Brunello Cucinelli Expects Sales to Fall 10 Percent in 2020 as it Writes Down $34 Million in Excess Inventory

MILAN, Italy — Italy's Brunello Cucinelli expects to limit its drop in sales this year caused by the coronavirus crisis to 10 percent and said it would writedown €30 million ($34 million) of unsold garments, which would be donated to humanitarian causes.

Cucinelli, the first Italian luxury group to update the market on its second-quarter performance, said sales fell 30 percent in the first six months but were expected to recover in the second half.

"Already today, we can envisage a positive third and fourth quarters that should result in a mild drop in 2020 turnover of around 10 percent," Chairman Brunello Cucinelli said in a statement.

He said annual growth in sales in 2021 was expected to be 15 percent. This compares with 9 percent annual growth in 2019.

The fallout from lockdowns in April to June was bigger than the first three months of 2020, when group revenues fell just 2.9 percent because of Cucinelli's limited exposure to China where the crisis erupted in late 2019.

Sales in China had grown since the lockdown there eased, the company said, while there was a positive outlook in Europe and the United States, major markets for Cucinelli's trademark $1,000-plus cashmere sweaters, with orders for the 2020 autumn and winter collections confirmed.

The group said it had decided to book an extraordinary provision for inventory writedowns of about 30 million euros for items left unsold because of the coronavirus crisis. It said these would be donated to humanitarian causes.

"We have an important amount of finished products in excess from the first half, we don't want to re-present them in 2021 because we fear that would harm the contemporary image of the brand," Cucinelli told a conference call.

By Claudia Cristoferi; Editors: Silvia Aloisi and Edmund Blair.