Brunello Cucinelli shares rise on upgraded sales forecast

Investing.com -- Shares of luxury fashion house Brunello Cucinelli (BIT:BCU ) jumped over 6% on the back of an upgraded full-year sales growth forecast, signaling continued strength in the high-end market, on Thursday. 

The Italian brand, renowned for its ultra-luxurious cashmere offerings, adjusted its guidance to an 11-12% increase in sales for the year, up from the previous estimate of 10%.

This revision aligns more closely with sell-side expectations and reflects robust performance, particularly in the post-election U.S. market and among affluent Chinese consumers. 

Analysts at Jefferies noted that the update reinforced confidence in the company’s trajectory. Brunello Cucinelli’s upward revision comes amid “extremely positive sales” in recent months, underscoring resilience in its key markets. 

In the nine months leading up to the forecast, sales had risen 12.4%, and the latest projection implies a steadier pace of 9% growth in the final quarter. The luxury sector is seeing varied dynamics globally, with Brunello Cucinelli standing out for its strength in specific segments.

The U.S., a vital market for the brand, has shown notable improvement in demand for high-end goods following the elections, particularly among ultra-luxury consumers. 

Analysts flagged that this positive inflection is most pronounced at the top end of the market, where Brunello Cucinelli operates. 

Meanwhile, in Asia, growth momentum continues at a strong 12-14% pace, with Chinese sales growing between 10-12%. 

The company’s under penetration in China, coupled with its appeal to ultra-high-net-worth individuals, has helped it maintain an edge compared to more established luxury players in the region.

Europe, the Middle East, and Africa posted steadier growth, projected between 5-7% for the year, following an 8% rise in the first nine months. 

The overall performance across regions has reassured investors, despite slight moderations in some markets.

Jefferies analysts said that the updated guidance supports existing expectations for modest margin improvement. 

While the company is expected to deliver a 30 basis-point expansion in EBIT margins for the year, its mid-term outlook remains intact. 

Brunello Cucinelli reiterated its guidance for about 10% annual sales growth through 2025 and 2026, with incremental margin gains of around 20 basis points each year.

In a space where U.S. recovery themes are becoming more widespread, Brunello Cucinelli’s focus on exclusivity and its positioning at the top of the market have driven its success. 

The company’s relatively younger presence in China, compared to more mature luxury brands, also provides a more favorable growth backdrop.

Source: Investing.com