to pester them, we must be courteous. This pace of e-mails has created a state of inner discomfort, we may have gone beyond.” Cucinelli emphasized the value of a “contemporary brand and a contemporary product. We must work on the product, as there is so much “normal” product out there, and not only in fashion.”