Brunello Cucin Unsp/Adr

Love is in the air, everywhere I look around Love is in the air, every sight and every sound In your eyes Love is in the air In the whisper of the trees Love is in the air In the thunder of the sea And I don't know if I'm just dreaming Don't know if I feel safe But it's something that I must believe in And it's there when you call out my name In the rising of the sun Love is in the air When the day is nearly done And I don't know if you're illusion Don't know if I see truth But you're something that I must believe in And you're there when I reach out for you I don't know if I'm being foolish Don't know if I'm being wise But it's something that I must believe in And it's there when I look in your eyes

Good evening and welcome to the presentation of the nine-month results 2026 of the Fashion House Brunello Cucinelli. Speakers will be Brunello Cucinelli, who is the Executive Chairman and Creative Director, Luca Lisandroni, CEO, Riccardo Stefanelli, CEO, Dario Pipitone, CFO, Morino Ciarapica, Co-CFO Senior, and Pietro Arnaboldi, Investor Relations and Corporate Planning Director. In order to receive help from an operator during the conference call, please press star followed by zero. Now I'd like to give the floor to Brunello Cucinelli. Good evening and it is really a pleasure to see you. We have installed new microphones and hopefully it is working properly. So thank you very much, analysts, investors, journalists. There's always all ten of us here around my table to provide you with the results of the first nine months of the year. But being mid-October already, this call basically provides you with the results of the end of the year. So this is how the call will run. I will read out the headline figures, then Luca and Riccardo will give you a worldwide overview of the markets, also with updates on Calimachus, That we received the green light from the government and that we have started this great project together with Marc Benioff. Then I will take the floor back with the expectations for 2026. Then we will also provide you with quite good visibility on 2027. And then I will tell you about the conclusions we drew after the two days we spent together in early October, when we basically gathered and tried to understand who we are, in which market we are present, and how we operate, and what the great fundamentals of our fashion house are. Now let me read. The first nine months of the year closed with very, very positive results, which allow us to raise up Again, our estimates for 2026, moving from an expected plus 10-11% to a forecast revenue growth of plus 12% at constant exchange rates. So revenues of 1.123 billion euros, up by 13.3% at constant exchange rates and 10.2% at current exchange rates. Third quarter revenues, Very important, 374.2 million, up by 13.5% at constant exchange rates. The retail channel revenues of 741 million euros report an increase of plus 19% at constant exchange rates in the first nine months of the year. Then significant growth was reported in every quarter of the year, 17% constant exchange rates in the third quarter, Double digit increases across all geographies. The wholesale channel with sales of 382.6 million euros confirms a consistently very sound result, plus 4% of constant exchange rates as of 30 September 2026, plus 7% of constant exchange rates in the third quarter. Very positive performance across all geographies, sales of constant exchange rates of The men's and women's order-taking campaigns are complete, both with very extremely positive results. We have gathered particularly favorable comments from our sales teams, from our multi-brand clients, as well as from the international press at PT Uomo, the trade fair last June, as well as at the recent Milan Fashion Week for Women last September. Our positioning in the absolute luxury segment and the pleasant atmosphere that we continue to feel around our brand allow us to look with confidence to 2037 as well. A year in which we expect healthy, balanced revenue growth of around 10%. Next week in Tokyo, Shanghai and Hong Kong, the important premieres of the documentary film Brunello, the gracious visionary will take place following the great appreciation it received in Rome first and then New York and Paris. During the Shanghai event, we will also open Casa Cucinelli there. in a captivating historic residence from the late 19th century in the city. It is really a splendid city. So next week, we will be traveling across the eastern part of the world. At the beginning of November in Solomère, we'll host the second edition of La Polée, a prestigious biennial gathering that brings together some of the most important wine and champagne producers and collectors in the world. It is a relevant event for us and also for Solomere, which will give us the opportunity to welcome guests of international standing and to share with them the atmosphere and values that animate our village. If you have two spare days, please do join us. Now, let me read out what I wrote. The first nine months of 2026 ended with a revenues growth of 13.3% of constant exchange rates and we consider this result to be very pleasing. We believe that the brand's image around the world reflects what we have always aspired to, a belief in absolute luxury. With no logo, absolute luxury, we think of a brand that stands for authenticity, style, familiarity and simplicity. where the product is the fruit of exceptional craftsmanship, quality, creativity with a contemporary sensibility and a strong sense of exclusivity. The latter being of paramount importance to us. We also feel that ours is not a mass market notoriety or renown. The family's stewardship of the brand allows us to take a longer term view with the enduring hope of maintaining a sound and well-earned reputation and ensuring that the brand continues to thrive for decades to come. In light of these considerations, and as the year draws to a close, we expect healthy revenue growth of around 12% in 2026. And now it will be up to Luca and Riccardo to give us a worldwide overview. Well, very well. Riccardo, let me start. I have to say that we have closed the first nine months of the year very well indeed, as we have these first 15 days of October. You see, the results achieved and the information and feelings that we have regarding the last quarter of the year have led us to a second revision of our estimate, always guided by the desire to share our expectation with you promptly and punctually. The growth has been distinctly regular, steady and continuous, as the figures themselves demonstrate. In Q3-2, we are actually growing by 13.5% at constant exchange rates, perfectly in line with the results of the first six months. And even when we actually Look at absolute values and no longer percentage ones, we can actually realize that the contribution to growth of each quarter at constant exchange rates has been entirely comparable. Therefore, we attach very great relevance to this growth. We attach a still greater value to two of its features that make this growth even sounder and more robust. On the one hand, we have its linearity over time, and then on the other hand we have its spread across geographies and sales channels. This increase, the raising of the estimate by about two points compared with the start of the year, rests on two reasons. On the one hand, the actual advantage achieved in the first nine months of the year and then the great confidence with which we look to the last quarter. As to the nine months, We have delivered three quarters or slightly above our expectations thanks to four protagonists, we may say. Retail, our online boutique, then geographically speaking North America and China, and then obviously the strength of our collections. The advantage gained is ascribable to the retail channel, In a balanced way between the organic component and the contribution of the new stores and new spaces. In the stores, both the number of customers and the average spend of existing ones are growing, thus reinforcing our conviction that we have a network that is still very young, which has ahead of it both ample room for healthy organic growth and also further scope for expansion. So, very good results for the physical stores and excellent results for a digital boutique. As you know, our online boutique accounts for about 6% of our sales, but you see the image of the brand of the collections becomes really fundamental there. And we see this thanks to the increasing number of customers who step into the store showing pictures they have seen online. And we have to say that Calimachus was truly, truly instrumental here. And I would like to update you on this project. First of all, as Luca was saying, the results we are delivering, we are pretty satisfied, not just for the economic results, but also for the quality of the traffic. So the traffic is steadily increasing and the visitors tend to stay there twice as long as before. And this actually proves that our customers are looking for something very specific, elegance, quality, contemporary style. And a lot of tips and a lot of advice is asked for during the whole stay on the website. And then, on the other hand, the great invention, but it is somehow another kind of business for us. We are happy to announce that on September 28th, Salesforce, you all know this company, and with whom we enjoy not just a business or professional, but also personal relation with Marc Benioff, they have two entities. have taken upon themselves the development and the growth of this invention of this project. So we have entrusted them with it and we are very pleased that a great company such as Salesforce decided to invest in this project, not just for the novelty and the innovation brought about by the platform, but also because of this balance between manual skills and visual together and technology. And besides, we are very happy to note that Microsoft, a few days ago, taking inspiration from us, decided to call it the Human Super Intelligence, which for us is a confirmation of what we have always maintained. So the government not only authorized but also sent a letter where they actually congratulated us on this deal.

Let's go back to physical for a second. All geographies have given a positive contribution to the nine months growth, including the Middle East. In the last nine months, it's been slightly positive thanks to a great start in the first two months of the year. And here we have to get accustomed to the idea that every year something may happen which is out of our control and may actually set us apart from our expectations. At the beginning we thought the Middle East would give us a good contribution. It's still a youngish area and geography for us and it holds great expectations for us, but we also have to say that the American market was even more favorable than we originally expected it to be. And actually a good part of the extra performance comes for us from the US where in the first nine months of the year we grew by as much as 20%. And in the third quarter we kept growing at 19% at constant exchange rates again. So the performance here is really, really good. And then this beautiful expression is absolute luxuries growing in America and not only in terms of width, but also in terms of depth. And so we believe that authentic luxury is becoming more and more rooted in the lifestyle of many American customers. As to department stores, they're still really important in the American market and everything continues really well for us with the ICSI employer luxury group. There's full mutual satisfaction about the results. and we're growing in each of their three banners, Nima Markos, Sachsenberg, Goodman and within each banner both men's and women's are growing and positive results have been posted for all three quarters and we had no problems on payments. They were perfectly punctual at all times. We can also confirm that for winter 2027 we will extend We extend the men's and women's locations at Werder, which we believe remains one of the most prestigious and most beautiful luxury stores in the world. Now, from the West, let's move to the East. We are just as happy with the results of Asia and China in particular, which maintains a fine growth trend of the previous quarters. and about 14% of our global sales were posted from Asia, from this region, with a quiet and gradual and constant growth in market share. The Golden Week was very successful in all territories, in all geographies, and we were discussing this with Pietro. One year ago, we said our brand seems to be experiencing a wonderful springtime in China. One year later, with a revenue base which is more significant, we seem to perceive The same freshness and to see the same excellent opportunities. Now, we should remember at all times that we are specialized in ready-to-wear and clothing at a time when the appeal and interest in this category is very high and growing. We are protected and favored by our size, starting with that of our notoriety. Brunello in his quote says that we don't seem to have mass notoriety, not China, and hopefully we'll continue like this, but we can certainly benefit from the fact that many new customers have kind of discovered their brand. There's a lot of attention towards us, a lot of magazine covers were dedicated to our brand because of positioning, image, but also because of the values we speak of. And, you know, when you dedicated a magazine cover, that means the product is top trend. There's a beautiful expression in Chinese tradition that says, flowers in the spring, fruits in autumn. We do trust, really, that the perseverance and the spirit of protection we've used in working in this region will truly bring us Very good fruits for the future. And even today, we're very happy to celebrate the opening of Casa Cucinelli in Shanghai and the extension of the Plaza 66 store, which is going to be completed before the end of the year. Finally, Europe. We believe it is solid and strong. Once again, the domestic customers are fundamental for the European market. And we're closing the best quarter as a percentage and in absolute terms for the whole year. We just completed the extension of the Geneva store. And I'd like to point this out because we actually carefully look at balancing investments carefully to obtain a well-balanced retail network across different continents. And finally, as far as the products are concerned, the first part of the year was marked by a very successful summer collection. And we can say the same about the winter collection, which is now in stores. We received very good feedback when we presented the collection to journalists and we received very good feedback from our in-house buyers and the multi-brand clients and now we see the appreciation from end customers too. We see it in our own DOSs and we see it in the wholesale channel too which have already received numerous reorders. It is good, it's important for us to underline that in these first months, growth is entirely comparable and fully balanced between men's and women's. As to the good health of sellout, as Luca said, we need to thank all of our collaborators who, this season two, enabled us to deliver the winter collection, which is currently in the stores, with very, very interesting punctuality and a degree of craftsmanship that gives tribute both to the capability of our creative teams to come up with these products and to the artisans who make them. We now stand at about 70% manual work in our constructions and this is really important. Once again, I'd like to point out that this capability is the outcome of the direct relationship we have with each and every one of them. We work with 400 artisan workshops that represent 9,000 individuals, 9,000 artisans. We had the first general meeting on September 18th. We met them, we shared work plans for next year with them, because actually our plans will be there working in order to And we shared with them the main challenges that concern us all, such as the fair pay workplaces and the transmission of artisan know-how, which is fundamentally important for us. So here, once again, we still believe that these schools of style and hard craftsmanship are extremely important to us. Both are the main sources from which we draw to secure those manual skills and capabilities which are so precious to our Casablanca fashion house. Back to products and to Luca's comments, we all know that in every collection it's really important to have a fair balance of colors, shapes, and most importantly, weights and temperatures to follow the needs and requests of customers that are really located all over the world. Now this is precisely one of those issues which we discuss and we bring up with multi-brand customers and their contribution is very valuable because they understand individual places and customers and service houses to design our collections better and to decide what we should do in our own direct store soon. Let's now talk about exchange rates. In the third quarter, the currency fat was still negative by a couple of points, but despite that, we successfully grew by 11.7% current exchange rates in this quarter and 10% over the nine months. For the fourth quarter, we still expect a slightly negative currency fat, which should mean that the exchange rate headwinds, there should be about 2.5 points by the end of the year. Let's now look at the last quarter. Many of the pieces of evidence that we have presented so far support our confidence for the last part of the year. Last year, in the last quarter, we grew by over 15% in retail and achieved the best results of the 12 months. And despite this, we're still confident that we can achieve beautiful organic growth fully in continuity with the previous months. The lesser specific weight of the new openings in the second half of 2026 has already been reflected in our guidelines and so we believe that today we are in best possible conditions to complete this year as we imagine it with beautiful growth of 12% and we can plan concretely for a healthy growth of 10% in 2027 as well. Now let me say a couple of Quick things about what Brunello said earlier, the movie. We're very happy with how the film has been received. The latest premiere in Paris generated a really moving atmosphere. So next week, Brunello will be travelling to Asia, unfortunately, Brunello said. And so the premiere cycle is going to be completed in December with another tribute to Hollywood in LA. Yeah, actually we would have loved to go to the Middle East and Russia and we are planning to go there as soon as it's feasible. Just to give you a piece of information on the Italian market, the movie has been made available by the Sky platform in Italy last weekend. It's now available on the main British platforms too. We are receiving very beautiful comments, not just from our clients, but also from people who are less familiar with the story of Brunello. And so we believe that since Tornatore is the director of the film, this is the best way to tell the world about ourselves and our business for those who are not familiar with our company. But also it's a really powerful tool for our people to really source motivation from what they see in the film of our way of doing business and it should serve as a daily inspiration for their work and their daily behaviors too. To say something else about the movie, it was translated in eight languages and subtitled in nine other languages. So that's quite a good achievement. I mean, watching a movie in your own language will actually make a difference. We also prepared the translation of the movie in Arabic and Russian and hopefully we'll be able to use it as soon as possible. Now, let me say a couple of things about the forecast for next year. After hearing from Luca and Riccardo, as we said, we think we will grow by 12% by the end of the year, over 2026. The EBIT margin is expected to be around 17%, up from 16.8% last year. Investments should be around 6% by year end. But please remember, do not think this is a low figure because when we speak of investments, for the next three years, we will always be around 6% because for the next three years, we're not going to have to make any further industrial investment because that's what we did in the last three years. However, this investment on production, are likely to give us a healthy and sound safety network for the next 10 years at least. Production is very important for us. Net financial position is expected to shift from 14% of revenues last year to about 10.5%, so from €188 million to around €160 million. So that was 2026. As to 2027, these are forecasts, but reasonably concrete ones. have given the excellent sell-out here to date and have completed sales campaigns with good feedback on them. So because of all those factors, we may imagine that for the first half of next year, multi-brand stores and directly operated stores will be equipped with products that have been very, very well received by the market. So this gives us good peace of mind. and so we can actually tell you that we are looking at the final forecast for the next year where we are thinking of revenues growing by around 10%, investment 6% and please remember this is not a low figure, net financial position improving further and we have no plans to change the dividends policy. As usual we expect to maintain our 50% proportion and that's been going on for about 10 years now Okay, let's take a few more minutes for some other important pieces of information and then we'll open the floor for questions. So we did meet at the beginning of October. We spent a couple of days together, so we had finished pretty much our world tours, we had completed collections, orders and so on, and so we got together to listen to people and to discuss and trade insights. So we met with clients, journalists, investors, analysts, bankers, and we gathered to picture together and to discuss who we are, who we are today, what we can expect for our future, and to state once again our fundamentals for us. Right now, when there are different visions on the future of action, And we discussed the greater things, the value of style identity, the value of absolute luxury, the value of made in Italy, the value of exclusivity, the value of uniqueness, the value of healthy growth, as you know, call it, the value of healthy profit, because that's the way we call it, the value of family. The value of generational turnaround and handover and the brand hopefully of the brand's long life.