Brunello Cucinelli Plans New Factory, Banks on Men’s Sartorial Growth
MILAN — Brunello Cucinelli closed another quarter of strong growth and is gearing up for additional gains by setting up a new manufacturing plant in Penne, Italy.
Located in the central region of Abruzzo, Penne is historically a production hub that specializes in sartorial menswear. It is home to the storied Brioni brand.
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During a call with analysts, chief executive officer Riccardo Stefanelli said the plant will be built by the company and begin operating in the last quarter of the year.
Stefanelli was speaking from Dallas, where he was accompanying Brunello Cucinelli, who was not on the call. After receiving the Neiman Marcus Fashion Award for Distinguished Service in the field of Fashion for the year 2023 in Paris on March 5, Cucinelli was in the Texan city attending another event for the award.
Stefanelli touted the “rich culture and craftsmanship” of the artisans and tailors in Penne and said the company was creating a “bella fabbrica [beautiful factory],” in sync with Cucinelli’s belief that it contributes to give moral dignity to work and improve the quality of the products.
Asked by analysts to reveal the investment, Stefanelli demurred, saying the project is in line with Cucinelli’s long-term strategy, and that it will be gradually developed, without changing the company’s business model.
This move telegraphs the brand’s belief in the growth potential of the tailoring segment and it is in sync with the acquisition in 2013 of the production division of the prestigious “Sartoria D’Avenza” in Carrara, another example of Made in Italy excellence in the production of men’s suits.
After the pandemic, when brands and retailers saw tailored clothing sales plummet as men worked from home in casual gear, there has been a rebound in sales of sports jackets and suits — but not the traditional versions. Instead, suits now are more versatile and for fall are more relaxed, can be in unusual colors and often are worn over sweaters or turtlenecks.
Luca Lisandroni, who shares the CEO title with Stefanelli, confirmed Cucinelli’s previous expectations of 15 percent sales growth in 2023 and of a 10 percent increase in revenues in 2024 and said that in the three months ended March 31, sales climbed 34.7 percent to 265.3 million euros. This compares with 197 million euros in the same period last year.
In a statement, Cucinelli said “there is no doubt that we are reaping the fruits of the positive period that our brand is experiencing for the style it represents and perhaps also for the way we share our ideas with all of our counterparts. As regards our market segment of absolute luxury, we continue to have a very positive vision for the entire coming year.”
Lisandroni said the company saw sales accelerate since Cucinelli was revealed as the recipient of the Neiman Marcus award.
In the first quarter, sales in Italy rose 13.8 percent to 27.6 million euros, representing 10.4 percent of the total.
The company converted two wholesale stores to directly operated: in Rome and in the luxury resort beach town Forte dei Marmi in April. The new Roman boutique is located on Via dei Condotti and spans four floors.
Lisandroni touted the “excellent” performance of Asia and America, and “very solid” business in Europe, where sales were up 16.6 percent to 67.9 million euros, accounting for 25.6 percent of the total. In the region, revenues were boosted by both local customers and tourists, including customers from the East returning in the first quarter.
Sales in the Americas climbed 42.9 percent to 95.5 million euros, accounting for 36 percent of the total.
Revenues in Asia soared 56 percent to 74.3 million euros, representing 28 percent of the total. “The decidedly positive trend in China continues, recording very encouraging signs in the period,” Lisandroni said. He has recently returned from a 10-day trip in China, and said the country was brimming with projects.
While China represented 12 percent of sales in 2022 and there are only 17 directly operated stores in the region, it is “becoming increasingly important,” said Lisandroni, adding that 2023 will be “a golden year” in China.
He also touted the “strong energy and program of cultural activities” in Hong Kong, and the solid performance of Taiwan and Macau. “We have a big opportunity in ready-to-wear in China, but we don’t want to force an acceleration,” he said.
He also believes “it will be an extraordinary year” for the company in Dubai, where Cucinelli just opened a second store.
In the first quarter, retail revenues jumped 63.7 percent to 164 million euros, representing 61.8 percent of the total. The gains were driven by strong like-for-like growth, with a significantly higher sell-out of spring collections and a network expansion, although the company noted that the comparison is favored by the fact that last year the retail division was affected by the COVID-19 restrictions in the first quarter.
As of March 31, there were 122 retail boutiques compared to 115 in the same period last year.
Sales in the wholesale channel rose 4.7 percent to 101.3 million euros, accounting for 38.2 percent of the total. Over the past six months, the wholesale channel grew 22.2 percent.
E-commerce growth was in line with expectation, Lisandroni said. The direct e-store segment accounts for 6 to 7 percent of sales, while in total e-commerce represents 13 or 14 percent of sales.
Lisandroni also spoke of the launch of the two new fragrances that were presented in the first quarter in Milan on March 28.
The fragrances “Brunello Cucinelli pour Femme” and “Brunello Cucinelli pour Homme” are the result of a collaboration with EuroItalia, owned by the Sgariboldi family, and with experienced perfumer noses Daphné Bugey and Olivier Cresp.
Retailing at 180 euros for a 100-ml bottle, the fragrances were launched in the Brunello Cucinelli boutiques in Milan and Solomeo, where the company is based, and will be rolled out in May. They will be available in the U.S. in October and in Asia in January next year.
The first sun and prescription eyewear with EssilorLuxottica will bow in the early months of 2024.
In line with the pact established 15 years ago, whereby executives are expected to leave their role at the age of 70, chief financial officer Moreno Ciarapica will pass on the baton to deputy CFO Dario Pipitone after 12 years in that position and 30 with the company. Ciarapica will remain an adviser as a senior co-CFO.
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