Half Year 2025 Brunello Cucinelli SpA Earnings Call Transcript

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

Question: Andrea Randone - Intermonte SIM SpA - Analyst : I have a couple of questions, but you have already provided a lot of details, but I have these two questions. The first question is a rather conceptual one. You hinted at the fact that some important players may have increased prices excessively. Some others may have not monitored the -- their supply chain correctly. Do you think these trends are supporting you in strengthening the loyalty of our customers? Or do you even have customers who were not your customers and who joined your brand? Can you make some examples about that? And the second question is rather financial question. We've seen the development of the working capital and you have provided extensive details on the development of CapEx for 2026 and '27. By the end of the year, can we consider for the net financial position as of the end of June proxy for the end of the year? And can you briefly comment on the development of the cash flow in the following months? Unidentified Company Representative Thank you Andrea, I will answer your first question, and my colleagues will answer the second question. As far as that behavior of brands is confirmed. Well, we don't know what we can tell you. We like the fact that the people congratulate with us when they enter the stores and they meet kind staff. So this is what we have been saying for a long time. This is the only thing that I would like to point out. But I wanted to highlight of the high value of the Italian supply chain. And now for the second question, you can answer. Yes. Well, as for the net financial position expectation, let's go back to last year for a second, December 2023, the net financial position was mostly equal to -- was basically equal to zero. And in the first half, we reported a net financial position of EUR100 million. And this was the same increase that we achieved as of the end of the year. And so we started that the first half with an increase of EUR100 million, reaching EUR200 million now. And we believe this will be the net financial position as of the end of 2025. So it's a very good proxy for the -- well, the June net financial position is a good proxy for the year's end.

Question: Luca Solca - Sanford C Bernstein & Co LLC - Analyst : I have a question on the perception of exclusivity and on the importance of keeping that feeling of contemporary products. I realize this is a fundamental element for the business and for the attractiveness of the brand. And so the exposure to the wholesale channel is key in this respect. How can you reconcile that and the perception of exclusivity with the fact that on the market, in the Internet and in multi-brand stores, you may find some discounts. And you may actually see that products are available at a lower price compared to the original one. So what have you -- what are you planning to do in order to restrict this risk? Unidentified Company Representative Well, let me start with this last risk, which is nonexisting. We have 42% of multi-brand stores, but multi-brand stores are the real custodians, guardians of products. If they don't like your product, you're ruined. And they judge your collection. When they say -- one would say the collection performed well, it is because multi-brand stores judged it. You have store managers, but what can they judge or evaluate if they haven't seen products for the upcoming season. That's the great topic in order to focus on contemporary collection. And then exclusivity, the topic is always the same. We do believe in exclusive products. And now exclusivity has been replaced by replaceability. And in the Italian language, these concepts are completely different. Well, I have a Constantine and an iPhone before me, but well, Constantine may have 100 years of history. iPhone well is shared by billions of people. One is an exclusive product and the other one is a desirable product. And then -- well, look, we've never organized or carried out smart working home office policies. This has restricted creativity and stifle creativity a lot. Creativity is based on teamwork and people meeting one another. And this was not the case during the smart working period. Young people could not learn anything. They may have understood that they will work just a couple of days a week. There is no separation between physical work and home. And this has penalized creativity. Creativity has not only to do with style. It pertains to production. It pertains to anybody coming to work. Our goal is, therefore, to work 8 hours per day or 7.5 hours, but to come to the workplace and work. We believe in exclusivity. We believe in multi-brand stores. We have 400 multi-brand stores in the world, which judge the collection, Luca. And if you are courageous enough to listen to them, you change your collection. If you're not courageous enough to listen to them, you will go bankrupt in a couple of years. And then, of course, you can give some special rebates or discounts of the market, but this has no impact on the exclusivity of the brand. So thank you. Very interesting question.

Question: Oriana Cardani, CFA - Intesa Sanpaolo IMI Securities Corp - Analyst : My first question has to do with the gross margin. I wonder if perhaps in the second half of the year, there could be an increase vis-a-vis the first half given the completion of the factories in -- by November. And the second question has to do on the new communication campaign, advertising campaign. It is sort of -- it is basically it emphasizes reading and books. I was wondering whether this anticipates an inauguration of the library, universal library in Solomeo. And perhaps a comment on the message. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 28, 2025 / 4:00PM, BCU.MI - Half Year 2025 Brunello Cucinelli SpA Earnings Call

Question: James Grzinic - Jefferies International Ltd - Analyst : I have a very basic question. Do we have to take your comments on July and August (inaudible) literally, so two months in line with the first half, around 11% and whether within that, there are some changes depending on the region or all the markets have a similar growth? Unidentified Company Representative Well, James, we can confirm everything. We are growing well across the Board, like Luca said, we are very glad. And since the fall/winter collection has been in the stores, on the shelves since early July, this really makes us pretty confident for the future. And then also the reaction to tariffs. At the end of the day, these tariffs in the US, they account for about 5%. But if you are to buy a blazer for $3,000 and instead of $3,000, $3,250, there's not much difference there. It's just the whole vibes that was created. But one thing is important. We are here to talk about natural and we're very happy of how things are doing. I've heard good results on watches to last time. So we are happy. We are happy.

Question: Louise Singlehurst - Goldman Sachs International - Analyst : You've given us lots of detail. So I have two quick follow-ups, if I may. Just on the manufacturing and the expansion, can you just talk to us about the product? I know you mentioned Penne and the blazers, but is it much more about the made-to-measure ramp-up that we should expect to see over the next following seasons? And then my second question was just to clarify the pricing point for the US about how much you've taken? I realize you don't take any pricing

Question: Chris Huang - UBS AG - Analyst : I have two. The first one on the marketing communications expense. I think in H1, you did 6.5% as a percentage of sales. Can you maybe just confirm the full year guidance? Is it still around 7% of sales for the full year? And secondly, on China, I know you have been doing very well, I think double-digit growth, as you commented at the last conference call in China. But in terms of the wider kind of retail environment, are you seeing any, let's say, return of traffic to the Chinese malls? Or what are the general trends you are seeing from the ground? Unidentified Company Representative Well, as far as China is concerned, Luca, you take the floor, and I may answer on the expenses. But we said it is around seven something, it is like last year for the second part of the year.