MILAN — There’s always a silver lining with Brunello Cucinelli.
Just as Italy is grappling with a lockdown throughout the country to fight the coronavirus, Cucinelli underscored that the COVID-19 outbreak was “only a temporary problem,” and that it was important to “focus on creativity, without dedicating too much time to something that we cannot change,” quoting 15th-century humanist Thomas More during a conference call with analysts on Wednesday. “It’s a moment of insidious apprehension that creates uncertainties and worries, but I am less worried than a month ago. The universe has its rules and mankind can’t always dominate them.”
Cucinelli was commenting following his namesake company’s gain in profits and revenues last year, but it was inevitable the call would largely hinge on the reaction to the health emergency. “There are less distractions now [because of the lockdown], we are very focused, and decisions can be made quickly on a daily basis,” said Cucinelli, adding that during the 2008 “deeply structural” crisis it was harder to find one’s bearings.
Long a champion of Made in Italy, the entrepreneur said he relied on “the great relationship with the territory, which allows us to work serenely.” He said that 75 percent of production is in the Umbria region, where the Solomeo headquarters are based, and the rest comes from the Marche and Toscana regions, working with 364 small producers that employ an average of 15 people for a total of 5,000 people. “Flexibility is key. We monitor on a daily basis and we push or slow down production depending on the need. We are all ready to double and extend the shifts, and work through August, moving holidays to September and October if need be, distributing important bonuses.” He noted that the crisis “happened at the slowest month for us, March. We have not slowed down production, we have important orders and we are working as usual.”
Last year, the company logged another year of growth, closing 2019 with a normalized net profit of 49.3 million euros, up 7.1 percent compared with 46 million euros in the previous year. This excludes benefits derived by the Patent Box benefits totaling 5.6 million euros last year and 5 million euros in 2018.
In the 12 months ended Dec. 31, sales rose 9.9 percent to 607.8 million euros compared with 553 million euros in the previous year.
Earnings before interest, taxes, depreciation and amortization rose 11.5 percent to 106.1 million euros, with a growth by 20 basis points, reaching 17.4 percent of the total.
Defining the year 2019 as “excellent,” the entrepreneur, chairman and ceo of the group touted “excellent results” derived by the fall 2020 orders. “We look toward 2020 with a positive attitude; we are fully aware that the coming year will call for a very careful reading and we will see it as separate not affecting our 2019-22 plan and 10-year 2019-28, in which we expect to double our turnover and achieve healthy, balanced and sustainable profits.”
After Jan. 19, China for first two months was down 50 percent, but the rest of the world was very positive, said Cucinelli. In the first 10 days of March, all stores in China are open, showing an improvement, down only 16 percent. “But we are very small in China, we have only 15 stores,” cautioned Cucinelli. “We have seen an inversion of trend now there, and a slowdown in Europe, not in the U.S., though.”
During the call, Cucinelli read a letter he had received a day earlier from Michael Huang, president of Brunello Cucinelli China, based in Shanghai, shedding some light on possible future developments for Italy, noting that after a month and a half things are improving, and “offering solid reasons for hope for your country.” While China is still waiting for schools to reopen and international traffic in and out of the country is not back to the norm, all stores are open, the city’s traffic “has already reached 80 percent of its normal volume” and “the number of people going to restaurants grows daily. […] Personal confidence is growing as the number of infections decreases.” The restart has begun, he concluded.
In 2019, sales in the Rest of the World area rose 12.4 percent to 66.3 million euros, accounting for 10.9 percent of the total.
The retail channel grew 14.6 percent to 339.4 million euros, accounting for 55.8 percent of the total.
Like-for-like sales rose 4.2 percent.
The company counts 106 boutiques, with three openings taking place in the last quarter of 2019. Cucinelli opened six stores last year and five new concessions. In addition to the new Meatpacking District store in New York, the company will open a banner in London and the end of March and one in Paris in May. “There are three new opportunities that were part of 2021-2022 plan, but we might open at the end of the year in New York on Madison Avenue, in Tokyo and in St. Petersburg,” said Cucinelli.
The wholesale monobrand channel, which counts 30 boutiques, rose 8 percent to 32.6 million euros. The multibrand wholesale channel rose 4.1 percent to 235.7 million euros. E-commerce represented 2 percent of revenues, up 20 percent compared with the previous year. Investments in communication totaled 35.5 million euros, representing 5.8 percent of sales, up 9.9 percent compared with the previous year. Investments to support the brand totaled 52.6 million euros, compared with 45 million euros at the end of December 2018. Commercial investments amounted to 37.7 million euros. Other investments totaling 14.8 million euros were mainly channeled into production, logistics and IT digital. Net debt stood at 30.1 million euros compared with 14.5 million euros at the end of December 2018.