MILAN — Brunello Cucinelli is taking Mario Draghi’s words to heart.
Cucinelli revealed that he is setting up a vaccination center at Parco Solomeo, in the medieval hamlet the designer has restored and that is home to the company’s headquarters, quoting the words of Italy’s prime minister, who has pledged to “act decisively and fast” in his new role. “We have decided to commit and quickly, and expect to vaccinate 500 people per day but, in theory, we could work at night and double shifts, tripling this amount,” said Cucinelli on Thursday during a conference call with analysts to comment on the company’s performance in 2020.
Cucinelli generally sees the glass half full and, once again, he said he was hopeful that by June the health emergency will have improved, and was clearly happier to talk about the future than 2020.
To wit, he stood by his 10-year plan, which sees the company doubling sales by 2028. “We look very positively to 2021, which we consider a year of rebalancing, and we expect a growth in sales between 15 and 20 percent compared to 2020 and between 3 and 7 percent compared to 2019 — knowing that the end of the pandemic is near,” he offered. “We believe our estimate to be very solid, and well supported by the orders received for both the spring and fall 2021 collections. The growth will continue in 2022, with an increase in revenues that we forecast to be around 9 and 10 percent. This fits well within our 2019 to 2028 10-year plan, which slowed sharply in 2020 but which will now regain its balance, and we continue to imagine doubling our turnover in 2028 to around 1.1 billion euros.”
Cucinelli quoted Confucius, saying that “even if you do something small, do it well and take care of it,” and touted the attention paid to the product, which is central to growth. “Even the length of a jacket can make a difference in men’s wear,” he said as an example. Trumpeting the success of the most recent collections, he also quoted Albert Einstein, saying that “in great pain, human genius unleashes creativity.”
Although Cucinelli saw an improvement in the second half last year, noting that it was mainly the second quarter that affected the performance, the company that bears his name did feel the impact of the pandemic in 2020, reporting a normalized net profit of 2.7 million euros, compared to 49.3 million euros in 2019. The normalization of the data neuters the 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 COVID-19 pandemic.
Revenues in 2020 amounted to 544 million euros, down 10.5 percent compared to 607.8 million euros in 2019.
Sales in the second half of the year totaled 338.9 million euros, up 7.1 percent.
“This was the first slowdown in 42 years,” admitted Cucinelli, noting that the company marks 43 years in business in 2021.
“We believe in our brand, and don’t expect us to buy other brands,” he offered to analysts, regarding any idea of the group acquiring other labels.
In the 12 months ended Dec. 31, normalized earnings before interest, taxes, depreciation and amortization were more than halved to 41.8 million euros compared to 106.1 million euros in 2019.
Normalized operating profit amounted to 6.9 million euros compared with 76.8 million euros in 2019.
Sales in Europe were down 1.8 percent to 181.5 million euros, representing 33.3 percent of the total. Sales in the second half rose 20.6 percent. The company noted very positive results in the multibrand channel and boosted by local customers, especially in central-northern Europe and the entire area of the former USSR.
Revenues in Italy fell 23.8 percent to 68.3 million euros, accounting for 12.6 percent of the total. Sales in the second half were down 13.3 percent.
Sales in North America decreased 15.4 percent to 172.8 million euros, accounting for 31.8 percent of the total, but rose 4.8 percent in the second half.
Revenues in China were down 1.9 percent to 61.7 million euros, accounting for 11.3 percent, but grew 14 percent in the second half.
Mainland China reported a positive result for the whole year, with a sharp acceleration in the second half, showing significant double-digit growth. The weakness of Hong Kong and Macau persisted over the 12 months, with some positive signs of recovery in the latter part of the year.
Revenues in the Rest of the World area dropped 9.9 percent to 59.7 million euros, or 11 percent of the total, but they were down 1.5 percent in the second half. Cucinelli reported solid results in South Korea and a normalization of sales in the Japanese market.
Retail sales dropped 20.8 percent to 268.8 million euros, or 49.4 percent of the total. In the second half, they were down 12.3 percent. As of Dec. 31, the store network consisted of 107 boutiques, one more than the end of December 2019. Cucinelli expanded its boutiques located in London, Paris, Saint Petersburg and Shanghai during 2020.
Sales on the brand’s online boutique saw a significant increase, doubling their impact on overall sales in 2020 and amounting to 5 percent of the total.
Sales derived from the wholesale channel amounted to 275.2 million euros, or 50.6 percent of the total, up 2.6 percent. In the second part of the year they climbed 36.1 percent. Last November, the company rolled out globally a technology update project.
Ready-to-wear represents about 85 percent of total revenues.
As of Dec. 31, investments amounted to 51.6 million euros, in line with the 52.6 million in the previous year. Commercial investments amounted to 39.6 million euros, while other investments were channeled into IT, digital, production and logistics software.
Operating costs amounted to 282.6 million euros compared with 247.3 million euros in 2019, mainly due to the development of the network of single-brand stores and the effects of keeping employee pay levels unchanged during the pandemic and not demanding discounts from any supplier, third-party manufacturer or lessor.
As of Dec. 31, net financial debt stood at 93.5 million euros compared to 30.1 million euros at the end of December 2019, impacted by the effects of the pandemic.