MILAN — Investors rewarded Brunello Cucinelli and Tod’s on Friday, a day after the two Italian luxury groups reported increasing revenues and solid performances in 2021.
On the Italian Stock Exchange, Brunello Cucinelli shares closed up 7.5 percent at 46.94 euros after sustaining growth throughout the day. Likewise, Tod’s shares closed up 7.6 percent at 39.26 euros.
Jefferies’ equity analysts Flavio Cereda and Kathryn Parker in their report said Brunello Cucinelli, after a “tangible full-year margin beat, with guidance tweaked (up) for the full-year 2022 and a very reassuring call on momentum (visibility beyond just a strong Q1 is better than for most here),” they “continue to believe that its unique product profile at the top of the luxury apparel space limits volatility, with further potential growth opportunities in the medium term supporting premium multiples.”
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Jefferies noted that Cucinelli plans to open at least two directly operated stores this year, “including Palo Alto to finally service the devoted Silicon Valley cohort” and two to three “significant” expansions are in the pipeline in Zurich, Cannes and Dubai. “We think sales density this year will be more than 10 percent better than in the full-year 2019, hence the projected return to ‘normal’ profitability.” Cucinelli the entrepreneur has over the years forged strong personal ties with the founders of Amazon, Salesforce, Instagram, Twitter, Dropbox, LinkedIn and other Silicon Valley giants, who have become loyal customers.
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Cucinelli was characterized in the Jefferies report as “not a brand where the European marginal buyer is relevant in any meaningful way.” As the company expects to double its sales in eight years, earlier than its projected 10 years, Jefferies stated that “it seems to us that Brunello Cucinelli’s unique product mix and positioning continues to deliver.”
On Thursday, reporting its fourth-quarter and year-end results after the close of the Milan Stock Exchange, Brunello Cucinelli said despite the war in Ukraine and COVID-19 pandemic, he was confident the company will achieve its 10-year goal unveiled in 2019, expecting to double revenues by 2026 rather than 2028 as originally planned.
In 2021, net profit totaled 56.3 million euros compared to a loss of 32.1 million euros in 2020 and a profit of 53.1 million euros in 2019. Revenues last year amounted to 712.2 million euros, up 30.9 percent compared with 2020, and 17.2 percent higher compared to the pre-pandemic year of 2019.
On Thursday, the Tod’s group also presented its year-end figures, boosted by Tod’s leather goods category and the Roger Vivier brand and by a strong performance in Greater China.
While the luxury company reported a net loss of 5.9 million euros in 2021, which compares to a loss of 73.2 million euros in 2020, a 38.7 percent increase in revenues to 883.8 million euros and careful cost management contributed to a recovery of its operating profit.
In the 12 months ended Dec. 31, operating profit amounted to 24.2 million euros, compared with an operating loss of 135.4 million euros in 2020 and an operating profit of 3.6 million euros in 2019.
Jefferies also commented on Tod’s performance and its operating profit “well in advance of consensus.” The first two months of 2022 were above 2021 “on an easy comp base, but Tod’s does benefit from Russia exposure well below the sector’s average and below 1 percent.”
Carole Madjo, luxury goods equity research at Barclays, underscored that the group “posted a better-than-expected” operating profit of 24 million euros compared to the bank’s consensus of 5 million euros. “Tod’s EBIT [earnings before interest and taxes] implies an EBIT margin of 2.7 percent versus consensus of 0.6 percent.” While the group in January indicated that it would return to positive operating profit, “the scale of improvement was much stronger than expected.”
In one year, Tod’s shares have risen 41.9 percent. Cucinelli’s shares in 12 months have gained 27.4 percent.