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1. Company Snapshot

1.a. Company Description

Brunello Cucinelli S.p.A., together with its subsidiaries, engages in the production and sale of clothing, accessories, and lifestyle products in Italy, Europe, North America, Japan, and China.The company offers women's collection, including coats and jackets, dresses, knitwear, t-shirts and tops, shirts, skirts, pants, denim, travel wear, sneakers, high-boots, loafers and flat shoes, sandals, leather goods, jewelry, scarves, other accessories, mini bags and clutches, crossbody bags and backpacks, and handbags and shoppers.It also provides men's collection, such as coats and jackets, knitwear, blazers and waistcoats, suits, tuxedos, t-shirts and polos, shirts, pants, denims, travel wear, sneakers, lace-ups, loafers, boots, leather goods, bags, scarves, and other accessories; and kids collections.


In addition, the company offers lifestyle products, which include throw and blanket, cushion, studio products, candle and fragrance, bathrobe and towel, gardening products, travel essential, leisure bag, leisure wear, kitchen and table ware, table linen, and ceramic creation products, China, and internationally.As of December 31, 2021, it managed and operated 114 directly operated stores; and 30 wholesale monobrand boutiques.The company was founded in 1978 and is headquartered in Solomeo, Italy.


Brunello Cucinelli S.p.A. is a subsidiary of Fedone S.r.l.

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1.b. Last Insights on BC

Brunello Cucinelli's recent performance has been negatively impacted by allegations of irregularities in its Russian business activities. A short-seller, Morpheus Research, accused the company of non-compliance with EU regulations, leading to a decline in shares. However, the company has firmly rejected these allegations, confirming its full compliance with regulations. Despite this, the scrutiny has raised concerns among investors. On a positive note, the company reported a 10.8% gain in nine-month revenues, surpassing €1 billion, and maintained its targets for the current year, driven by strong sales of new collections.

1.c. Company Highlights

2. Brunello Cucinelli: Strong Financial Performance and Strategic Growth Initiatives

Brunello Cucinelli delivered robust financial results for 2024, with revenues reaching €1.278 billion, reflecting a 12.2% year-over-year increase. The company’s profitability remained impressive, with EBIT growing 12.9% to €211.7 million, supported by a stable 16.6% margin. Net profit rose 19.5% to €128 million, underscoring the brand’s ability to generate strong returns despite macroeconomic uncertainties. The company also returned value to shareholders through a dividend of €0.94 per share, maintaining a 50% payout ratio, which aligns with its long-term shareholder-friendly policies.

Publication Date: Mar -15

📋 Highlights
  • Strong Financial Growth in 2024: - Revenues reached €1.278.5 billion, up 12.2% YoY, with EBIT rising 12.9% to €211.7 million and net profit increasing 19.5% to €128 million.
  • Investment in Production Expansion: - €109.5 million was invested in expanding production capabilities, aligning with a 10-year plan to double output by 2033, with key expansions in Solomeo, Penne, and Gubbio.
  • Focus on Brand Visibility and Innovation: - Plans include launching a new AI-powered website in October 2024, opening new boutiques in 2025, and collaborating with high-profile events like the Miami Formula 1 event and Wimbledon.
  • Emphasis on Product Exclusivity and Craftsmanship: - The company prioritizes craftsmanship and exclusivity, with a 10% revenue growth target for 2025-2026, supported by improved EBIT margins and a focus on men's collections and luxury fragrances.
  • Geographic and Channel Growth Strategy: - Targeting balanced growth across regions, with strong U.S. growth (80%), cautious optimism in Europe, and planned expansion in Asia, while maintaining exclusive distribution channels and a robust wholesale partnership network.

Strategic Investments and Growth Initiatives

Brunello Cucinelli emphasized its commitment to sustainable growth and brand differentiation. The company’s focus on product creativity and exclusivity, particularly in its men’s collections, has been a key driver of revenue growth. Furthermore, the success of its new fragrance line underscores its ability to extend its brand equity into adjacent categories while maintaining its luxury positioning. The company’s strong relationships with multi-brand accounts and direct boutiques have also contributed to its balanced growth strategy, with key markets such as the U.S., Asia, and Europe showing healthy growth rates of 80%, 12%, and 7%, respectively.

Valuation and Financial Outlook

Brunello Cucinelli’s financial performance and strategic initiatives are reflected in its valuation metrics. With a trailing P/E ratio of 43.88 and a P/S ratio of 4.12, the stock is trading at a premium, reflecting investors’ confidence in the brand’s long-term growth prospects. The company’s strong free cash flow yield of 2.73% and return on invested capital (ROIC) of 17.5% further underscore its efficient use of capital and ability to generate value for shareholders. While the company faces headwinds such as currency fluctuations and macroeconomic uncertainties, its disciplined approach to pricing and its focus on exclusivity are expected to mitigate these risks.

Outlook and Conclusion

Brunello Cucinelli remains well-positioned to achieve its 10% revenue growth target for 2025, driven by strong demand in key markets and the continued execution of its strategic initiatives. The company’s focus on craftsmanship, exclusivity, and sustainable growth aligns with the evolving preferences of luxury consumers, positioning it as a leader in the high-end fashion sector. As the company looks to double its production capacity by 2033, its ability to balance growth with artistic integrity will be crucial to maintaining its premium positioning in the market.

3. NewsRoom

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A Look at Brunello Cucinelli (BIT:BC) Valuation Following Steady Results and Growth Outlook

Oct -06

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Brunello Cucinelli Addresses and Rejects Short Seller’s Russia Allegations

Oct -01

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Brunello Cucinelli Sales Keep Growing as Customers Spend on New Collections

Oct -01

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Brunello Cucinelli Faces Scrutiny Amid Allegations of Russian Business Activities, Shares Slide Further as Market Awaits Clarity

Sep -26

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Brunello Cucinelli Shares Continue Slide Following Short-Seller’s Russia Claims

Sep -26

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Brunello Cucinelli Denies Allegations of Russian Market Irregularities, Shares Plunge

Sep -25

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Should You Revisit Brunello Cucinelli Stock After Its 25% Climb and Strong 2025 Outlook?

Sep -24

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Carolina Cucinelli on Preserving Brunello Cucinelli’s Unique Heritage and Legacy

Sep -16

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.69%)

6. Segments

Retail

Expected Growth: 10%

Brunello Cucinelli's 10% retail growth is driven by increasing brand awareness, expansion into new markets, and a strong online presence. The luxury brand's focus on high-quality materials, craftsmanship, and timeless designs resonates with consumers seeking premium products. Additionally, strategic partnerships and limited-edition collaborations contribute to the segment's growth.

Wholesale

Expected Growth: 12%

Brunello Cucinelli's 12% wholesale growth is driven by increasing demand for luxury clothing, expansion into new markets, and strategic partnerships. The brand's focus on high-quality materials, craftsmanship, and timeless designs resonates with affluent consumers. Additionally, the company's e-commerce platform and strong relationships with upscale department stores contribute to its wholesale segment growth.

7. Detailed Products

Ready-to-Wear

High-end clothing for men and women, including coats, jackets, trousers, dresses, and tops

Knitwear

Luxury knitwear for men and women, including sweaters, cardigans, and accessories

Leather Goods

High-quality leather handbags, wallets, and accessories for men and women

Shoes

Luxury footwear for men and women, including boots, loafers, and sneakers

Accessories

Luxury accessories for men and women, including hats, scarves, and jewelry

Home Collection

Luxury home decor and furniture, including textiles, ceramics, and decorative items

8. Brunello Cucinelli S.p.A.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The luxury goods industry has a low threat of substitutes due to the unique and high-quality products offered by Brunello Cucinelli S.p.A. The company's products are often considered works of art, making it difficult for substitutes to emerge.

Bargaining Power Of Customers

The bargaining power of customers is medium due to the niche market that Brunello Cucinelli S.p.A. operates in. While customers have some bargaining power, the company's high-end products and strong brand reputation limit their negotiating power.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low due to the company's strong relationships with its suppliers and the high-quality materials used in its products. This gives Brunello Cucinelli S.p.A. significant negotiating power.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the luxury goods industry. The company's strong brand reputation, high-quality products, and established distribution channels make it difficult for new entrants to compete.

Intensity Of Rivalry

The intensity of rivalry is high due to the competitive nature of the luxury goods industry. Brunello Cucinelli S.p.A. faces intense competition from established brands, and the company must continually innovate and differentiate its products to maintain its market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 31.86%
Debt Cost 3.95%
Equity Weight 68.14%
Equity Cost 9.43%
WACC 7.69%
Leverage 46.76%

11. Quality Control: Brunello Cucinelli S.p.A. passed 8 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Pandora

A-Score: 4.9/10

Value: 4.9

Growth: 7.4

Quality: 7.1

Yield: 4.4

Momentum: 2.5

Volatility: 3.3

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Redrow

A-Score: 4.9/10

Value: 6.7

Growth: 3.8

Quality: 7.4

Yield: 4.4

Momentum: 4.0

Volatility: 3.0

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Swatch

A-Score: 4.1/10

Value: 5.5

Growth: 1.7

Quality: 4.6

Yield: 5.0

Momentum: 2.5

Volatility: 5.3

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Burberry

A-Score: 3.8/10

Value: 4.0

Growth: 1.9

Quality: 2.2

Yield: 3.8

Momentum: 9.5

Volatility: 1.7

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Brunello Cucinelli

A-Score: 3.8/10

Value: 1.1

Growth: 7.8

Quality: 5.0

Yield: 1.2

Momentum: 4.0

Volatility: 3.7

1-Year Total Return ->

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Capri

A-Score: 1.8/10

Value: 6.3

Growth: 1.4

Quality: 2.4

Yield: 0.0

Momentum: 0.5

Volatility: 0.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

94.82$

Current Price

94.82$

Potential

-0.00%

Expected Cash-Flows