MILAN — The coronavirus outbreak put the brakes on a promising start of the year for Brunello Cucinelli SpA. On Thursday, the luxury company reported a 2.3 percent drop in preliminary revenues in the first quarter, as COVID-19 spread first in China and then to the rest of the world.
However, the namesake entrepreneur, chairman and chief executive officer of the company is not one to be daunted by a global pandemic and is relying on key characteristics of his firm to maintain its strategy and vision as part of its 2019-2028 plan. These include: the flexibility of its manufacturing structure, which is fully Italian (75 percent of it is located in the Umbria region) and made up of 364 “high-quality artisanal laboratories” employing about 5,000 people; a strong partnership with all its main suppliers; the importance of the wholesale channel, which represented around 45 percent of total sales last year; the low level of debt, and a “sound trust-based relationship with our customers hinged around the protection of their human privacy.”
That said, focusing on the protection of the health of its employees, collaborators, suppliers and customers all over the world, the company stated that “realistically speaking, the depth and scope of this emergency will make it impossible to fully deliver the economic objectives we had set ourselves for 2020, with a much greater impact in the second quarter than in the first three months of the year.”
The company has “maintained the same deftness and responsiveness in adapting to a rapidly changing macroeconomic context as in 2008, when the criticalities seemed to us very different and much deeper than those of today,” said Cucinelli, who included a letter for the “New Time” in the release of the first quarter figures.
“The current year got off to a very, very good start from an economic point of view, and remained so until Feb. 29, with the exception of China,” said Cucinelli. “We think that today’s circumstances are strongly temporary, therefore very different from 2008, a tough year burdened by a structural downturn and a lack of vision for the future.”
In the three months ended March 31, revenues decreased to 156.7 million euros, compared with 160.4 million euros in the same period in 2019.
In Italy sales were down 13.9 percent to 24.4 million euros, accounting for 15.6 percent of the total, strongly impacted by the full closures of stores in the second part of the quarter.
Revenues in Europe decreased 2.2. percent to 51 million euros, representing 32.5 percent of the total, with “remarkable growth” until the beginning of March. The period was only marginally impacted by the last two weeks of March and the closure of the stores in the region as the health emergency gradually expanded to different countries on the continent.
In North America, sales increased 9.5 percent to 50.8 million euros, accounting for 32.4 percent of the total, showing “a sharp improvement” until the stores had to close in the second part of March.
In China, revenues fell 27.1 percent to 11.2 million euros, representing 7.2 percent of the total. Following a very positive start of the year, “significant drops” were reported since the last week of January and throughout the month of February, due to the regulations enforced to curb the expansion of the COVID-19 infection. The first signs of improvement were seen in the first 10 days of March and over the past few days, following the gradual normalization of the health situation and the reopening of stores, as well as a desire to restart.
In the Rest of the World area, sales grew 6.6 percent to 19.3 million euros, accounting for 12.3 percent of the total, only slightly dented in the last days of March.
“Our company structure has been planned for delivering balanced growth in the three-year period 2020-21-22,” said Cucinelli. “For the time being, we are dividing our work into two important parts: the first part focuses on the careful management of the current year. We may have to wait another two or three months to get an overview of the whole year, but at the same time the fall/winter 2020 wholesale order backlog is very significant, and in this regard the strong reliability of our partners — and hopefully ours, too — reassures us a lot.
“The second part is devoted to the paramount planning of the coming two years 2021-22, which we view in a very favorable manner for the future of mankind, and where we expect to resume a balanced and sustainable growth trend for our company and the whole world,” continued Cucinelli. “The priority lies in safeguarding the brand image, its creativity, its craftsmanship and all the skills of the team. We greatly appreciate what governments around the world are doing to protect the human race, and we share our government’s intention to support the needy first, and then business. We feel overwhelmed with esteem and gratitude for all those who, even in these tough times, have continued to believe that only the soul is the source of great thoughts. A big thank you to all of you.”
By distribution channel, in the first quarter, the retail monobrand division decreased 7.2 percent to 66 million euros, accounting for 42.1 percent of the total, reflecting a first part of the quarter — until the end of February — with sharply positive results and like-for-like, combined with increases in sell-outs of the spring collections net of the impact of the health emergency in China and Asia. The closure of a considerable number of boutiques had a more significant impact on the second half of the quarter. As of March 31, the channel counted 107 boutiques, one more than at the end of December last year, since the new banner in New York’s Meatpacking District was opened in the first quarter.
The wholesale monobrand channel inched up 0.4 percent to 11.2 million euros, representing 7.1 percent of the total. The network includes 30 boutiques, unchanged compared to the end of last year.
The wholesale multibrand channel was up 1.8 percent to 79.5 million euros, accounting for 50.7 percent of the total, showing a significant improvement until February, excluding China.
The company called off its April 23 shareholders’ meeting, rescheduling it for May 21, and withdrew the proposal of a dividend that had been approved on March 11 and to be reconsidered in the last quarter of the year “in the event of a rebalancing of the global economic environment and with positive business prospects for 2021.”
The final figures for the first quarter will be reviewed and approved by the board on May 7.