MILAN — Tourists in Europe on the lookout for unique products along with boutique openings, strong demand in North America for elegant daywear and increasing appreciation for the brand in China helped propel Brunello Cucinelli SpA’s sales up by more than 10 percent in the first nine months of the year to 384.2 million euros.
Revenues increased in all channels, with retail — which benefited from the conversion of some stores from wholesale to direct management as well as from the opening of three new directly operated locations and the launch of the directly managed online boutique — seeing a nearly 20 percent gain over the first nine months of 2016.
Retail revenues, which account for 48.7 percent of total sales, reached 187.3 million euros in the January-to-September period. In a statement released Tuesday after the stock exchange closed in Milan, where Cucinelli is listed, the company said net of the conversions and new stores, like-for-like sales — revenues generated by stores open at least one year — were up 4.2 percent.
Wholesale monobrand turnover — sales generated by Cucinelli stores managed and owned by partners and which represent 5.7 percent of total turnover — increased 3 percent in the period, while wholesale multibrand revenues — which include department stores and represent some 45.6 percent of total sales — increased 7.7 percent, to 175.1 million euros.
In a conference call Tuesday evening with analysts, chairman and chief executive officer Brunello Cucinelli said — given the firm’s performance so far this year and seeing the strong demand for winter collections, “we can say with confidence that for this year we expect a beautiful double-digit growth in sales and a more than proportional increase in EBITDA [earnings before interest, taxes, depreciation and amortization].” He also said the order intake for spring was strong, in terms of numbers and feedback from customers and that he was confident that next year would be “another year with healthy growth in revenues and profits.”
In terms of markets, Cucinelli was positive about Italy, the brand’s second-largest market (representing just over 18 percent of sales). In its home country, Cucinelli posted a “very handsome rise” of 9.8 percent in revenues, which reached 70.6 million euros. He singled out the brand’s new store on Milan’s Via Montenapoleone, its largest physical boutique, where he said results were “excellent.”
The European market — representing 30.2 percent of total revenues — saw 10.4 percent growth in the period, sustained by local customers and high-end tourists, with sales reaching 116.1 million euros.
In North America — the brand’s largest single market, representing more than one-third of turnover — Cucinelli said the trend remained “very favorable,” especially because of the brand’s ability to keep offering “special products with limited distribution.” Turnover in the first nine months of the year increased 6.3 percent on the year-earlier period, to 130.2 million euros.
Asked by an analyst how he felt things were going in the U.S. wholesale market in general, Cucinelli said during Milan Fashion Week he spoke to Neiman Marcus ceo Karen Katz, who told him things were improving. However, he said Katz told him that department stores “need to be more attractive” in terms of the way brands’ collections are displayed.
In China, the company reported a nearly 40 percent jump in sales, to 29.5 million euros, while in the Rest of the World, sales were up 8 percent, to 37.9 million euros. Cucinelli said he had been talking with 18 Chinese multibrand retailers “of the highest quality” who told him they strongly felt that Chinese luxury consumers want to buy in beautiful stores. Cucinelli said that, according to the retailers, these consumers continue to buy in physical stores because “it’s less fascinating to buy online because no one knows what they are really buying.” He said the retailers told him luxury customers “want to walk out of stores with large bags, which is very chic. They want a driver to pick them up and take them home, which is also very chic. They also want some discounts, even though they are rich.”
As for other Asian markets, Cucinelli singled out Japan and South Korea for tourist flows that generate “gradual and sustainable” sales increases, thanks to the “presence of top-end customers who are less influenced by macroeconomic developments than the midrange customer.”