Brunello Cucinelli Returns to Profit in First Half
MILAN — Brunello Cucinelli is looking both east and west for growth.
China, he said, is beginning to represent a significant business for the entrepreneur’s namesake company and he sees a strong recovery in the U.S., which remains “a very important point of reference for us.”
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Cucinelli, who holds the role of executive chairman and creative director of the luxury fashion company, sounded upbeat during a conference call with analysts at the end of trading on Thursday, reporting a return to profit in the first six months of the year.
In the period ended June 30, net profit amounted to 21.9 million euros, compared to a loss of 47.7 million euros in the first half of 2020, hurt by the impact of the COVID-19 pandemic. In the first six months of 2019, net profit amounted to 25 million euros.
The company compared figures from the first half of 2021 with the same period of 2019, considering a comparison with the first half of 2020 “of limited relevance” given the lockdowns and the closure of many boutiques globally, especially in the second quarter last year.
Revenues totaled 313.8 million euros, up 7.7 percent compared to 291.4 million euros at the end of June 2019. This was a 52.9 percent gain compared to 205.1 million euros on June 30, 2020. In the second quarter, the company saw a 13.8 percent increase in sales compared with 149.2 million euros in the period of 2019.
“The first half of 2021 closed with very, very interesting results,” said Cucinelli, noting that sales of the fall 2021 collections “got off to a very good start, and the brand seems to be gaining broad consensus both in its stylistic expression and in the way it relates to the local community and to humanity as a whole.”
He characterized the order intake for the spring 2022 men’s and women’s collections as “excellent.” Cucinelli emphasized the importance of product throughout the call and paraphrased a quote by Albert Einstein, saying that “difficult times stimulate creativity.”
Cucinelli said this was a year of “rebalancing,” forecasting a further acceleration in the second half, and expecting a 20 percent increase in revenues in 2021 compared to 2020 and a 10 percent gain in 2022 compared with 2021 as well as “healthy margins.” All this realigns with the objectives of the first five-year period (2019-2023) of the 10-year plan ending in 2028, when the company expects to double the 2018 turnover and reach 1.1 billion euros, he noted.
Cucinelli reiterated his concerns, first expressed in June, about the small percentage of the company’s employees who choose not to be vaccinated. While the Prada Group on Thursday issued a note to its Italian employees asking them to provide proof of COVID-19 vaccination or recovery from the virus to access its facilities starting Sept. 6, Cucinelli for the time being is asking non-vaccinated workers to stay at home with a paid leave for six months.
However, he said that “when employees will be allowed to work without masks,” those entering the plant will need to provide the Green Pass, the European certification released to citizens who have either undergone the vaccination or recovered from the coronavirus in the past six months. “We don’t want to force or convince anyone, but our goal is to protect all our employees and nobody wants to work or eat during their lunch break close to someone that has not been vaccinated,” opined Cucinelli.
Cucinelli also opaquely referenced an award he is to receive in London next week, but said he could not disclose details about it.
Also coming up is a presentation in Milan on Oct. 28 at the Piccolo Teatro, when Cucinelli will unveil a three-year project involving a further development of Solomeo, the medieval hamlet which he has restored through the years and where the company is headquartered. Solomeo, he mused, is “giving the brand a limited immortality.”
In the first half of the year, earnings before interest, taxes, depreciation and amortization amounted to 80.6 million euros, compared to a loss of 3.4 million euros last year and a positive result of 79.2 million euros as of June 30, 2019.
Operating profit amounted to 25.3 million euros, compared to an operating loss of 53.3 million at the end of June last year. In the first half of 2019, operating profit totaled 39.1 million euros.
In the first half of 2021, sales in Europe amounted to 95.9 million euros, representing 30.6 percent of the total. They were up 43.5 percent compared with the first half last year, and up 9.1 percent compared with the first half of 2019.
Revenues in Italy totaled 41 million euros, accounting for 13.1 percent of the total. They climbed 41.8 percent compared with the first half of 2020, but declined 7.4 percent compared with the first half of 2019, as a slow tourist flow continued to dent the performance of the country’s main cities.
Sales in the Americas totaled 99.9 million euros, representing 31.9 percent of the total, up 72.5 percent compared with last year and up 5.2 percent compared with 2019. Cucinelli was impressed by the performance of that market, which is “decisively recovering, also psychologically.”
Revenues in Asia amounted to 76.8 million euros, accounting for 24.4 percent of the total and were up 49.5 percent compared with last year and up 19.7 percent compared with 2019. “China accounted for about 15 percent of sales, so it’s starting to be a significant business for us,” said Cucinelli, expressing his hope that Asia will represent 30 percent of business in three years, and China 20 percent. “China will govern this century,” he said.
Co- CEO Luca Lisandroni emphasized the Chinese customers’ “growing interest in ready-to-wear” compared with their traditional attraction to accessories, and “an increased closeness to the brand and its positioning. Its sobriety and no-logo are more and more attractive to Chinese customers,” he claimed.
Responding to an analyst, Cucinelli said he did not see any impact from the recent coronavirus clusters that emerged in China.
In the first half, retail sales amounted to 165.4 million euros, up 61.4 percent compared with last year and up 10.4 percent compared with 2019.
Wholesale revenues totaled 148.3 million euros, up 44.5 percent compared with last year and up 4.8 percent compared with 2019.
In the first half of 2021, the company chose to confirm all the activities and investments planned before the start of the pandemic, with the aim of fully realigning itself in 2023 with the objectives of the first five years (2019-2013) of its 10-year plan 2019-2028.
Investments in communication amounted to 14.4 million euros, compared with 13.3 million euros last year.
In the first half, investments amounted to 29.9 million euros, compared to 22.4 million euros in the first half last year. Commercial investments amounted to 22.5 million euros, while other investments were allocated to production, logistics, IT and digital services. The company continued to develop its network of stores, counting 112 directly operated boutiques as of June 30 compared with 102 boutiques at the end of June 2019.
The number of directly managed shops within department stores totaled 41 compared to 31 as of Dec. 31, 2020, following the 10 conversions to direct management made in the first six months of the year. The company expanded boutiques in London, Paris, St. Petersbourg, Shanghai and Tokyo.
As of June 30, debt stood at 96.3 million euros, compared with 136.5 million euros at the end of June last year, which had been impacted by the effects of the pandemic.
