Release Date: August 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenues increased by 14% at current exchange rates and 14.7% at constant exchange rates compared to the first half of 2023.
- EBIT rose by 19% to EUR104 million, with a margin improvement from 16.1% to 16.9%.
- Net profit increased by 31% to EUR66 million, with a margin of 10.6%.
- Investments grew to nearly EUR50 million, supporting future growth and production capacity.
- Strong performance in key markets, including the United States, China, and Europe, with healthy growth in retail and digital sales.
Negative Points
- Core net financial debt increased to EUR68 million from EUR38 million last year.
- Operating costs rose by 21.4%, driven by in-house production expansion and personnel costs.
- Personnel costs increased by 21.3%, reflecting higher operating expenses.
- Rent costs grew by 14.1%, influenced by new openings and renovations.
- Inventory levels increased to 28.1% of rolling turnover, indicating higher stock levels.
Q & A Highlights
Q: Can you provide more details on the outlook for different geographies, particularly Asia?
A: Japan is experiencing a very favorable year with significant traffic from other Asian countries. Korea, through our partnership with Shinsegae, is also performing well. In Mainland China, despite slightly sluggish overall mall traffic, our stores are performing well due to high conversion rates. (Answered by Luca Lisandroni, CEO)
Q: What can you say about the gross margin for the second half of the year and the impact of insourcing production?
A: The insourcing of production, particularly for men's tailored blazers, has shown positive effects in the first half and will continue to do so in the second half. This structural change ensures high-quality production and supports future growth. (Answered by Dario Pipitone, CFO)
Q: How are rent increases affecting your financials, and what is the expectation for net debt by year-end?
A: Rent increases are manageable and within normal expectations. We have renewed important contracts, ensuring stability for the next two years. Net debt at the end of the year is expected to remain low, reflecting our strong financial position. (Answered by Dario Pipitone, CFO)
Q: Will the busy schedule of communication events in the second half of the year lead to higher expenses?
A: No, all events are budgeted for, and there will be no significant changes in communication expenses. These events are crucial for maintaining our brand image and are well-planned within our budget. (Answered by Brunello Cucinelli, Chairman and CEO)
Q: What is the expected price effect included in your 2025 guidance of 10% growth?
A: We anticipate a price effect of 3.5% to 4%, mainly due to increased personnel costs. The remaining growth will come from volume increases, with raw material costs remaining stable. (Answered by Brunello Cucinelli, Chairman and CEO)
Q: Can you provide more details on the kids' collection and its expected growth?
A: The kids' collection, which mirrors our main collection, is performing well with 33-34 clients. It is part of our balanced growth strategy and is showcased selectively due to space constraints. (Answered by Brunello Cucinelli, Chairman and CEO)
Q: What are your expectations for the second half of the year, and which region gives you the most concern?
A: We expect a very good second half, similar to last year's performance. There are no specific regions of concern, and we anticipate well-balanced growth across all regions and channels. (Answered by Luca Lisandroni, CEO)
Q: Can you provide more quantitative details on July and August performance?
A: All regions confirmed their strong performance in July and August. We expect a beautiful year with consistent results, and we are not focused on short-term fluctuations but on long-term growth. (Answered by Brunello Cucinelli, Chairman and CEO)
Q: How do you plan to reinvest in your business given the strong EBIT margin?
A: Our focus is on maintaining creativity and ensuring our products and stores provide a welcoming experience. Investments are planned and executed without financial constraints, ensuring high-quality and exclusive products. (Answered by Brunello Cucinelli, Chairman and CEO)
Q: Is there any change in demand from Mainland China versus global Chinese demand?
A: We see strong demand and high traffic in all regions, including Mainland China. Our focus is on providing a balanced and welcoming shopping experience, which continues to attract affluent customers globally. (Answered by Brunello Cucinelli, Chairman and CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
