MILAN — Brunello Cucinelli SpA continued to grow in the first quarter of the year, boosted by increased sales globally that offset a soft performance in Italy.
This story first appeared in the May 10, 2013 issue of WWD. Subscribe Today.
In the period ended March 31, the Italian luxury brand reported net profits, excluding the effects of capital gains, of 8.2 million euros, or $10.8 million, up 14.8 percent compared with 7.2 million euros, or $9.4 million in the same period last year. Including the effect of capital gains, net profit totaled 8.8 million euros, or $11.6 million, up 11.9 percent compared with 7.9 million euros, or $10.3 million, in 2012.
Revenues climbed 14.4 percent to 88.8 million euros, or $117.2 million, compared with 77.6 million euros, or $101.6 million.
Dollar amounts have been converted at average exchange rates for the periods to which they refer.
Brunello Cucinelli, the group’s chairman and chief executive officer, told WWD that he was “very, very satisfied” with the results, although, in his usual understated manner, he said he wanted to use low-key terms, given the unstable situation in Italy. He was also proud about the perception of his brand and of the Made in Italy production outside the country.
The entrepreneur touted the strength of his stores’ locations in cities ranging from Milan and Venice to Capri and Rome. “We have a new government now, which I think is bringing back dignity to the country, and I urge foreigners to invest in Italy, to fear not, because the country is rich with good people,” he noted.
Cucinelli said the first quarter “highlights a good start to 2013, a robust and serene beginning. The very positive results achieved [bode] well for the year in terms of corporate and product image; our product is still being strongly identified as featuring top-notch quality, high craftsmanship, creativity and ‘gracious’ distribution.”
Cucinelli, who has been stepping up investments in retail and expanding the company’s factory and logistic hub, said these and “the targets achieved lead us to envisage a full year characterized by a ‘gracious’ double-digit growth.”
The entrepreneur also said he expected a recovery in the brand’s Italian sales. “Exports are growing nicely and this testifies to a great interest in a special luxury made in Italy. In 2013 we envisage growth also for our magnificent Italy, [albeit] a moderate one.”
Normalized earnings before interest, taxes, depreciation and amortization amounted to 15.3 million euros, or $20.2 million, in the first quarter of 2013, up 18.6 percent compared with last year.
Sales outside Italy grew 21.6 percent, reaching 73.4 percent of total revenues, compared with 69.1 percent in the first quarter of 2012.
In the first quarter of 2013, sales in the U.S. rose 26.5 percent, reaching 22.8 million euros, or $30 million, representing 25.6 percent of revenues. “This market is very positive for us. Americans appreciate our craftsmanship, our taste and lifestyle,” said Cucinelli.
Sales in Europe grew 18.3 percent to 28.6 million euros, or $37.7 million, boosted by tourists shopping in the continent and new openings, including a venue in Barcelona in February. Europe accounted for 32.2 percent of total sales.
Sales in Greater China jumped 69.3 percent, reaching 5 million euros, or $6.6 million, and accounting for 5.6 percent of total sales. A second boutique in Shanghai opened in January, as well as a third boutique in Hong Kong and a first store in Beijing in April.
Sales in the Rest of the World area grew 4.1 percent to 8.8 million euros, or $11.6 million, representing 9.9 percent of the total.
Sales in Italy edged down 1.6 percent to 23.6 million euros, or $31.1 million, making up 26.6 percent of revenues. That said, first-quarter results reported showed an improvement over the trend seen in the second half of 2012, added the company.
The retail channel climbed 75.7 percent, reaching sales of 26.5 million euros, or $35 million.
The total number of boutiques rose to 85 at the end of March, from 63 stores at the end of March 2012.
Agreements for the opening over the next 12 months of 12 additional stores have already been signed.
The company increased its capital expenditures to 16.4 million euros, or $21.6 million, compared with 3.7 million euros, or $4.8 million, in the same period in 2012. The expenses in this year’s first quarter were mainly led by investments totaling 12.3 million euros, or $16.2 million, aimed at the key boutique openings planned for the whole of 2013 and at the extension of the factory and the logistics hub, totaling 4.1 million euros, or $5.4 million.
As of March 31, net debt stood at 14.8 million euros, or $19.5 million, a steep reduction compared with 57.8 million euros, or $75.7 million, at the end of the first quarter of 2012, thanks to the cash generated by the public listing of the company last year.