Brunello Cucinelli Spa

Good evening, Corus Call Operator speaking. Welcome to the presentation of results of the first quarter 2020 of the Brunello Cucinelli Group. I'd like to remind you that all participants are in listen-only mode. Following the presentation, the initial presentation, you will have a chance to ask questions.

The speakers will be Brunello Cucinelli, Chairman and CEO of the company,

Moreno Ciarapica, CFO, and Pietro Arnaboldi, Head of Investor Relations. In order to receive help from an operator during the first press call, please press star followed by zero. And now I'd like to give the floor to Brunello Cucinelli. The floor is yours. Good evening, everyone. Welcome back. It is always a great pleasure to speak with you, investors, analysts, and journalists. As usual, I find that these calls are pretty relevant in order to exchange our views. So we are all here in Solomeo, beautiful, splendid day with Riccardo, Luca, Moreno, Dario, CFO and co-CFO respectively. And we would like to tell you how we would like to organize and structure the following call. So first of all, I'd like to tell you how we are working and living. I'd like to read out the figures you're already familiar with, how we are managing 2020, and how we have planned 2021 with a pretty sound visibility in 2022 too. And then, once again, I would like to once again give you some colours on our 10-year programme, Plan 2019-2028. What about today, the current mood? I have to say that today too we only had one positive case here in Umbria, so I would say the situation is looking up. After a very strong period From the emotional point of view, especially the first 10, 20 days of March, the beginning of this pandemic, you see it was pretty tough. And now the second half, I would say until last week, the days were slightly better because we were seeing that the skies were clearing up somehow. Now we're all back to work. So the collection style, 23% of people for 10 days. And then last Monday, everybody came back. So I have to say that we are back to normal. And the first day was pretty moving and emotional with, you know, serological samples and tests for everybody and face masks. Of course, this is not compulsory, but every employee decided voluntarily to take these tests. This is a choice, a project that we have decided done together with Perugia University because they asked us that all our employees undergo these very important tests. In 40 minutes we have the full results with these four scientists working for us. And this is very interesting because they need these figures to map out, in this case, Umbria, our region. So we have done everything. An important thing I'd like to say, we have two doctors, a special gazebo, a special area dedicated to the tests and the sampling. And then there is the foundation, too. The foundation boards a special machinery, and this machinery is able to read out and process all data in 40 minutes. And we carry out tests regularly. also to friends or people coming from far away because you see if they come to the company and maybe they spend a couple of days with us, you're having the possibility to take a test and knowing everything after 40 minutes, then you have a different feeling. So it was a good choice to cooperate with the Perugia University and the hospital. So how do we work now? we have tried to convert all this into somehow a new attitude with a focus, dedication, humbleness, courage, and creativity. This is what we want to put in place. And first of all, we said to ourselves that we should be changing what can be changed, and we should be able to accept what cannot be changed. Like my great master, 16th century or the greatest humanist, Tommaso Moro, said to me, stated for me so we decided that until the end of the year well actually I decided it until the end of the year we won't be using that many adjectives and many formalities we must be very quick very down-to-earth very pragmatic to the point and ready to change a strategy whenever it is necessary even on a daily basis So jokingly, but not very much, so I have always thought that you only take part in the Olympics once in your life. And this has been a sort of Olympic Games for our company. And I'll read out the comment here. because I'm sure you already knew the figures. So, 166.7 million euros net revenues, minus 2.3% year-on-year current change, and 2.9% constant exchange rates, vis-à-vis 106.4 million. The first, 31st March, first quarter 2019, North America plus 9.5%, Europe minus 2.2%, Italy minus 13.9%, China minus 27%, rest of the world plus 6.6%. Performance per channel, 7.4 monobrand retail plus 2 wholesale and monobrand wholesale plus 0.5. So what about my comment on this? The current year was off to a very, very good start from an economic and brand image point of view until February the 29th, the end of February, the only exception being China due to the COVID-19 epidemic. Our company reacted to the health emergency immediately by taking action to protect the health of all its employees, co-workers, suppliers, and customers all over the world. The precautionary measures adopted and the exceptional provisions introduced by the governments of several countries around the world in order to contain the spread of the virus have resulted in the closure of a significant number of boutiques around the world. and only affected sales in the last weeks of the first quarter, thus reducing the overall result in a limited manner. The economic and financial impact of the pandemic is expected mainly in the second quarter, with sales significantly affected by the closure of a still significant number of boutiques around the world. Great attention is devoted to the planning of the two-year period 2021-22, for which we envisage a buoyant and sizable recovery of the business, allowing us to continue to work for our 10-year plan 2019-2028, which should lead us to double our turnover. We believe these to be strongly temporary circumstances. For this reason, our attention is focused on the management of the current year and the healthy control of costs, keeping our company structure strong and also poised to fully resume business. We keep up our planning efforts and confirm a sound strategic investment program for everything related to the distribution and production side of the company as well as the support of the brand as a whole so how do we manage the current year so we can say that since the mid-march we decided to call all our analysts investors and suppliers and we decided to organize one, so to speak, virtual meeting a month with the financial community. At the beginning of April, we published the revenue of the first quarter. In mid-April, we organized something very interesting and very appealing, a virtual roadshow for three days. And I would say that this was really, really important to have this exchange of views. And we think that what is happening in the world is a crisis that we want to call temporary, a temporary one, very strong and sharp, but not as sharp as in 2008. I remember in 2008 banks would go bankrupt. We didn't know where to go. And I remember that my father sent me to withdraw from the bank 16,000 euros in savings that he had deposited there. But I'd like to compare the situation with an anecdote that really was important for me. When we were farmers, we lived in a family with 13 people we had no electricity we lived we worked the land with animals and I was 10 and I remember fully well because my grandfather passed away two months after what I'm telling you about the story I'm telling you and then there was a huge hail storm that summer that destroyed our harvest we didn't have any policy insurance policy on that and then in the evening it was pretty gloomy the mood there my mother The lady there, everybody was crying. And my grandfather, he said to me, you see, he wanted to comfort me, to reassure me, to calm me down for that great tragedy that had hit us because, of course, to have a harvest was important for our livelihood. And the day after, the neighbor, our farmer, our neighbor, basically lent us about 20 bales of wheat. And then we returned the favor a year later. And about this, my father, who is 98, and I always go and visit him every evening, the other day he said to me, you see, after the huge hailstorm, however, of course, we harvested what was left. But when we went back to work the land for the seeding, the sowing of the following year, we were even more careful, we were even more fond of what we were doing.

So that maybe we could have some sort of recovery the following harvest.

So these are the great choices that we have made. So we think that this has been some sort of hailstorm for the world. So what about the choices that we have made? First of all, we want to devote 40% of our time to managing 2020 and 60% of our time to planning for 2021 and 22 that we want to dub some sort of new time because this is what it's like. So until February the 29th, everything was going well. and the world economy was going well, we had completed all our summer collection deliveries, as usual, and we had already in-house all the orders for the fall-winter 2020 for the three collections, women, men, and kids. By the way, it went very well. both in terms of numbers and in terms of taste, because it's always very important to have the feedback from the press to know whether your brand is contemporary or not. How do we manage now, 2020, ongoing? The first idea is to protect the brand and all the creative and organizational minds working for it. This is what really matters. And we also... try to achieve sustainable balanced results. Over the last, you see, we have been listed for eight years, but over the past seven years, we have doubled. So our company is 40 years old, but if we think of the period 2000, 2019, we grew by 11%, we have grown by 11% on average. So what did we do in mid-March as soon as the company closed down? So we actually closed the company a week in advance because I, myself, everybody, we were very scared because we had the example of China before our own eyes. And we made a huge decision back then to maintain all our employees, to maintain the same salary of 2019 starting from China, the first ones that were locked down. And we knew that six, seven weeks later, we knew that we would resume our business in the best way possible with new excitement, drawing inspiration from our Chinese employees who really, for us, represented for the good and for the bad. They have really been an example of timing and mood. I remember fully well the letter that we received on the day of the last call, March the 11th, so two months after they had started the situation. So what did we do? We spoke to all of them, with all our employees over there, and we asked two things of them. Well, actually, we asked all our employees to work more until the end of August, half an hour every day more every Saturday morning, And until the end of August, only have one week off, because usually we would take two weeks off in August this way. By the end of August, we will have caught up completely in delivering the winter goods and also in preparing the collection. The second important thing, maybe even more important, is we should try and be even more special from the human point of view, because once this painful situation is over, we will come across people who are feared, who are scared, maybe they're grieving the loss of some beloved ones, maybe they've lost their job, and also a bit frightened, petrified by the world coming up. So this is precisely where we have to be extremely careful, and I'm saying it to you and also to the people here with me, surrounding me. We have to listen and we have to not be arrogant at all because this is what we want to do. So you see, the reactions of our employees were very touching and moving. So we can deduct that there's a very strong sense of belonging to the company, to the area, to the region. I myself am strongly Italian. When someone speaks ill about Italy, I really regret it. And this is what I call the great value of the community. There is no doubt that this represents this human sustainability that we are so fond of. Another important topic is production. The whole of production takes place in Italy, as you know, 75% in Umbria and the remaining 25% in Tuscany and Market Veneto. We have 364 micro-workshops with 15 employees on average. They all have welcomed the idea to work through August so that we can say at the end of August we will have caught up the delay. with the previous year. These micro companies, and I really wanted to highlight, they were not really hit by huge losses because they only have basically workforce. So thanks to the furlough scheme of the government, they can basically redress their losses. But they provide us with a lot of flexibility with the delivery time because they are basically made of workforce. And therefore, we feel some sort of confidence and peace of mind, both for production for 2020 and also for the new collections that will come out in July and August. Another important thing is the value of the multi-brand accounts. You see, for us, this business is 45% of our revenues with 500 accounts, about 10 department stores, and then the rest, 490, are the wonderful specialty stores. We have known them for many years, had a business relationship for many years, never had any problems there. In the past few years, in the former Soviet Union and in China, many multi-brand stores, especially stores, have blossomed. Therefore, we believe that for the coming years, we will have the opportunity to definitely expand our business with these special players who are coming in the offing. So you see, nobody has canceled their orders for fall winter. And honestly speaking, fall winter, we really believe very much in that because we think that generally speaking, you see, our clients might receive a bit less of what they ordered because of the production issues of other companies, of other vendors. That's why they're really asking us for help in case of any reassortments if the market was to go the way we expect. Another important thing to be mentioned is the idea of redressing the seasons in stores and the coming out of new collections. I think in the past five to six years, we had really stretched it. We had crossed the line, meaning that we would showcase in the shop windows, you know, strong cashmere coats in June. And speaking with many players, we actually see a trend emerging, some sort of rebalancing of the dates when the goods are displayed in the stores. I would say with one month delay. So we are going back to normal. which means that in July, in June, you will have 80% of summer goods, and you start showing off some sorts of winter garments. Another important topic, still another one. Everything is important. So spring, summer, 21 collections. In July and August, we will present the new collections as usual, with the usual timing, and they will be delivered physically to our showrooms, So in New York, Tokyo, Shanghai, London, Paris, Milan, Moscow. I think that there is no doubt that before making an order, you need to touch the product. You need to feel it. You see it live. Of course, if it's not possible, you can also visualize it online. But if you can actually do it, it will be a completely different experience. So I'd like to say that as far as we are concerned, our collections will be very much very new. They should not look old. They should look new and maybe even more new than in the past year. And why is that? Because I think that after two days lockdown, sorry, two months lockdown in our homes, maybe in front of the computer, we have seen it all. And we will definitely feel the need to step into brick-and-mortar stores to see, to touch, to be maybe tipped by maybe salespeople. You see, for example, I wanted to buy two tennis rackets because I've always played tennis since when I was young. I didn't want to buy them online, and that's why I want to go to the physical store so that I can have some sort of explanation there. I think that this will become true in early July when we have to show the fall-winter garments in the stores. And there is no doubt that in January already, for the next spring-summer, the stores must be beautiful, very modern, very groomed, visual must be very appealing enticing and also DSAs must be special because everything because we need to display new goods then e-commerce you know it's something we really believe in so this part of the year we have had a 50% increase because of course The starting point is just 3%, the buvelocucinelli.com. But it's very important. We have really reinforced our structure in terms of space and people, but especially space, so we can double our business without any problem. So we have the facilities for it. We think that... It is a very important means for image-related or communication of the company. So e-commerce is something serious on the online world. But I also wanted to convey my personal thoughts on this. Following two months lockdown and always online, I don't know about you, but I really am fed up with these calls. Sorry, not with the calls that we're having now, obviously. But I really am fed up with them being online and, you know, screen and stuff. And I think that the past two months, we have really visualized everything, every single thing. So there is a huge need to go back to physical things. Of course, complying with the safety and security regulations. So I think that... physical stores will play an important role in the future, like we were saying before. And also for the coming years, I want to go back to physical stores. I love brick-and-mortar stores. And this maybe will redress the balance between technology and human factor. And there is no doubt that this time, once again, will bring customers to carefully think before making their purchase. You see products, they need to understand where it has been made, how it has been made, whether harm has been made to the environment. So we think that there will be a return to the great, the striking difference between true luxury and accessible luxury and the difference between a product that is handcrafted recognizable, artisanal, exclusive, and expensive. Of course, if we talk about our product, it is expensive. But they can be mended and reused over time. And then on the other hand, you know, commoditized goods, industrial goods made all over the world with a very large distribution and with a low price. I think there will be a very clear-cut distinction. And now... I'd like to talk about investments 2020. We have maintained our strategic investments unchanged, both in distribution and production. And many investments took place in the first half of the year. We opened the meatpacking district store in New York in a beautiful neighborhood. London, it is ready, but we have to wait for the reopening, restart. Then Paris, too, three very important stores. All in all, in the second half of the year, we have seized the opportunity we have been waiting for for many years because in some locations it takes years for something to come your way. And we will expand our store in New York. In Tokyo, we will go to Otosando, change location, and also in St. Petersburg. We will relocate to a beautiful building we have been waiting for for a long time. So as far as our plan is concerned, we will pull forward six, seven million from 2021, and we will pull them forward through 2020 for November. Then cost control, another important topic. So we have always tried to keep costs under control, always envisaging When the restart came, we would be poised and ready. As a matter of fact, we are ready to start. We have, with our partners, we have basically followed a very good conduct of behaving properly, respecting human dignity and sustainability. We have chosen to behave well. Because, see, we have all been victims of this. It has been a hailstorm for the whole of mankind. With one difference, the hailstorm that happened when I was little, only economic damage was the consequence, whereas in this case there was a human toll, unfortunately. This is something I want to say to you. In 1453... There was Benedetto Cotugli, who was born in Dubrovnik, Croatia, and in 1453, he wrote a beautiful booklet on the art of doing business. The book is called The Art of Trade and Commerce. Basically, it is the first book about the sort of way of doing business in a honorable manner. He was a merchant. And it was forgotten for five centuries, this Renaissance text. I think that this book is very, very contemporary. especially when we talk about the specific form of capitalism. Mr. Cotulli basically points out something very interesting. He said, one should become rich with honor according to justice. When you buy or sell, you should respect and apply a fair price in order to preserve the human race. I find this very, very beautiful. If you're interested, we have it in Italian. But we can have it translated into English, too, because it really is worth the while. Last point, very important for 2020, the inventory. You see, for 2020, in the second half of the year, when we talk about the winter production, well, we are confident because we are flexible in our manufacturing. Because we manufacture everything. everything here in the neighborhood with the 364 workshops as far as the summer goods is concerned in the DOS stores now once the season is over say at the end of August we will then decide what how to proceed by very carefully breaking down the evergreen items from the seasonal ones so usually We deliver much early, starting from December. And when we reach February, mid-March, the sellouts have already reached a good point, plus the online. So we expect quite good results. But one thing must be restated, very important thing. We believe that in the next season, stores should display a very attractive and contemporary product. You see, a year for fashion is a long time. Since I still have three or four minutes, I'd like to say something more. When I was young, there was a very important knitwear manufacturer, an entrepreneur, a very refined 60-year-old. And he was a romantic man, too. So he called me, and he said, I bought a huge lot of Shetland wool, and he had paid 20% of the value. And he said to me, Brunello, I think it was a bargain. And I said, listen, Mr. Fagioli, I don't know whether it was a bargain, but who will you sell the Shetland wool to? a Shetland Wool that is an itchy kind of product and nobody's going to buy it. And then I can't tell you how it ended, but it definitely did not end well. Then another important thing, whatever. So 2021, 2022, we call it a time for redressing the balance. For 2021, we envisage revenues. growing 5% over 2019, a PTA around 14, 15%. Whereas for 2022, we guide for revenues up 10% with a PTA in line with our current standard. So for, we still have our plan 2019, 2028, and we still believe in this 10-year plan. Now, for 2021, investments, 6% of revenues, because more or less 1% or 1.2% will be pulled forward to to the end of 2020 for the three openings. Then in 2021, we need to redress the balance in the inventory and also the working capital needs to be redressed, so the net financial position must be redressed and also rebalanced, and also the dividend. Until the beginning of April, we thought we would have a general shareholders meeting in April and then pay out our dividend. But you see, we have the government and the banks in Italy, they have basically recommended the following to us to postpone the dividend payout to discuss the issue again in autumn when things will have settled down a bit and maybe pay out the dividend in 2021. So if the conditions are met, I think that we can definitely pay out the dividend in spring. Now, on May the 21st, we will hold our general shareholders meeting, where, as according to the plan, Luca Lisandroni and Riccardo Stefanelli will be appointed CEOs or will be subject for approval. Well, actually, it's been nearly two years that they have acted as CEOs. And I myself would like to be the executive chairman and creative director of the company. This has always been my dream. to cover this position. And now I'd like to make a very special wish to these two guys sitting in front of me, these 40-year-olds. I've never said to them this. I'm going to say that I have a lot of esteem and high regard for them as managers and as human beings who believe in great values of mankind. So you will have to... to really take the helm in this year of very important changes. But my master and genius, Einstein, taught us something very interesting. From pain and grief, you should draw the genius of creativity and the strength of innovation. And it's a beautiful statement for now. So, conclusions. From the human point of view, we believe that the worst is over. But of course, I'm talking about Italy. I refer to Italy. China, still some countries are lagging behind, like the UK or the US. And my hope is for you to believe that maybe we are approaching the last mile of this situation. So we have... planned 2021 with the very same care with which my father said we should be sowing the fields for the coming year.

So this is my opinion, by the way.

The strong liquidity in the banks and the injection of huge amounts of money into the markets by different governments, will make 2021 a market with huge opportunities, and I really think that. Therefore, for this year, we are confident that the second half of the year will make us catch up on opportunities what we will have missed in the second quarter with the closure of stores. So to conclude, I'd like to say that personally speaking, I am convinced that very soon I can feel that our scientists will give us a good gift by saying to us that they have found the cure. And then maybe they will have found the vaccine. But you see, I myself spent years two months talking to the head doctor of the hospital on a daily basis. So sometimes it was very harsh and also talking about the face masks. And by the way, many people helped us out in the first phase, giving us the face masks. And now we ourselves can help out, can reach out to others because face masks, You see, they don't cost much, but they're not always so available. And then to conclude, I'd like to borrow this statement that I read the other day by my friend Jeff Bezos when he commented results. And he said, we need humbleness, prowess, ideas, and money. So I wanted to repeat it because I found it very, very interesting. So we are open for all the questions you want to ask us. Last thing I'd like to say, as far as the financial side is concerned, we have enough funding from banks with a classic credit line without having resorted to the aid from the government because banks we thought that it would be better to leave the money for the companies that might be in dire straits. Coruscant operator speaking. We will now start the Q&A session. Whoever wants to ask a question, please press star followed by one on your keypad. In order to exit the booking list, please press star followed by two. please ask your question speaking into the microphone. Whoever wants to ask a question, please press star followed by one now. The first question is from Flavio Cereda, Jefferies. Thank you and good morning, Brunello. I'll be speaking Italian. Yes, yes, you're doing it for me. Thank you, Flavio. Thank you. and good luck to Luca and Ricardo that made it. No, no, they haven't made it yet. Slow down. The election, the appointment will happen on May the 21st. So you have always been a strong supporter of multi-brands, especially in your traditional markets and then in the new ones. And today we read the piece of news on Neiman Marcus, the most important client for you in the U.S. So what to your take on that? What kind of risk do you see there? This is my question. Yes, good question, because today we received a piece of news that they have adopted this Chapter 11 voluntarily and so that everything that happens after May the 7th will be in continuity thanks to the funding of $675 million. So it is not a liquidation. So what I say, Flavio, is the following. If we divide the financial management of this beautiful brand, which I'm not familiar with, you see, I'm just talking about the core business. If we exclude the financial management, I would say that this is the best luxury player in the world. You see... I know 32 of their stores, and they are really, really beautiful.

I have to say that we have been paid up completely.

You see, Savio, they own the beautiful multi-brand, Bergdorf Goodman in New York, and they also own MyTheresa in Germany, and for us. It is one of the best online multi-brand stores, retailers in the world. Truth be told, if I lived in the U.S., if I had a lot of money, I would buy Neiman Marcus myself now because it is a marvelous department store. And I'm talking about taste, luxury. And by the way, in January, when they came to place their orders, in January and February, they kept repeating the great value, how important luxury is. So for us, this is a beautiful piece of news that this beautiful brand has found a solution, a way of sorting out this situation.

Thank you. Thank you, Flavia. Next question from Francesca di Pasquantonio, Deutsche Bank.

Asked a question in Italian, Francesca.

Maybe she has her phone on the mute, so we can't really hear her. Your line is open, Mrs. Pasquantonio. But we can't hear you, Francesca. If we can't hear you, Francesca, you can send us a message or something after the call.

We're here for you.

Or maybe we can answer to some other questions and then you come back again. I'd like to remind you that if you want to ask a question, you can press star followed by one on your keypad. Next question from Paola Carboni, Equita. Yes, good evening, Brunello. It's a pleasure to talk to you. I have a question on the inventory, the topic you hinted at before. Do you maybe have another question to ask me, Paola? Ask us another question. Do you have a spare question to ask? So the spring-summer season will last a bit longer, like other players are saying, and then you will decide what to do. But at the same time, the spring-summer 2021 collections must be very fresh and contemporary, yes. So we will understand later on how much carryover goods we have for the following season, and where we have to apply some sort of write-downs or maybe to use the outlet stores. But I think that thanks to your approach, you won't have a lot of carryover because you will prefer to maintain a freshness of your product. I wanted to understand this better. You see, the world is going towards some kind of taste that is a bit more in line, akin to ours, but you can't have basic collections because we will have six months when they will be visualized by everybody and they will maybe sold at different prices. So to date, Paola, I'd like to say But maybe the end of August is the right time to rediscuss this issue. That's why we decided to meet, to speak to you analysts once every month and to organize a roadshow once every month to update you on the state of the matter. Because I think that together we can definitely navigate this hailstorm better. Yes, thank you. Then you'll update us later on.

Yes.

We'll speak to you soon. Next question from Andrea Randone, Intermonte. Thank you, and good afternoon, everybody. My question is pretty trivial, but it can help us maybe sum up

maybe give us an overview on the stores that you had open and closed at the beginning of April, what the current situation is, and when you think that based on the current measures, when do you think they will be nearly all open? It's not a boring question, not at all, because you see every day We are looking forward to our stores reopening. But I keep saying that we have to reopen only when we are safe. Because, you see, I was very scared myself in January already. But, Andrea, now we are working with a good state of mind. We see Germany, Austria, Switzerland, and Italy. We might start again. We might reopen in a few days. Then in China, you know the situation there. So I'm pretty confident that I would say towards the end of May, probably the whole world, more or less, with different rules, will have reopened. Well, of course, we have three scenarios in front of us. There's a negative one, a medium one, and a positive one. So today I would say that I am pretty positive for the winter season because I'm fully confident that they will find a treatment. You see, the scientist, the lady doctor, the head of the hospital, said to me, You see, 25 days, being hospitalized 25 days ago was not the same as being hospitalized now. And you see, she actually offered to do this thing, this project with the tests for everybody. Because if you can catch the disease right from the beginning, it really is the best way because you have to really detect the asymptomatic patients especially among the young people and i feel very confident because of that that in the short term we will find a cure we'll find a treatment and if i say that maybe if tomorrow they were to say to us that the cure has been found i don't know what we'll do because you see everybody will be very happy And I think that by the end of the year, we will be able to redress the balance and rebalance the way in which we live because this will be over. The epidemic will be over. Thank you very much, Brunello. I share your view. Thank you again. Well, you see, history teaches us Andrea, everybody in the world is working on finding a cure, is going out of their way, and I think they have made really huge steps ahead in the last month, and I'm talking about the treatment.

So I want to have this positive view.

But you see, we work here, but we really respect the social distancing. The canteen is closed. We have really our windows open. We sanitize the factory and the business on a daily basis. And you see, my father said, you see, he said, I have lived through so much. And he personally experienced the 1958 flu and his father the Spanish flu, so everything will be over soon.

Thank you. Next question.

Follow-up question from Paola Carboni. Yes, I apologize. I wanted to raise another point on the retail.

So at the end of spring, summer, sorry, the question is on the wholesale.

When they will take stock of the situation at the end of the summer, what will be your approach in case there's a whole lot of unsold goods, for example? Well, no, no, no, no, Brunello says. This is a wholesale relationship that we have with them. So we are open. to help them with payments, of course, but then it is a wholesale, it's up to them. The good is theirs, and they have to manage and to handle it. So this is the reason why we did not go and basically negotiate for rent, for example. Many landlords say, we can have you pay in six months or seven months and defer your payments. But I'd also like to mention what an important landlord said to me. He said, you see, you asked us for help, and we postponed your payment by seven, eight months. Your neighbor, he basically refused to pay. So not only will he pay, and he must pay in April, but when in two years' time he wants to renew the contract, You know, it will be tough for him because he will want to renew it because these are beautiful locations. So that's why we have to say once again, Paola, that it is a hailstorm that hits each and every one of us. We all have our income statement. We can help each other out. We asked money from our banks that we can support our supply chains, for example. But you see, we have very important accounts and department stores. We never had any losses with them in the past. Thank you.

And still on this.

Well, maybe I can ask this question later. I'll think about it first. Yes, about the wholesale, Paola, what I'd like to say is that not many people believe in it. But I, however, instead, I'm convinced that it is still a great business. First of all, they are the ones that really tell you how your brand is doing. They are the ones that mix you with the best brands, with the young brands, and if your collection looks old, they force you to change. So I have no doubt on payments from them, and I have no doubt on the relationship. They will not cancel their orders. How can they cancel their life? You should consider this.

If you have 100, for example,

They say that, on average, they know that 25%, 30% of the goods they order will not be delivered. So how can they do their business if they don't have their goods available? So when they say they might not accept it, they can't. No, it's not true, because in New York, in Frankfurt, they cannot do that. They must collect their goods. in Frankfurt, for example, it is a very serious kind of relationship. I really want to highlight it's a very serious relationship. And the whole development that we have in Russia with 125 beautiful specialty stores and what is happening in China goes to prove that, in my opinion, we can coexist in the same city. We can have both a monobrand and a multibrand space. but the multi-brand is always more fascinating because they mix different products. Yes, the doubt I had was, Paola says, if there is a flexibility with these partners not to do any reassortment. So maybe you won't have any reassortment there. No. No, Paola, I wish it was. We have a production structure whereby we will catch up on everything by August, just by working half an hour more. So we're not concerned at all. I wish it went like that, and we do have a possibility to do reassortment, and they really, really rely on us for that. Thank you. Next question. Oh, we have retrieved Francesca. No, maybe we have not. Maybe you have your phone in mute because your line is open, but we can't hear you. Francesca says, how many stores are open as a percentage? So I would say 50%, Francesca. But in about 10 days or so, it will be better. Do you have an agreement for return goods with Neiman Marcus was the question? No, no, no. We have been working with them for 20 years. They always paid cash to us. Honestly speaking, we are honored. that they consider us the best ready-to-wear company in the world together with another beautiful company, super wonderful company, Chanel. And so we do not have any kind of agreement of that kind with them. We don't work on consignment with them. And also, how do you want to manage the unsold goods? Well, we will let you know in September, Franchi. And as for cost, is it correct to assume that there will be no efficiencies to be gained because you are focusing on growth, future growth? Well, the structure that we have in place after opening the three beautiful stores this year And the three stores that we are about to open were the three expansions and a new one. Wonderful.

Sorry, two relocations and an expansion. So for 2021, not big investments there.

We have these beautiful locations.

And we have stores. where we might not have 50 people a minute, but we really are.

I am very confident because we know that the people have the need to go back into the stores, and I'm very confident. Francesca, I won't say we're not a complex company. It's not that we have a huge number of stores.

So we are very, very confident. So we were able to answer Francesco's question.

Mr. Cucinelli, no more questions booked for you for the time being. Well, Ben, thank you very much for everything. Whatever you might need, any clarifications, you can give us a call. Oh, no, something important I wanted to say. So the results we will publish on July the 14th for revenues by June the 30th, we want to have a call in July, not just to comment on the results, but to maybe take stock of how things are going, collections and so on. So we will speak to you at least once a month, and of course you can give us a call on a daily basis whenever you want. Thank you very much to all of you.