Cucinelli, allegations in Morpheus Research report: Russia violates EU sanctions

Businesses still open to the public, shops (both single-brand and multi-brand) selling goods well above the limits set by the European Union when it passed the sanctions package against Russia following the invasion of Ukraine on 24 September 2022. Also: sales of products at discounted prices to clear product stocks.

These are the main accusations levelled by Morpheus Research, an American company founded only a few months ago, at Brunello Cucinelli, the Umbrian fashion company specialising in cashmere and top-of-the-range made-in-Italy clothing and accessories, which in 2024 had a turnover of €1.27 billion and has been listed on the Milan stock exchange since 2012 (since 2023 it has been on the Ftse Mib 30). After the release of the report - which follows similar accusations by Pertento Partners, a hedge fund shareholder of Cucinelli, reported by the Financial Times - the stock plummeted by more than 5% and Borsa Italiana temporarily suspended trading. Once it reopened, the value of the shares fell as much as 17.28 per cent to just over €85.

But here are in detail the contents of the report by Morpheus, which is based on an investigation carried out over "more than three months and which involved interviews with former Cucinelli employees and partners, an in-depth analysis of commercial data and visits to Cucinelli's Russian shops". The report 'casts doubt on Cucinelli's claims and reveals that Cucinelli has been deceiving its shareholders: it continues to operate several shops in Moscow with a wide range of items at prices exceeding thousands of euros'. Prices that would therefore violate EU sanctions (European companies can sell goods with a maximum value of 300 euros per sell in, ed). According to the American company, Cucinelli would have justified the fact that the shops were still open with the desire to maintain customer services on site, but in this case it would be a real sale. Cucinelli, in its note responding to the accusations, points out that 'at the beginning of the conflict we chose to keep our local structure unchanged, continuing to guarantee full salaries to employees and salespeople and to honour rental contracts, as we have always done everywhere in the world, even in extraordinary situations'.

Morpheus disputes the figures on exports to Moscow communicated by Cucinelli a few days ago, when the Financial Times had reported similar accusations made, however, by the hedge fund Pertento Partners, according to which Cucinelli continues to operate in Russia in violation of EU sanctions on luxury goods, as confirmed by Morpheus in its paper: "Our clients made more purchases, with receipts issued by Cucinelli's Russian subsidiary," it says. The American company obtained the financial statements of Cucinelli's Russian subsidiary, which reveal that "the entity generated approximately EUR 15 million in sales in both 2023 and 2024, despite the fact that the main shops it operates are supposedly closed. The subsidiary's financial statements also reveal a strategy to 'reduce the negative impact of sanctions' by continuing to sell via 'distance selling' and 'home delivery'". Yet, says the report, "trade data indicate that Cucinelli has increased its exports since the imposition of sanctions. From 2021 to 2023, Cucinelli's exports to its Russian subsidiary increased dramatically by approximately 715% in weight terms. Although part of this increase may be due to a higher volume of low-priced items, such a significant increase is unusual in the context of the apparent closures of Cucinelli shops in Russia.Although part of this increase may be due to a higher volume of low-priced items, such a significant increase is unusual in the context of the apparent closures of Cucinelli shops in Russia," it reads.

That's not all: the report points out that 'in addition to selling through its Russian shops, Cucinelli also sells through high-end shops such as Tsum, controlled by Russian luxury conglomerate Mercury Group, which appears to be supporting the brand's growth in the region despite EU sanctions'. The analyst firm reveals: 'Our secret shoppers visited Tsum's flagship store, which had an area dedicated to Cucinelli, and documented numerous Cucinelli products for sale, including items manufactured in 2024 and 2025 sold for the equivalent of €5,000'. The document mentions 'approximately 5,000 Cucinelli items for sale on Tsum's website. Among Tsum's online offers, we found Cucinelli garments for sale for up to €30,000'.