Good evening, and welcome to the presentation of preliminary revenues for the nine months in 2025 of the fashion house, Brunello Cucinelli. Speakers will be Brunello Cucinelli, Executive Chairman and Creative Director, Luca Lisandroni, CEO, Riccardo Stefanelli, CEO, Dario Pipitone, CFO, Moreno Ciarapica, Co-CFO Senior, and Pietro Arnaboldi, Investor Relations and Corporate Planning Director. In order to receive help from an operator during the conference call, please press star followed by zero. Now, I would like to give the floor to Brunello Cucinelli.
Good evening. It is a pleasure to have you all here, analysts, investors, and journalists.
This is the call to report on the preliminary results of the first nine months of the year, which we decided to bring forward by a few days in order to have the opportunity to discuss with you the company in detail and also to discuss together on the product that we have defined as short-selling activity, so we're all here, all 10 of us. How we would like the call to proceed, so I will read the main figures that we consider excellent. We will give you our final 2025 revenue and profit forecasts, which we are very satisfied with, and there is absolutely no change from the last August call, and you already know these figures because they are unchanged, then we will dwell on 2026 forecasts after the closing of the Spring/Summer 2026 Men's and Women's Sales Campaign and the performance of sales this autumn.
We have the feeling that everything is going very well, both in terms of numbers and product image. Then Luca will give you a brief overview of the markets. This too has not changed since late August. Then we will provide you with a summary of the fundamentals of our fashion house, a very essential and concise summary, as well as our business model. Then we will move on to the explanation and then discussion of the short-selling activity, which consists of inventory, number one, multi-brand, number two, exclusivity, number three, and Russia. The discussion is open. Do not worry about time. If more is needed, we are fully available. Now, let me read out the press release. Okay, let me read it out in full. Excellent revenue, totaling EUR 1,019.6 million, it was up +10.8%.
The current exchange rate is 11.3% at constant exchange rates compared to the first nine months of 2024. Very, very positive growth in the Americas, up 9.2%, 10.8% at constant exchange rates. Extremely solid in Europe, with an increase of 8.9%, 8.6% at constant exchange rates, and very strong results in Asia, up 15.5%, and the same at constant exchange rates. Excellent performance for the retail channel, up by 11.4%, and very, very good for the wholesale channel, up by 9.7%. In Q3, sales reached EUR 333 million , up 12% at current exchange rates and 12.4% at constant exchange rates, with an excellent increase of 13.8% in retail and still very, very good in wholesale at + 9%.
The results achieved in the first nine months, together with the excellent start of Autumn/Winter 2025 Collection sales in stores, give us today an even clearer visibility and stronger confidence in achieving the targets set for 2025, with expected revenue growth around 10%, always accompanied by healthy and balanced profits, so the Spring-Summer 2026 sales campaign ended, and it ended on a very positive note for both men's and women's collections, very, very positive comments and feedback received from international press during last week's Milan Fashion Week. With renewed confidence, we therefore confirm expected revenue growth of around 10% also for 2026. We confirm the presence of a just and balanced inventory.
This is the way we defined it: just and balanced for our company identity, perfectly consistent with the fundamentals of our collection offering and aligned with historical data of our ready-to-wear fashion house since its listing in 2012, and to operate in the Russian market according to EU rules. The weight of this market amounts to 1.4% as of 30 September 2025, compared to 2.7% on September 30, 2024, 2.4% as of 31 December 2024. So this is how I commented. We closed the first nine months of the year with excellent revenue results, up 10.8% at current exchange rates and 11.3% at constant exchange rates. And given the quality of sales, we believe this also applies to profits. We feel that the brand image clearly reflects how we aim to live and work. The Women's Fashion Week in Milan has ended.
Our collection received extremely positive reviews for style, craftsmanship, quality, and exclusivity, and we are clearly very satisfied with this. In my life, I grew up with three great masters: the refined Jil Sander, the German designer, the genius like Ralph Lauren, and the visionary Giorgio Armani, and I nourished myself with their refinement, their genius, and immense poetic vision, so last week was a week honoring the figure and work of the great Giorgio Armani. For all who love beauty, simplicity, understatement, and work, he is a star. This star of the great Master Giorgio has extinguished on earth after shining for long among the most brilliant artists of our times, and from now on, it will shine gloriously among immortal mortal spirits as the absolute symbol of Italian fashion. To him, the honor of the greats. Thank you, Master Giorgio.
Of course, if the events this week we have defined as short-selling activity had not occurred, well, the activity regarding our fashion house, it would have been preferable and a little less demanding for me, the two CEOs, and for Pietro. But what happened is part of being listed on the stock exchange and its rules. On this matter, I received countless messages of appreciation. For the rest, everything remained particularly special at the company. Perhaps we have had the most beautiful fashion week in our history in terms of number of journalists, celebrity talents, and client presence from boutiques around the world, to whom we dedicated an exclusive evening like we usually do. So we therefore expect a year-end with healthy revenue growth of around 10% and consequently proper profits.
Given the results of the Spring/Summer 2026 sales campaign and the way it's performed, which we consider excellent, and given the winter collection sell-out, which is going very, very well, we envisage 2026 revenue growth of around 10%. Now, I keep clearing my throat because of this sudden increasing of temperatures. How we see year-end, you already know everything from the 28th of August call, no significant material changes. Revenue growth around 10%, EBIT margin slightly improved compared to 2024, very significant investments in artisanal production, and the doubling of the Solomeo headquarters almost completed and already operational, planned in the 2024, 2025, 2026 three-year period, but brought forward by about six months. We will end everything this year. This year, we have invested around 10.5% of revenue, but this gives us security, hopefully, for the next 10 years.
Please note, and I will say it once again, our investment plans for 2026 and 2027 should be normal, considered normal of around 7%, because this is our standard. Clearly, when expanding factories, well, these are always long-term projects. In this case, it amounts to 10 years. Now, 2026 forecasts. So excellent order collection for the Spring/Summer men's and women's lines. I would also say excellent in terms of taste, style, visual merchandising, and lifestyle. And you know how important this is because 75% is ready-to-wear and 25% is lifestyle. You know how important this topic is because the feedback of multi-brand stores on the collections guides our own orders for our retail boutiques in that specific market. And it also highlights the collections value.
When they turn up at your doorstep, they look at the collection, they say, "Is it beautiful, modern, or slightly repetitive or outdated?" This means that if you go back home and you integrate new styles to place in your stores for the upcoming season accordingly, then it is always a good thing. Very, very positive sellouts in our boutiques and multi-brand stores, even in the last week after the report, and we will discuss in detail later. As you know, we have around 450,000 - 500,000 end customers. Now, inventory, its incidence. Sorry, let me sip some water. So inventory, around 28% to 29% of yearly sales. This has always been a healthy level because we make clothing, and we find it fresh and contemporary. Otherwise, it would mean that stores have outdated goods and sales would not perform as they are.
Because we call it inventory, but actually it amounts to the goods that are displayed in the stores. That's in line with the June 30th values, so we feel sound and contemporary in style and lifestyle. So dividends, typically around 50% of profits. Sell-out for this Fall/Winter, we're very, very positive. So it's now the end of September, so we understand that and how it works. So please remember this is an important thing. Should I tell you about last week's fashion week in Milano, both as we looked at the collections and as we talked to customers who came for orders at our showroom, the air was slightly positive. It was certainly on the plus side. So that means that taste for the product and our boutiques are very contemporary.
We have noticed that customers stay in boutiques around 30 minutes as against the 15 minutes in the past, which shows that the way we welcome people, hospitality, boys, cappuccino, and kindness of sales staff are very important. So spending 30 minutes at the store is really, really interesting for us. Now, there are three major events planned for this year, and the highlights are the Fashion Oscar, which will be awarded to me on December 1st in London by the British Fashion Council, together with the world premiere of the documentary film about my life on December 4th in Cinecittà, directed by Maestro Giuseppe Tornatore and with the music by my friend Nicola Piovani, both Oscar Prize winners. I think this will actually be a major image-building event.
Giuseppe Tornatore won an Oscar for Nuovo Cinema Paradiso, whereas Nicola Piovani won the Oscar for the music of Life Is Beautiful with Benigni. All these events will give us great visibility, and it will boost our healthy revenue growth around 10% with solid profits. Now, let me talk about the company setup. Just one minute to explain the company organization, because sometimes I hear people asking, "What after Brunello? What happens after Brunello?" With my family, we hold 50.1% of the shares. It is subdivided as follows. Myself, I am 72 years old. I am the Executive Chairman and Creative Director. 80% of my time is dedicated to product and management and 20% sees me traveling around the world for events and clients and so on.
Riccardo, who's the husband of my daughter, is the CEO together with Luca, and he's the father of two grandsons and granddaughters. Luca, the co-CEO with Riccardo, is the only non-family member, but we consider him like family. Camilla and Carolina are both vice presidents and responsible for product and image. Carolina was recently awarded with a very important prize in New York, and so we are very proud of this. Alessio, her husband and the father of a grandson, is another important component of the men's team. Federica, my wife, is 71 years old. We've been together for 55 years now. So we're responsible together with Camilla and Carolina for all the events that happen in the village. For us, our Borgo, our little town, Solomeo is very, very important. Finally, the trust. Camilla and Carolina are the beneficiaries of the Irreversible English-i nspired trust with three company advisors.
I established this trust when I was 59 years old. I started thinking about my heritage when I was that young. This trust allows me to operate freely while alive, but the day after my death, Camilla, Carolina, and the three advisors or people working with us will make their own decisions. This is going to continue for 20 years after I die. Don't be alarmed. As soon as I die, the morning after my passing, everything will be organized and the company will keep on working in a fully organized way. Let's now see some key figures of our fashion house. Revenue: 50% men, 50% women, 40% multi-brand, 60% mono- brand. 3,300 employees, half in Solomeo, half in stores worldwide. 400 artisan companies representing our production soul. We are a ready-to-wear company. 85% is ready-to-wear and 15% accessories.
This was the same when we went public in 2012. So this is what we are today, Made in Italy in the absolute luxury segment, where we see quality, craftsmanship, creativity, manual skills, and extremely important exclusivity. And exclusivity is a fundamental theme for us, and we'll discuss it further. Our business model and the big fundamentals we believe in are always unchanged. Our business model has not changed over time. We'll keep the company alive in Solomeo for the next 200 years. We want healthy annual revenue growth, healthy profits. We want better workplaces, better salaries, where human beings feel like they're thinking souls. In particular, we do support manual labor. So who's going to be a factory worker in the future? What parents will encourage their children to become factory workers?
I think in the future, the challenge will not really be whom we sell to, but who will produce such special items Made in Italy. Now, Riccardo, for the next two minutes, can you please update us about the connection with the 400 providers and suppliers that are our soul?
Thank you, Brunello. Good evening, everyone. We consider those 400 little companies that Brunello mentioned as the real jewels of Made in Italy. We wanted you to understand this because we have a direct personal relationship with them. We've never relied on platforms. We always built a day-in-day-out connection and dialogue with these companies based on product quality, but also on the quality of our work and human relationships. Frankly, it's really nice to see that each and every one of them really subscribes to those same principles.
Over the last few days, we've been reminding ourselves about this all the time. The Constitution of Italy at Article 36 says explicitly that all workers are entitled to receive a salary proportional to the quantity and quality of their work, which in any case should be sufficient to grant them a free and dignified existence for themselves and their families. Now, this is a founding principle of our country, and it's even more important for a supply chain like the one we have in Italy that's been built over time. So this is true for us as a company and for us as a brand. We want to protect these companies and their profit-making skills and abilities and the possibility to plan their future, which is so important for little companies. Actually, next Friday, we're going to meet with all of them here in Solomeo.
We talked about the excellent Spring/Summer campaign, which means it's their work from October to May. So it's going to be very important for them to plan carefully. So we do believe that the Italian supply chain is top quality today and for the future. And maybe 70% of French brands do actually manufacture in Italy themselves. So I leave you with the recommendation that's very important for them and us. Let's support this supply chain. Let's make sure that our artisans can work in beautiful places, that they make the correct profits, they receive a suitable salary, and especially for younger people, they may consider Italian manufacturing not just as hope, but as a real-life opportunity. Well, finally, e-commerce is so important for us. Towards the midst of November, by November, we will publish our first e-commerce AI-powered website.
I think it's going to be special because it will be able to welcome all visitors in a very personalized way and show people the art of the collection, which is more relevant for them. It's a bit like a kind of a made-to-measure experience.
Okay, thank you. Let's now move on to a discussion on what we called a short-selling activity. We feel that the thesis suggested shows a major critical issue with our inventory, which has been called bloated, leading to discounted multi-brand sales and consequently loss of exclusivity, and hence the necessity of doing this also in Russia, where in the first nine months, revenue is currently 1.4%. So how do we define this? Bloated inventory, multi-brand, not respecting rules with discounts, loss of exclusivity, and need to sell to Russia to reduce inventory and generate revenue. So let's look at topic one, the inventory.
In our 47-year history of the company, inventory has always been 28% to 30% of revenues. Since our 2012 IPO, this has always been the case. Today, it is between 28% and 29%, so we've never believed in evergreen products because we believe they don't lend contemporaneity to the brand, except for some iconic items, mainly accessories, but not ready-to-wear, so this is what we've always thought, and we sell 85% ready-to-wear, so there's no code which is fashion this year and not evergreen next year, so bloated inventory means carrying goods that are not truly contemporary in the stores, which would mean that both products and stores would be less charming, less fascinating, and so hard to sell. Today, we feel balanced, and sales in stores are very, very good, and we are happy with the image.
It appears to be very contemporary, both in store windows and inside stores. At the time in 2012, 27% was retail and 73% multi-brand. Today, we sell about 60% through retail and 40% through multi-brands, but the inventory ratio remains the same. The annual production is just under 2 million units, all Made in Italy. Very limited and expensive. Our estimated customers are anywhere between 450,000 and 500,000 people, which means they roughly buy four pieces per person per year. Of these 2 million pieces in production, 40% goes to multi-brand stores that have no return rights, i.e., about 800,000 pieces. The remaining 60%, which is 1.2 million pieces, go to our direct stores. So you can easily understand that our unsold inventory is in limited numbers.
Also, we have a beautiful project, which is Brunello Cucinelli for Humanity, which was first created in 2020 during pandemics to support the least lucky part of mankind. Besides that, we have sales to our employees and friends and family sales. The amount of inventory pieces is actually well-balanced for our business. Of course, a problem may arise when sales stagnate, which would be a very different situation. The inventory quality reflects the management quality and the contemporaneity of the brand. Of course, our highly artisanal production is concentrated in our micro companies, 70% of them in Umbria, the rest in the rest of Italy. This gives us flexibility, security, and speed. This production model with our 8,400 artisans provides us with a very good level of security. Now, another important topic is multi-brand. We were born with multi-brand stores. That's been our story forever.
Today, we have around 400 multi-brand stores worldwide, beautiful, very beautiful, very prestigious interiors. They've built our image from the beginning. And if we are what we are today, it is largely thanks to them. We believe over the decades, their behavior has been extremely reliable and inspiring. When we encounter issues in their behavior, we point it out and, if necessary, stop collaboration. But this has been very, very rare throughout our history, maybe due to their economic difficulties. Let me just make a little example considering Hermès and Chanel. I mentioned these two brands because I think they are two great brands that have always inspired me, undoubtedly amongst the most beloved brands in the world. I was carefully following when I was younger, even though it was really hard to find them, the interviews of Monsieur Jean-Louis Dumas.
And they were fascinating when he said, "I want to feel responsible for everything that leaves our maison." It was beautiful. Mr. Karl Lagerfeld inspired me to do what I do today, a creative director, which is something that perhaps you can do even at an advanced age where you lose creativity, but not your taste, and still be the beacon, the guiding light for your brand and co-workers. These wonderful brands have grown for more than a century, being present in the world's most prestigious multi-brand stores. So we would never be able to think that these beautiful multi-brands would not respect the brands they collaborate with. And this we can say based on our direct experience. [Foreign language] And so important multi-brand stores and year foundation: Saks 1867, Goodman 1899, Neiman Marcus 1907, Hirshleifers 1910, Mitchells 1958.
In Germany, Unger 1878, Braun 1933, Daimaru in Japan 1917, Isetan 1886, Takashimaya 1831, Hankyu 1929. In Hong Kong, Lane Crawford 1850. In Italy, Nugnes 1920, Tiziana Fausti 1946. Why have I listed all these? Because they're wonderful multi-brands. The history of multi-brand stores is ancient, as ancient as the world, and until about 20 years ago, almost everything happened and was sold through the multi-brand channel. This is what we have experienced with our company. Even today, important exclusive watch brands are sold through multi-brand stores. I always cite my favorite Vacheron Constantin, well, at the end of the season, of course, they might discount some items, for example, mismatched sizes, seasonal pieces, but they are very, very careful because their image is at stake. Over the decades traveling the world, I have never seen anything harmful to the brands.
Perhaps today, with technology, something more could happen, but it is really not relevant. Multi-brand stores are the true guardians of the brands. They provide you an honest feedback of your collection and the contemporaneity of your brand, and this is crucial to understand how your brand is really, whether it is healthy or not, and as we heard in Milan, if the feedback is not very positive, then you go back home and you make some tweaks and changes. They have viewed 300 different collections, so therefore, their judgment is as valuable as the store directors. We have not seen other brands' collections. They're true critics, but if you have the courage to listen, their criticism is always very constructive. When our team travels worldwide for research, we almost always visit multi-brand stores seeking inspiration and exclusivity, so we restate once again our belief in multi-brand.
Another very important topic, one minute on exclusivity. This is a major topic. I once read, "Which brands will be truly exclusive in five years' time?" We have discussed this extensively with our team as we do it on an actual daily basis. It's something we work on. Exclusivity is synonymous with limited quantity, hard to find, very well-made items with a very high, highly recognized image, possibly heirlooms and expensive. In Italian, exclusivity is being replaced with desirability. But these are two very strikingly different concepts. Exclusivity means it is hard to preserve over time as the company grows. Desirability, it's something that is easy to find but highly desired. For example, my friend Eddy Cue today, he gifted me with a new iPhone. I showed it to my granddaughter, and she was really thrilled.
I said, "Yes, I agree, but this is not exclusive." So for our company, we have always opted for exclusivity combined with healthy annual growth, proper profits, ethical production, better workplaces, and adequate salaries. Balanced numbers of new stores, openings each year appropriate to our brand. Then fourth topic, very important, Russia, necessity of sales at all costs in Russia. Luca will explain this in detail.
Thank you, Brunello. In just a few minutes, with just a handful of numbers, we would like to give you a very clear scope of our activity in Russia. Let's start from the beginning, the start of 2022. When the conflict broke out, we decided to tackle the situation the same way we did with the pandemic, meaning protecting our people and our partners.
In Ukraine, we never had; we always had a wholesale activity, never retail, always with multi-brand stores and a mono-brand store in franchising. Our focus and attention has always been focused on offering the utmost support to these partners. Since the beginning, we have always appreciated their courage and determination to continue their operations also in the darkest days. In Russia, we always had a twofold activity, retail on the one hand and wholesale on the other. Let's start from the retail. Precisely, well, just before the war, we had just renewed our network with three new flagship stores in terms of size, and they were to represent the image of our brand on the Russian market. In March 2022, we decided to close these points of sale, and they have remained so until now.
This network in Russia also includes two spaces in multi-brand stores, and they stayed open. What kind of product have these two small stores sold, smaller than the three flagship stores that are closed? The product that we had shipped before the introduction of the start of the conflict and the product worth less than the threshold set by the sanctions. We would like to recall that sanctions never introduced an obligation to close down the store or to stop shipment, but they just identified a value of EUR 300 as a statistical value, meaning the value beyond which articles, items could no longer be shipped to the market in question. And statistical value means a value of transfer.
For the sake of clarity, you should remember that to move from the transfer value to the retail value of the very same item, we have to multiply three times, sometimes even higher. The revenues may be generated in these two spaces together with the one in our showrooms in these one-to-one appointments between our salespeople and our loyal customers. This generated the results of our Russian subsidiary. From year after year, we have always shown these figures in the accounts of our Russian partner, the subsidiary. This for retail. Now, wholesale. The wholesale activity is limited to the shipment to multi-brand, Russian multi-brand stores of items that are lower in terms of value of this EUR 300. We have never even envisaged or imagined to make special products just to be included within the range, the allowed range.
We have always checked that everything was proper and correct. The retail revenues, if we compare this with the shipment, multiply this, sorry, by the shipment in Italy, we arrived to EUR 14.8 million generated in the Russian market until September 30th, matching the 1.4% of our revenues. Just to give you any other figures, in the first six months of 2024, it was 1.7%. If we take a look at the whole 2024, it was 2.4%. We believe that these numbers already properly describe this revenues growth that was consistent between 2022 and today. We use this decrease. To give you an image of that, our Russian business is like a candle that it is melting hand in hand with the use of the inventory we had in Russia and the reduction in the number of employees.
We had over 70 employees before the war and today, 44, due to the voluntary departure of many other people who decided to move elsewhere. Once the revenues have been cleared, let's take a look at shipment and so the volume of trades. We basically used weight, although this is not a measure that we, a parameter that we use, but we can say that since 2021 and 2024, our shipment to Russia dropped by 52%. So in a very consistent way with the revenues performance that we just described. Now, just one last remark. When we take a look at the growth that our company enjoyed in the past few years, undoubtedly at world global level, retail was at the forefront. The multi-brand channel grew consistently, definitely, but in a lesser proportional way than the retail.
We believe that this number can also reassure you of the fact that we did not force at all the multi-brand market. I would now like to stop here.
To wrap up, first thing first, well, we can say that we could have done without the short-selling activity after such a great week in Milan. But today, I should have started my English lesson a week ago. Thank God this is postponed. Now, what do we want to say? The company is working normally. Tomorrow, we will have an employee general meeting to explain everything to our employees, although they're already very well informed. We can say that we have four very important events expecting us in Korea, in Japan, in London, an event at Harrods, and then the award, this prize that I will be honored with.
And then on December the 4th, we have the pre-screening of the movie. So we are pretty confident, especially because the collection has received great feedback. So we now live in the certainty that in the coming months, there will be beautiful products displayed on the shelves. And now we open full discussion. Thank you.
Chorus Call operator speaking. We will now start the Q&A session. Whoever wants to ask a question, please press star followed by one on your phone. In order to exit the booking list, you can press star followed by two. Please speak into your microphone. Whoever wants to ask a question, please press star followed by one now. There will be a few seconds of silence in order for questions to be booked. The first question from Andrea Randone in Intermonte. The floor is yours.
Yes, good evening. Good evening, Brunello. I have two questions.
One on the business and the other one on Russia business. So very good numbers there. It was perhaps a further comment on revenues in Asia. They were particularly buoyant. Perhaps you can give us some colors on this. And specifically Japan. And if something has to be reported, pointed out on retail or wholesale, or if everything is or not. Second question. Very interesting details you provided on Russia. And as an outsider, I wonder, what are these customs checks? Did something specific happen in the past few days, or are you just talking about the regular frequent checks?
Yes, let's start from here. Andrea, Luca speaking. So nothing special over the past few days. So we have had over 100 customs checks since 2022, always. What kind of checks are these? Well, the documentation first, the documents, the accompanying documents.
Secondly, sometimes to what extent the price matches the price of shipments to other countries. And there was nothing to report on these, never. As to your comment on results, we had nine months that were particularly positive, and there are linear results. And for this reason, all the comments that we shared in August still hold true. So today, we basically defined Americas' results very good. And there was no impact on the willing to shop or on the purchases. Brunello traveled to Europe very often, and he was met with beautiful multi-brand stores. And yes, multi-brands are working hard in order to identify special goods and excellent results in Asia and China that we called a strong, modern, and balanced market. Andrea, you see, in China, revenues amount to 13%.
But we came back from Milan, and after speaking to all the different Asian markets, we came back with confidence, but definitely not on the last day, because that's when we learned the news. And then to conclude, Japan last year was a special year for Japan, but this year too, it keeps being a great contributor. Yes, it was very special last year. Thank you, Andrea.
[Foreign language] The next question will be asked by Chris Huang of UBS.
Please. Hello, hi. Thanks for taking my questions. I have three, if I can. The first one is on the trends you are seeing in the business. If we look at your retail performance in Q3, it seems like it saw quite a big acceleration versus Q2. So I'm just wondering, what are the trends you are seeing within the quarter?
I know this is not something you usually comment, but given that you're the first in the sector to report, would it be able to give us a little bit more flavor in terms of maybe September is growing faster than the quarterly average? Anything like that, that would be very helpful. Secondly, on a more kind of a P&L structure, can you just maybe remind us the way you report? Because I think recently in the market, there's a lot of debate around cost of goods sold. And if I remember correctly, you report production costs. So can you just remind us what is the difference between the production costs we report and then the typical cost of goods sold we see for a company?
And last but not least, on wholesale, I think currently the wholesale channel is around a third of your sales on a global level. Do you expect maybe perhaps in the future that this channel continues to decline in terms of its reliance? And do you have in mind a relative kind of ideal channel exposure you have for the midterm? Thank you very much.
Very interesting, Chris. So let me take your question about the multi-brand trends. So the beginning of the winter season was very, very good. But please remember, Chris, that if you do, well, if you look at retail, it doesn't really look like a great moment in time. I mean, people keep asking us how we're doing all the time. And what I'm telling is, well, we do plus 10%, which is quite reasonable, so to speak.
You know, at times people say fashion is in trouble. And so my question is, why don't we just look at 2021, 2022, 2023? Why don't we look at all financials from 2021 to 2025 altogether? Because if we do put these things together for the fashion industry as a whole, we have a good five-year period. Now, as for this season, the general atmosphere is good, started off on the good foot. That's what we felt in the Milan Fashion Week. Now, of course, I keep talking about multi-brand stores, and I love multi-brand stores. But what do multi-brand stores do? Well, they boost our creativity when we engage in research. We got multi-brand stores because they would buy maybe trousers from one brand, wear it with a contemporary jacket from a different brand. And so that's all very interesting.
Of course, multi-brand people should be very good at visual merchandising and lifestyle. But of course, novelty belongs to multi-brand stores most of all. And so the trend now is that of going back to shopping in multi-brand stores too. So multi-brands are doing well right now because people trust their sales associates they normally talk to because they know they'll come up with some interesting proposal for them. And then there's something else we should say. I mean, when you go to a single branded store, that's one thing. But if you go and see Harrods, Neiman Marcus, Lane Crawford, I mean, you just walk in, take a tour, and you see how your taste has been positioned and where it's been presented. So you can actually see what your performance is also dependent on how you're located in multi-brand stores.
The contemporary appeal of your brand is very visible also depending on how you're displayed and merchandised in multi-brand stores. Of course, we do believe in multi-brand stores. It's growing a bit less than retail, but it's still growing. Should I think of the next 20 years, my project would involve multi-brand stores all the time. For us, it's always been an interesting channel. Besides actual sales, we look at brand positioning because multi-brand stores tell us where the collection is going and how it's performed, how it's performing. Now, Chris, as to the accounting, our first margin is calculated as the difference between revenues and the cost of production. What is included in the cost of production? The cost of raw materials and consumption material and the cost of processing of these products.
Other peers on the market, I mean, that's what we've always done to calculate cost of goods sold. It's always been the same. So other companies, other peers actually match the cost of goods sold and the cost of production. And so besides the elements I just mentioned, they also add cost of prototyping, for instance, or the cost of in-house employees, which we actually classify as operating expenses. So that's maybe one difference between us and other peers. Thank you, Chris. Thanks for your questions.
Next question will be asked by Charles Scotti of Kepler Cheuvreux. Please.
Yes, good evening. Thank you for taking my questions. I have a couple for you.
The first one, it doesn't seem to be the case, but have the allegations in the report had any impact on your relationships with your end clients and/or wholesale partners in the U.S., Europe, or Asia, or eventually suppliers? And have the allegations led to a request for clarification from, I don't know, various authorities like the Italian market regulator, as it was mentioned in the press? And secondly, thank you very much for all the clear information about your exposure to Russia in particular and also concerning your inventory management. Is it your final say? I mean, are you stopping there or do you believe it's necessary, I don't know, to appoint an external auditor to testify to your statement and definitely remove any doubt on those allegations? And finally, last question regarding the exclusivity of your brand.
I totally understand the importance of wholesale, multi-brand, and outlet partners for you. Do you plan at some point to strengthen the selectivity in terms of distribution in order to prevent some of the less qualitative partners from reselling your unsold goods to online discounters? Thank you very much.
Okay, this is Brunello speaking, and I'll take your final question first. We have the best 400 wholesale accounts in the world. It's the 400 most beautiful stores in the world, and they've never created any problem at all for us. So in 2008, when the financial crisis happened, in October, November, some players started to extend some discounts, but it was just a one-off happenstance. So we are confident that we serve the 400 best stores in the world, and we're very happy with that. Something else is the impact on our clients.
So as I told you, we sell to about 500,000 people. So of course, we tend to sell to wealthy people or well-off people at least. And normally, wealthy people are really familiar with how profit is made and how much profit can be made. And so we are very confident about the image of our fashion house. So we realized in the last few days that there was no particular feedback. I mean, even the people who work at our showrooms didn't receive any particular comment on this. So we're not overly concerned. Of course, we could have done without this, but this doesn't mean we are concerned. Now, Luca.
Yeah, what we're doing is in-house, we're going through all of the internal control activities we've done over the years. And so far, we have seen no infringement, no violation that should worry us.
We have asked a law firm to actually help us and do an outside verification on the robustness of our in-house controls. This is what we're doing today. So thanks for your question, Charles. And don't be worried. I would like to take a bet and think about it again in 30 years' time or 40 years' time. So the wholesale world has always been the most important thing for us. I mean, up until maybe 20 years ago, the whole fashion world was wholesale only.
The next question will be asked by Maria Meita, Bernstein, please.
Good afternoon, and thank you for taking my questions. I have two. First one would be, are you aware of any investigations that the Italian authorities are undergoing following the short seller report? And then the second one regarding Harrods.
Could you tell us more about the collaboration with Harrods for the festive season and also what percentage of your sales would be in the U.K.? Thank you.
Thank you, Maria. Luca will answer your first question.
Well, we have no information about any investigation at all.
Now, as far as Harrods are concerned, I will answer you, Maria. This is Brunello speaking. We're going to have three very important days in London. So we'll have the Harrods windows for 45 days between December 1st and January 15th, with a changeover to the Spring/Summer collection on January 2, and we'll take over all the Harrods windows for those 45 days, which is really, really important. So we'll have the huge panel display for 45 days there. And it's really major for us, really, really important because that's going to actually boost our image next year.
We work very beautifully with Harrods. And apart from that, we go back to the idea of multi-brands. So people go to Harrods, and they have as many as 15 million visitors every year. So that means that at least five million people should walk by our location. So it's a bit like in Dubai. They have 111 million people going through Dubai every year. So I really want to attach a lot of value to those beautiful stores all the time. And then next year, well, the film is going to be shown around the world. I'm not sure I'm happy to know that because that means I'll have to be all over the place. You know, I wanted to be a kind of a part-time monk, but it's not going to happen anytime soon.
But actually, the movie is actually showing and showcasing the name of our brand. So hopefully, it's going to boost us a lot. So I've seen it myself, and it's embargoed until December 4th, and I didn't sleep for three days after I first saw the movie.
Next question from the Italian line from Melania Grippo, BNP Paribas, please.
Melania Grippo, BNP Paribas. I have two questions. I'd like to know whether in the quarter, at European level, you saw any difference in the performance of the different countries, France, Germany, U.K., if you can comment on this.
Just this, Melania?
You also said that your exposure to the Russian market is 1%. In terms of Russian clients,
Melania, could you please speak up because we can't hear you properly?
The second question has to do with the exposure to Russian customers, also including traveling, tourists. Any difference?
In Europa, [Foreign language] So in Europe, everything is going really well. I have to say that the weather helps, you know, because this is your classic kind of weather. As you know, the season starts well depending also on the weather in France, Germany, England, Italy. So we can say that the season has started. It was off to a pretty good start. And then Russian customers in the world, well, they're very, very important. And we find them everywhere. We saw how this changed in Dubai, in Turkey, and everything. Melania, we have always maintained that usually our sales. So we had high revenues in Russia, but many people moved. We envisage. Yes, of course, we sell to very wealthy customers. [Foreign language]
So if there are no further questions,
Chiara Battistini wrote two questions.
The first one is the growth in wholesale and how much was this a result of new customers and how much by loyal customers. Second question, whether we intend to better control the way in which the wholesale customers, clients, manage their sales.
We have no new wholesale customers. I have to say that we enjoy a great relationship with them, and we trust them, but they are the most beautiful in the world. So it's not that we want to check and control them. As usual, we said if something, an issue arises with any of them, then we stop collaborating with them. But the only issue can be linked to financial issues. I'm very fond of Mr. Pressman, the owner of Barneys, you see, because we were able to explode as a brand because 40 years ago, our products were displayed on Barneys windows.
And then, however, some economic issues followed, and that's what happened. We trust the multi-brands fully, but especially we listen to them whenever they comment on the collections because if they are not happy, then that means that your product is aging. But if you go back home with your team and you basically say to your team that this was not very much appreciated, we can still work on it. And so we can do even better. Let me tell you something interesting. Yesterday, Luca said, "I am 45 years of age. I do not know the multi-brand channel that much." Whereas I, Brunello, I grew up with my esteemed Hermès being displayed in the beautiful multi-brand stores and Chanel too. Yes, yes, that's what we talked about yesterday, Luca says.
But honestly speaking, we have to say that many young managers, they're not familiar with the heritage of multi-brand. When you talk to them about multi-brand, you see that they're not really familiar with it, not conversant with. Yes, when I was working in the eyewear sector, and that's when multi-brand are still doing strongly there. Yes. [Foreign language]
Next question from English, Nick Anderson, Berenberg.
Hi, many thanks for taking my question. Sorry, just to get one in at the end. But in last week's press release, you referenced evaluating legal action to protect your reputation. I just wonder if you have any updates on where you are in that process or thoughts on it. Thank you.
As we were saying earlier, Nick, right now we're actually looking at our in-house control systems.
At the end of that moment, we will decide what we should do with Morpheus if we do anything. It's not something we have finalized yet. Nick, can I tell you something nice? I mean, today we saw the first collections for Winter 2026, and we just love them. So you know how important that is for us. We are a product company. I've always thought that product is actually the reason for everything. If you don't have a fully contemporary product, no matter what you do, you won't succeed. Once again, speaking of the inventory again, inventory is not something dead. It's the stockrooms of the stores. I mean, it's really important. It's there for people to come in touch with.
We have a question from Louise Singlehurst of Goldman Sachs, please.
Hi, good evening, everyone. Thank you for taking just two questions for me.
Firstly, I will just say thank you very much for hosting this call this evening too and bringing forward the results. My first question just on the underlying regional growth. If we were to take the U.S. and China and exclude the new stores, would you be able to give us some of the like-for-like momentum in those markets or flavor versus for Q3 versus Q2? Thank you. And then my second question was, given all the noise over the past few days and having had the board meet, is there any view on potentially changing or clarifying some of the disclosures a little bit differently going forward, particularly when it comes to things like inventory and understanding that more clearly? Thank you.
Well, I'll take your second question first, says Brunello Cucinelli. We have changed nothing. This is actually what our company is all about.
But we have changed nothing, really. We haven't altered anything. So we have worked a lot in the recent days on this trouble, but just four or five of us, not the whole company. Now, Luca will answer your other question.
Yeah, the result comes from new locations plus existing stores, and there's a very good balance there. And as you know, we opened new stores very carefully. So in the third quarter, we opened two stores, Abu Dhabi and Pudong. And these are the first two stores we opened in 2025 because throughout the first half of the year, we had no new openings.
And this, says Brunello Cucinelli, this always belongs to our exclusivity project because, of course, if you have a lot of points of sale, they're less exclusive. It's mathematical. It's one of the tenets in our exclusivity.
So at least we are trying to live as long as 100 years as a brand. I know I'm boring about this, but I always think of, I don't know, Vacheron Constantin, 270 years of history. They do 30,000 pieces, and they're pieces of jewelry. And that's why they're so exclusive, and they've been around for centuries.
Next question will be asked by Paola Carboni of EQUITA.
[Foreign language] The stronger growth that we had in retail in Q3. How much is this linked to price mix and volumes?
On volumes, I was interested in knowing whether from your research you can understand how much of this volume growth comes from new customers, so your ability to attract new consumers thanks to the visibility and everything. Thank you.
Paola, I'll try and take your question. We always claim that tomorrow we should be known less than today. This is what exclusivity means. Yes, things are going well. The whole winter collection received positive feedback in July, and now it looks very good in stores. The same went for the summer collection. You see, when you come and visit where the collection is presented, you can really realize when at the start of the season you disclose your collection, if it receives good feedback, you see it matters. We are going back to the great value of the product. This is very important.
You can't always design your best collection, but if you do listen, you can change. When you go back home, you must have the courage to change something because maybe you see this part or a section was not appreciated that much. So Paola, we can say that taste, style, brand exclusivity, it seems that it is garnering quite a good success.
Thank you.
[Foreign language] Next quest ion, Flavio Cereda, GAM.
Good evening, Brunello. Oh, Flavio, good evening to you. So I would like to ask you some sort of abstract question. So we said 2 million pieces and revenues split between retail and multi-brand. So in the past, I did buy your products online and offline at a discount. I remember Century 21 at New York. Sometimes they had nothing. Sometimes they had 10, 20 items.
Then I stopped because every time I bought something, then Riccardo was teasing me. He said, "Well, this goods that you're deciding that you're wearing is six collections ago, six collections old." But if we actually make the math, and given that you are in clothing, so seasonal product numbers, so it is true that multi-brands will not sell everything. So something will be sold at a discount. But numbers are so small compared to production that, in my opinion, the concept of exclusivity definitely is unscathed there because we are talking about very limited and occasional quantity. But do you really mind? This is my question. Do you care? Do you do something? Or the quantity is so small that you do not do anything?
But on the behavior, we never say anything about the major names in multi-brand because they know they basically lose if they do something like that. If a Lane Crawford or if they sell something at a huge discount, their image is blemished. So if Braun or Unger in Germany, if they sell something at a huge discount, they jeopardize their own image. That's why I say that I never came across anyone who was willing to basically jeopardize their image. Of course, one year is the miniskirt. The second year is the longskirt. So if you have six miniskirts the second season, you sell them at a discount. So that's why you will find more ladies' clothing than men's because ladies is very seasonal. If you do not sell those miniskirts by the end of that month. That's it. But thank you for your question.
Multi-brand is my passion. You can always trust. You must always trust the feedback of the multi-brands. I never trust what our store managers say when they say, "Wow, it's beautiful. It's great." No, it's up to the multi-brands to have a say. Thank you.
[Foreign language] I'd like to remind you, if you want to ask a question, you can press star followed by one on your keypad. [Foreign language] so there seems to be no further questions.
We'd like to thank you immensely and so the reason why we brought the conference call forward was, yes, to provide you with the preliminary data, but also to tackle this issue. Of course, had it not happened, it would have been felt better, but this is the rule of the games, so best greetings, best wishes, but one last thing.
We were sitting at the bar once, and a foreigner turned up, and he was really dealing the best cards. He was really great at playing cards. He stayed at our local café for three or four days, and he won and conned and deceived everybody. Not me because I refused point blank to play with him. But you see, this is the rule of the game, and we tend to comply with it. It was plus 50% on our first trading day. And so this means that these are the rules. There are ups and downs. Thank you very much.