The Board of Directors of Brunello Cucinelli S.p.A. – an Italian maison operating in the luxury goods sector and listed on the Borsa Italiana Electronic Stock Exchange (MTA) – reported a revenue increase of 52.9 percent at current exchange rates compared to 30th June, 2020 for its half-yearly financial report 2021.
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Brunello Cucinelli, Executive Chairman and Creative Director of the Company, commented, “The first half of 2021 closed with very, very interesting results. Sales of the Fall Winter 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. Order intake for the Spring Summer 2022 Men’s and Women’s collections, now almost at an end, was excellent. All this prompts us to envisage a strong rise in turnover of around 20 percent for the current year, and to view this time as a sort of year of rebalancing, and for 2022 we expect a return to a healthy growth of 10 percent.”
Analysing the details of the Income Statement, production costs at 30th June, 2021 amounted to US$123.1 million, with a First Margin of 66.8 percent, substantially in line with the marginality of the first half of 2020 and slightly improved compared to 30th June, 2019 (marginality of 66.5 percent).
The gradual increase in human resources stems primarily from its network growth and development projects, as well as growth in the digital world. Rental costs net of IFRS 164 effects amounted to US$64.2 million, compared to US$52.7 million last year and US$46.9 million at 30th June, 2019.
This increase is substantially related to the network development, in the presence of the new openings of direct boutiques (112 boutiques at 30th June, 2021 compared to 102 boutiques at 30th June, 2019), the 12 conversions to the direct management of hard shops in luxury Department Stores, carried out in the last 12 months, and the important expansions of some sales spaces.
Investments in communication, amounted to US$17 million as of 30th June, 2021 (US$15.7 million last year and US$19.1 million as of 30th June, 2019), against the decision to favour the planning of events and activities with customers in the second half of 2021, in the presence of the protracted impacts of the pandemic in the first 6 months of 2021; the growth trend of digital communication activities, as an increasingly important and strategic communication vehicle, continues also in the first 6 months of 2021.
As of 30th June, 2021, EBITDA amounted to US$95.1 million, compared to a loss of US$4 million last year and a positive result of US$93.5 million as of 30th June, 2019. EBITDA excluding IFRS 16 impacts was US$47.1 million as of 30th June, 2021, compared to US$58.9 million as of 30th June, 2019 ; normalised EBITDA as of 30th June, 2020 reported a loss of US$16.6 million. EBITDA margin excluding IFRS 16 impacts reported at 30th June, 2021 was 12.7 percent, compared to 17.1 percent at 30th June, 2019, in the presence of the impacts of the pandemic that continued in the first 6 months of 2021, and the presence of costs, commented above, whose benefits on sales and results will be progressively visible in the coming periods.
EBIT amounted to US$29.8 million, compared to an operating loss of US$62.9 million last year and a positive result of US$46.1 million as of 30th June, 2019. The result from financial operations was negative and equal to US$7.31 million as of 30th June, 2021, compared to US$12.9 million last year and in line with the US$7.6 million as of 30th June, 2019.
Inventory dynamics show the complete recovery of the increase reported as of 30th June, 2020, mainly related to the lockdown period, with deliveries of Fall Winter 2020 collections that had slipped slightly and efficiently recovered in the second half of 2020.
The inventory balance is also influenced by business development, including the expansion of the network of directly managed spaces, with 5 new openings and 10 hard shop conversions in the first 6 months of 2021, the expansions of some existing boutiques, and the development of new initiatives related to the “Kids” collections and the “Sartoria Solomeo” project, as well as the expansion of the digital channel business.
In the first half of 2021 the level of investments remained very high, including those aimed at opening new boutiques in the most important world centers, and updating the company’s digital image and production/logistics infrastructure.
Commercial investments favoured the development of the network of directly managed retail spaces. There were 112 retail boutiques, compared to 107 boutiques at 31st December, 2020 (including the conversion of two wholesale monobrand boutiques, including the important space in the Dubai Mall).
The number of directly managed hard shops within Department Stores totalled 41 compared to 31 hard shops as of 31st December, 2020, following the 10 conversions to direct management made in the first six months of the year.
Significant investments in the retail channel also made possible a program of prestigious boutique expansions between the second half of 2020 and the first half of 2021, including those in London, Paris, St. Petersburg, Shanghai and Tokyo.
In terms of digital investments, the Company has renewed its online presence, with its website to offer a browsing, knowledge and shopping experience that is always fresh, contemporary and appealing.
Sales of Spring Summer 2021 were very positive, and the Company is satisfied that the trend of the Fall Winter 2021 season will show a similarly favourable result.
It is confident to continue the growth path that has characterised the first part of the
year, expecting for the second half of 2021 a further acceleration of growth compared to the results reported in the first six months of the year. In the coming months it is also expected to be able to fully benefit from the sales space development plan that has characterised recent quarters. The important investment plan will continue, identifying the absolute luxury as its exclusive scope of reference.
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The Company is increasingly confident in achieving in 2021, the “year of rebalancing”, a growth around +10 percent compared to 2019, with an increase of around +20 percent compared to 2020, and continue this development path in 2022, with a growth of +10 percent compared to 2021 and healthy margins.
It is believed that all this makes it very concrete to realign with the objectives of the first five-year period (2019-2023) of the 10-year plan ending in 2028, the year in which the Company expects to double the 2018 turnover and reach US$1.2 billion.