Brunello Cucinelli SpA End of the Year Update Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Louise Singlehurst - Goldman Sachs - Analyst : It's wonderful to see such good momentum going into the year end. I wondered if you could share with us any surprises during the Q4 period to date and the extra optimism and I wonder if it relates specifically more towards the US. There have been some comments that the US has picked up a little bit post the election. But it'd be interesting to hear what you're seeing in the US. And then secondly, for China, is that an improvement you talk about for the Q4 relating to like for like or is there also space expansion too?

Question: Chris Huang - UBS - Analyst : It's Chris from UBS. I have two, please. Firstly, on the kind of top line you expect for 2025. Of course, you got it to 10% growth. Can you just remind us within this 10% growth how much do you expect to come from price mix or if we put it in other words, the average selling price of the new collections? That's my first question. And then secondly, I just wanted to understand a little bit more on the wholesale dynamics you're seeing currently in the market. Of course, what we see across the sector is that the wholesale channel seems to be a little bit more under pressure. Are you seeing any potential weakness from that channel? Because, some investors seem to be kind of concerned about promotional levels, [discounting] issues. So if you can share any of your thoughts on kind of your control over the distribution, that would be super helpful. Unidentified Company Representative (interpreted) I can definitely answer your question about the wholesale. We use the wholesale channel. You see, we say -- when we want, we say we should be careful. When they don't buy, we say that it's us that we don't want to sell to them. But this is not the true, they don't buy because they don't like the collection. If the wholesale likes the collection they buy, they're healthy. We have 320 accounts and the image we have at their stores is fantastic. It's really appealing. There is a lot of cooperation between us, they invest, but they also tell us when we have to change or tweak something about the collection. So as you know, with -- about the wholesale channel, we think the opposite of what rumors has it. Then as far as prices are concerned, we think that we might grow by 10%. It could be 6%, 7%; 3% or 4% price mix, and the rest, the number -- the volumes. And as far as the novelties are concerned, well, you need to have a beautiful collection. When we went public 12 years ago, you analysts quite rightly said: but how can you possibly not have any evergreen item? Because evergreen drives you to the cemetery, dear Chris. I know it's really hard to express this, but that's my opinion. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 11, 2024 / 5:00PM, BCU.MI - Brunello Cucinelli SpA End of the Year Update Call You say no for this, carry over for this evergreen items. We have all the material inhouse. No, that's not true. You need to have a new shape, a new color, a new shoulder on your blazer. The other day, we came out with the collection, and they say it is the best in our history. Well, I try not to believe this too much, but I think it is pretty fine. But you must have the courage to work on your collections and if something that is not in line with your identity, it should not come out. Because, for example, what I said in the latest call that we organized with the sales assistance, I said: do not dare sell items to your customers that do not suit these customers. Because, Chris, in the evening they go back home and they try this item on with their spouses, with their partners, and they feel ridiculous because they were sold an item like that. That's not something that should be done because, you see, ready to wear is very tricky. If I sell you a blazer that does not suit you, is not flattering, well, it is not good. Of course, we have very -- in a month and a half of travel, we have gathered, garnered a lot of positivity for true luxury, absolute luxury for the brand recognition and also for Italy as a nation. But we have to be brave enough to stay exclusive. And if you don't like a color, you should not use it just because it's trendy, you should not use it. We have 60 people working -- creative people working on the collection and as soon as the collection was released, we started expressing our opinion but only multibrand channels can tell you whether your brand is aging or not. There's no one else that is going to make that comment, Chris. Your store manager in Los Angeles, New York, and Milan, who have not been around viewing collections, they will never tell you that your brand is outdated or is going down the drain. They will tell you are the best. Whereas, let me mark my words, multibrands, they see 300 different collections. They pay attention and they can really tell you whether your collection is working or not. And they also do point out if there are too many carryovers. Of course, they do point this out. Evergreen is just good for the financial people, not for -- it would be too easy to sell. Always sell the same piece, a blue blazer. You see, for example, I am wearing this blazer dating back to 2015 because it's 75 centimeters long, no longer 72 like last year. So, Chris, I'm sorry for being so energetic when speaking, but you know I'm a great fan and supporter of the multibrand channel. And many brands, they say: perhaps we should cut down, cut back on the wholesale because we wanted to sell more in the retail. No, that's not the truth. The truth is that they did not want to buy your collection.

Question: Chris Huang - UBS - Analyst : Thank you so much. Congratulations.