Brunello Cucinelli CEO on beating the luxury slowdown: Don’t be greedy
COPENHAGEN, Denmark – On the day of its IPO in 2012, Brunello Cucinelli issued an uncommon ultimatum to investors: if they wanted short-term profits achieved by harming the environment or damaging people, they should not invest.
In stark contrast to an industry filled with flatlining sales, the Italian luxury house known as “the King of Cashmere” is now bucking the trend, reporting a 14% revenue growth in the first three months of the year.
Meanwhile, other major luxury houses like Gucci and Louis Vuitton are weathering a sweeping downturn, barely recording growth at all.
Brunello Cucinelli’s success in making luxury apparel, including knitwear lined with diamonds and $1,000 t-shirts, is tied to its ethos of choosing long-term integrity over short-term margin chasing, Co-CEO Riccardo Stefanelli told CNBC.
“You don’t have to be greedy,” he said on the sidelines of the Global Fashion Summit in Copenhagen. “If you are greedy, it means that you are taking value from the supply chain and you are depleting someone.”
Dressed in white, matching Brunello Cucinelli’s “Solomeo in White” collection, the 45-year-old CEO explained how the company is expanding without losing its soul: it consciously operates at lower margins to preserve a healthy supply chain and what it calls “gracious” growth.
Its focus on ethical operation is rooted in the experience of its founder, Brunello Cucinelli, and has today evolved into what the company calls “humanistic capitalism.”
It’s about how you deliver your profits, how you achieve targets, and how you respect the value chain by trying to give back before pocketing a higher return, Stefanelli said.
Brunello Cucinelli, chairman and chief executive officer of Brunello Cucinelli SpA, center, speaks during a news conference to announce the company’s initial public offering (IPO), inside the Borsa Italiana, Italy’s Stock Exchange in Milan, Italy, on Friday, April 27, 2012. Brunello Cucinelli SpA, an Italian maker of luxury cashmere clothing, rose 37 percent on its debut in Milan trading after investors sought to purchase 17 times the amount of stock available in an initial public offering. Photographer: Michele D’Ottavio/Bloomberg via Getty Images
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To protect its philosophy, the Cucinelli family retains 51% ownership of the business.
“It makes all the difference. We have control,” Stefanelli, now son-in-law to the founder. “We have to think on a long term instead of the short term imposed by the stock exchange.”
Luxury woes
Brunello Cucinelli has maintained a strict pricing principle, keeping the retail price at 7-8 times the industrial production cost.
This formula separates it from much of the industry’s behavior during the Covid-19 luxury boom, which ended in 2022. Many brands aggressively hiked prices, achieving as much as 30% revenue growth, but without a perceived uptick in quality, it alienated customers.
Gucci-owner Kering’s new CEO, Luca de Meo, recently said that price hikes “went too…
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