Cucinelli ahead with new factories. The push on China

All as easy as drinking a glass of water, then? The reality is more complicated. The increasingly harsh contrasts between China and the United States, as a result of Washington's tariff policy, may penalise Western companies, including Cucinelli. The cashmere maison does not share the concern. The group, is the indication, in the states where it is present, including the former Middle Kingdom, studies and confronts the cultures it encounters. A knowledge that allows integration, and mutual respect, with the local reality. Not only that. The Chinese, says Cucinelli, appreciate the group's high quality products and craftsmanship. As well as the ability to stand out in lifestyle. So, for the company there are no specific problems on this front.

But it is not only a question of Asia and China. another important aspect - precisely - is the strategy in the expansion of the production base. In the three-year period 2024-2025-2026, annual capitalised investments of around 9% of turnover were planned. This is higher than the historical figure of 7-7.5% of revenue. The increase - it is well known - is aimed at building new factories to support the group's future growth. Well: Cucinelli reaffirms the acceleration of the Capex in order to bring the project forward to the end of 2025. So much so that, in the current financial year, capitalised investments are estimated to reach 10.5% of turnover, to then return to the level that has historically characterised the luxury house in the following year. In particular, at the end of the current year, the expansion of the factory in Solomeo should be completed (reaching a total surface area of around 75,000 square metres). Then, also at the end of the year, the Penne facility (4,000 square metres) is expected to be completed, which can potentially "gather" up to 400 tailors; and, on the other hand, the factory in Gubbio (3,000 square metres) with the potential for up to 250 tailors (currently 80).

In such a context, and taking into account that the US is a significant outlet market for Cucinelli, the saver expresses a doubt. The concern is that the new duty policy - initiated on 2 April with 'Liberation Day' - will impact the luxury sector itself, including Cucinelli's business. The fashion house - although aware of the situation and strongly reiterating that it does not intend to move production outside Italy - invites a more articulate analysis. Exclusive luxury, it is reminded, is resistant to phenomena such as the new tariffs. In this sense, the group will implement - in the American market - the pass trough. As of 1 July - and as things stand at present - there will be a 3-4% price increase for the autumn-winter collection alone. A move, says Cucinelli, against which no repercussions on sales are feared. Having said that, however, it can be further argued that geopolitical and macroeconomic instability creates insecurity. A context, facilitated by what the sociologist Zygmunt Bauman has called 'the political economy of uncertainty', in which the very propensity to spend on luxury goods - such as luxury goods - can be affected. True, says Cucinelli who, however, retorts: firstly, in April and May, the group noticed no change in the behaviour of its customers. Furthermore, the company - similar to what happened with Covid - gave - reassuring its employees about their work - several directives. Among them: to be, with customers, more and more polite, welcoming and courteous. An approach that - evidently - is paying off. So much so, in fact, that Cucinelli is confirming its revenue growth forecasts at around 10% in both 2025 and 2026.

So far, some suggestions regarding the development of the production base and the Asian markets, particularly China. What, however, are the dynamics of the distribution channels? At the end of 2024 - i.e. net of any seasonal dynamics - revenues divided by sales channel were distributed as follows: 66.6% to Retail and 33.4% to Wholesale. The group considers such a breakdown to be appropriate. Among other things, the company emphasises that the multi-brand also remains important because it plays the role of 'guardian' of the brand. Put differently: the presence - in high-end department stores - of 'made in Cucinelli', alongside other brands, allows the freshness and contemporaneity of the group's products to be assessed.

That group which - with regard to directly operated shops - (Dos) generally confirms, on the one hand, 4-5 expansions per year of existing shops; and, on the other hand, the opening - always every year - of 3-4 Dos. With reference, on the other hand, to the digital world, it must be remembered that the weight of e-commerce attributable directly to the online boutique is around 7% of the total turnover. If we also consider purchases via multi-brand web pages, the percentage rises to 13-14%. Are these numbers destined to increase? The answer is no. Although the digital world - in particular for the function that the online has in the presentation of the garment and its first vision by the potential user - is considered important. The proof? It is provided - among other things - by the development of Artificial Intelligence, which is gradually flanking the traditional digital boutique.

Thus, for example, within three months, a service should be offered in which Artificial intelligence - questioned on the subject - can suggest the best combination of garments (from jacket to trousers to shirt) for attending a gala dinner or ceremony. In short: the real world of retail remains at the centre, facilitated by new technologies.

Title

Technical analysis

Finlabo research