Cucinelli is ahead of the curve with its new factories. The push into China

So, is it as easy as drinking a glass of water? The reality is more complicated. The increasingly fierce tensions between China and the United States, following Washington’s policy on tariffs, could penalise Western companies, including Cucinelli. The cashmere fashion house does not share this concern. The group, it is said, in the countries where it operates – including the former Middle Kingdom – studies and engages with the cultures it encounters. This understanding facilitates integration and mutual respect with the local community. But that’s not all. The Chinese, Cucinelli adds, appreciate the group’s high-quality products and craftsmanship, as well as its ability to stand out in the lifestyle sector. Consequently, the company does not face any specific issues on this front.

But it is not just a question of Asia and China. Another important aspect – precisely – is the strategy for expanding the production base. For the three-year period 2024–2025–2026, annual capital expenditure was projected to be around 9 per cent of turnover. This is higher than the historical average, which stands at 7–7.5 per cent of revenue. As is well known, this increase is aimed at building new factories to support the group’s future growth. Indeed, Cucinelli has confirmed that capital expenditure will be accelerated to bring the project forward to the end of 2025. So much so that, in the current financial year, capitalised expenditure is estimated to reach 10.5 per cent of turnover, before returning to the level historically typical of the luxury house in the following year. In particular, by the end of the current financial year, the extension of the factory in Solomeo is expected to be completed (reaching a total area of around 75,000 mt2). Then, also by the end of the year, the facility in Penne (4,000 square metres) is expected to be operational, which has the potential to accommodate up to 400 tailors; and, on the other hand, the factory in Gubbio (3,000 square metres) with the potential to accommodate up to 250 tailors (there are currently 80).

In such a context, and given that the US is a major export market for Cucinelli, investors are expressing concerns. The concern is that the new tariffs – launched on 2 April with ‘Liberation Day’ – will affect the luxury sector itself, including Cucinelli’s business. The fashion house – whilst fully aware of the situation and strongly reiterating that it has no intention of moving production outside Italia – calls for a more nuanced analysis. It is pointed out that exclusive luxury goods are resilient to developments such as these new tariffs. In this regard, the group will implement a ‘pass-through’ policy in the American market. From 1 July – as things stand – a 3–4 per cent price increase is expected for the autumn–winter collection alone. A move – Cucinelli adds – which is not expected to have any negative impact on sales. That said, however, it may be further argued that geopolitical and macroeconomic instability creates uncertainty. This context is fuelled by what the sociologist Zygmunt Bauman has termed ‘the economic politics of uncertainty’, in which the very propensity to spend on discretionary goods – such as luxury items – may be undermined. True, says Cucinelli, who nevertheless counters: first and foremost, in April and May, the group observed no change in its customers’ behaviour. Furthermore, the company – much as it did during the Covid crisis – issued various guidelines to reassure its employees about their jobs. These included: being increasingly kind, welcoming and courteous towards customers. An approach that – clearly – is paying off. So much so that Cucinelli confirms its revenue growth forecasts of around 10 per cent for both 2025 and 2026.

So far, we have looked at some insights regarding the development of the production base and Asian markets, particularly China. But what are the trends within the distribution channels? At the end of 2024 – and therefore net of any seasonal fluctuations – revenue broken down by sales channel was distributed as follows: 66.6 per cent was attributable to retail and 33.4 per cent to wholesale. The group considers this breakdown to be appropriate. Among other things, the company emphasises that multi-brand retail remains important, not least because it acts as a ‘guardian’ of the brand. Put another way: the presence of ‘Made in Cucinelli’ products – alongside other brands – in high-end department stores allows customers to assess the freshness and contemporary appeal of the group’s products.

That group which – with regard to directly managed stores (DOS) – generally confirms, on the one hand, 4–5 expansions of existing outlets per year; and, on the other hand, the opening – again each financial year – of 3–4 DOS. With regard to the digital sphere, however, it should be noted that e-commerce attributable directly to the online boutique accounts for around 7 per cent of total turnover. When purchases via multi-brand websites are also taken into account, the percentage rises to 13–14 per cent. Are these figures set to increase? The answer is no. Although the digital world – particularly given the role that online platforms play in presenting garments and offering potential customers their first glimpse of them – is considered important. The proof? It is provided – amongst other things – by the development of artificial intelligence, which is gradually complementing the traditional online boutique.

So, for example, within three months, a service is expected to be launched whereby artificial intelligence – when asked – will be able to suggest the best combination of garments (from a jacket and trousers to a shirt) for attending a gala dinner or a ceremony. In short: the real world of retail remains at the heart of it all, supported by new technologies.

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