Brunello Cucinelli CEO on beating the luxury slowdown: Don’t be greedy
COPENHAGEN, Denmark – On IPO day in 2012, Brunello Cucinelli He gave investors an unusual ultimatum: they should not invest if they want to make short-term profits by harming the environment or harming people.
In stark contrast to an industry riddled with declining sales, the Italian luxury house known as the “King of Cashmere” is now bucking the trend, reporting a 14% revenue increase in the first three months of the year.
Meanwhile, other major luxury brands like Gucci and Louis Vuitton are weathering a major downturn and posting almost no growth.
Brunello Cucinelli’s success in producing luxury clothing, including diamond-encrusted knitwear and $1,000 T-shirts, is down to its ethos of choosing long-term integrity over chasing short-term profit, 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, that means you are taking value from the supply chain and depleting someone.”
Dressed in white to match Brunello Cucinelli’s “White Solomeo” collection, the 45-year-old CEO explained how the company has grown without losing its soul: He consciously operates with lower margins to maintain a healthy supply chain and what he calls “elegant” growth.
Its focus on ethical operation is based on the experience of founder Brunello Cucinelli and has evolved into what the company calls “humanistic capitalism” today.
Stefanelli said it’s about how you make your profits, how you achieve your goals, and how you respect the value chain by trying to give back before pocketing a higher return.
Brunello Cucinelli, president and chief executive officer of Brunello Cucinelli SpA headquarters, speaks at a press conference to announce the company’s initial public offering (IPO) at the Borsa Italiana in Milan, Italy, on Friday, April 27, 2012. Italian luxury cashmere clothing maker Brunello Cucinelli SpA rose 37 percent in its Milan trading debut after investors sought to buy 17 times the amount of shares in its initial public offering. Photographer: Michele D’Ottavio/Bloomberg via Getty Images
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To preserve its philosophy, the Cucinelli family retains a 51% stake in the business.
“This makes a lot of difference. We are in control,” says Stefanelli, now the founder’s son-in-law. “We have to think long term instead of the short term imposed by the stock market.”
luxury troubles
Brunello Cucinelli maintained a strict pricing policy, keeping the retail price at 7-8 times the industrial production cost.
This formula distinguishes this from much of the industry’s behavior during the Covid-19 luxury boom, which ends in 2022. Many brands have aggressively raised prices and achieved revenue increases of up to 30%, but alienated customers without a perceived increase in quality.
owner of Gucci Kering’s new CEO Luca de Meo recently said price increases “have gone too far.”
“We still hope to maintain the perception between real value and retail price,” Stefanelli said. “When you miss that, as has happened in the last two years, you end up with a problem where customers understand, or perhaps don’t understand, why the price increase is not linked to the real real increase.” [value]”
“I also appreciate success” LVMHrelated to Kering. “I respect them,” Stefanelli said. “We’re doing something else.”
The luxury market is currently sharply polarized: hyper-exclusive labels are thriving while generalist conglomerates that predominantly cater to aspirational consumers are struggling.
The narrowed focus on owning just one brand and the relatively small size of the company allows the company to target a steady, controlled annual growth rate of 10% to 12%, keeping volume growth moderate to maintain brand exclusivity.
Brunello Cucinelli has a market capitalization of around 6 billion euros ($7 billion) and recorded revenues of 1.4 billion euros in 2025; This figure is much lower than most of its peers.
Scaling privilege
By eschewing mass-market expansion and focusing tightly on what he calls “absolute luxury,” Brunello Cucinelli appears to have avoided the luxury fatigue that has plagued many of his peers.
While Stefanelli recognizes that Asia in particular offers significant room for growth, the brand refuses to change its DNA to follow trends, even if it means missing opportunities.
“What we will not change is our recognition within the country, our attitude within the country, our Italian attitude,” he said. “We listen to the market, but if the market wants something that doesn’t belong to you, we shouldn’t produce it.”
LONDON, ENGLAND – NOVEMBER 21: An overview of the atmosphere at the opening of Brunello Cucinelli’s “Solomeo in White” pop-up at Harrods on November 21, 2023 in London, England. (Photo: Dave Benett/Getty Images for Brunello Cucinelli)
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Stefanelli said some of his competitors are trying to capture a larger, more willing customer base to generate higher revenue, but that means “you can never get back to the top of the pyramid again.”
Following the company’s quarterly foray in April, Jefferies analysts said it confirmed the “superior staying power of wealthy luxury shoppers.”
Brunello Cucinelli has been posting for the last 12 months.
However, maintaining this premium image was not without market turmoil.
Morpheus Research, which was a short seller in September last year, claimed that Brunello Cucinelli had bypassed international sanctions and misled investors about his activities in Russia.
Following the allegations, the stock fell more than 17%, marking the biggest one-day decline in history. While the company vehemently denies the allegations, the stock has yet to fully recoup its losses.
Italian luxury brands have also been hit by recent investigations into worker exploitation and poor factory conditions that threaten their prestigious “Made in Italy” image.
Stefanelli insisted the solution was simple: pay workers more.
Higher wages are also vital to encouraging future generations to enter trades such as tailoring and spinning, where labor shortages are looming. Parents are unlikely to steer their children into these career paths without the promise of dignified compensation, Stefanelli said.
“If you believe the company should be there for the next 50 years, you plan like we do,” Stefanelli said. “Of course it comes at a cost, but it’s a choice.”
