MILAN — Sustained by increasing sales in all geographic markets and by a higher percentage of sales through its own stores, Brunello Cucinelli SpA on Thursday reported solid growth in profits for the first half of the year. In a statement released after the close of trading in Milan, where Cucinelli is listed, the company said net income — excluding non-recurring costs — in the first six months of 2016 reached 17.9 million euros, or $20.2 million, up 15.7 percent on the year-earlier period. The company confirmed that net revenues expanded 9.7 percent in the period to 219.8 million euros, or $248 million; it had already released preliminary sales figures on July 14.
During a conference call with analysts, company founder and chairman Brunello Cucinelli said that, following the first half’s results, “with serenity we can imagine a 2016 with a beautiful growth” of some 10 percent in revenues and a more than proportional growth in earnings before interest, taxes, depreciation and amortization. He also forecast similar, year-on-year growth in sales and EBITDA for 2017, adding: “We see a good two-year period of cash growth.”
Returning to the first half of 2016, sales growth was strong in all major international markets, Cucinelli said, with North America — which represents just shy of 35 percent of total revenues — expanding by almost 10 percent, Greater China (just over 6 percent of total sales) by 15 percent, rest of the world up just over 17 percent and Italy (18 percent of sales) up almost 7 percent. Sales were particularly strong over the summer in key tourist markets like Greece, Spain and Italy, he said.
In contrast to many luxury goods makers, who are encountering tough times in Hong Kong, Cucinelli reported “solid performance” in both mainland China and in Hong Kong, “supported by the glow of top-end tourism and by local customers.” He pointed out that the company’s business in China was still very small.
Looking ahead, Cucinelli said that the orders of the latest spring collections were going “very well.” Cucinelli pointed out that “in particular, our taste and the way we combine colors and fit have been very appreciated. This will infuse serenity in us as we know that we have embarked on the right path.”
Cucinelli also explained that in the first half of this year the company had already spent some 18 million euros out of a total 80 million of a new three-year, 2016-18 investment project; total investments in the year will reach some 34 million euros, or $38 million. The remaining roughly 45 million euros, or $51 million, would be invested in 2017-18, he added. In the results statement, the company said the plan is mostly focused on retail network expansion, in “supporting the evolution of the company’s technical platform” and enhancing its “presence in the digital world.” The brand’s new e-commerce site is scheduled to go live in January, Cucinelli reminded.
But opening new stores is costly: in the first six months of the year, the company reported operating costs up 11 percent, largely due to the increase in the cost of rents of new boutiques in key shopping destinations.
In terms of the store network, Cucinelli said that he wants to reach a balanced distribution, with some 50 percent of sales generated through multibrands and 50 percent through monobrands. Like-for-like sales in the monobrand store network were up 3.7 percent through August 14, Cucinelli said.