MILAN — Trust Brunello Cucinelli to see the silver lining. Italy’s general elections were held on March 4 and political leaders have since been meeting and holding discussions to try to form a new government to no avail. On Thursday, things seemed to be finally progressing in this sense, and Cucinelli chose to kick off the conference call with analysts to comment an uptick in first-quarter sales of his company on a positive note.
“I want to emphasize how this is a serious nation that is picking up, with real manufacturers. Feel free to invest serenely in the country and you will not be disappointed,” said Cucinelli, chairman and chief executive officer of the namesake luxury group.
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The entrepreneur has more reasons to be pleased. Revenues in the three months ended March 31 climbed 9.1 percent to 148.3 million euros, compared with 136 million euros in the same period last year. At constant exchange rates, sales rose 12.2 percent, and Cucinelli said he expected double-digit growth in sales and profits for the year. All divisions and geographic markets contributed to the gain.
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“We are very satisfied with our business in the first months of the year; considering the current sell-out rates of the 2018 spring collection, the excellent sales campaign of the 2018 fall collection and the high quality of sales,” he said.
Currencies had a negative effect,especially in the U.S. and the Rest of the World area, but the company is banking on hedging to help preserve healthy margins in 2018. Cucinelli also clarified that exchange rates are fixed and no changes are made on prices during the course of a season.
In the first quarter, sales in Italy grew 4.4 percent to 27.2 million euros, representing 18.4 percent of the total.
“We believe the results reported in the first quarter of 2018 to be very positive, as we are aware that the Italian market has always represented an undisputable benchmark in terms of fashion appeal,” Cucinelli said.
Europe was up 14.9 percent to 48 million euros, and accounted for 32.3 percent of the total. “In Europe, we returned to selling to Europeans again, the mood has improved, and there is a good atmosphere,” remarked Cucinelli.
Sales in North America grew 2.2. percent to 42.5 million euros, representing 28.6 percent of the total. Cucinelli saw “very interesting sell-out both in the retail channel, with the boutique network remaining stable and no new openings in the first part of 2018, and in the multibrand channel, where the current sell-through continued to show growth compared to the previous year.”
Revenues in Greater China rose 31.2 percent to 13.7 million euros, representing 9.2 percent of the total, driven by mainland China and in Hong Kong, as well as in Taiwan and Macao. “The Chinese are looking for special things, made especially and made to order, and they want to dress like us [Italians],” he said, underscoring the need to keep protecting the brand in the region. In light of the size of the Chinese population and the potential in the region, Cucinelli said he “could not imagine China not accounting for 25 or 30 percent of total business in the next five years.”
In the period, the Rest of the World area gained 5.3 percent to 17.1 million euros, representing 11.5 percent of the total.
Cucinelli was upbeat about the future of men’s wear for the brand, as long as it succeeds in “fascinating” customers with small innovations, “a young and fresh style,” and good visual merchandising, all in line with the Italian taste.
Asked by one analyst about an earlier comment on making capsules, he said that the company has always developed injections of product for some countries such as Germany, where cashmere sweaters are requested 12 months a year. “We’ve always renewed merchandise every three months, and we are not especially pushing this more now.”
The retail channel was up 9.8 percent to 65.6 million euros, representing 44.2 percent of the total.
As of March 31, the company counted 94 boutiques, unchanged compared to Dec. 31. In terms of store openings, three to five are scheduled for the year.
A store in the Dubai Mall was just inaugurated, as well as one in Las Vegas. The company is expanding a unit in Monte Carlo and will open one in Beijing in August.
The wholesale monobrand channel, which included 31 boutiques, rose 12.9 percent to 11.6 million euros representing 7.8 percent of the total. The wholesale multibrand channel rose 7.9 percent to 71.1 million euros, representing 48 percent of total.
Responding to one analyst who asked about travel retail, Cucinelli said it was “difficult to consider it real luxury, and we sell mainly ready-to-wear, while it’s easier to sell bags or pens, things that don’t have a size, in airports. Travel retail can have a nice image but not an exclusive one.”