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.