Good evening, Chorus Call operator speaking. Welcome to the presentation of 9M19 revenues of the group, Brunello Cucinelli. I'd like to remind you that all participants are in listen-only mode. Following the initial presentation, there will be a Q&A session. Speakers will be Brunello Cucinelli, President and CEO, then Moreno Ciarapica, CFO, and Pietro Arnaboldi, Head of Investor Relations. In order to receive help from an operator during the conference call, press star followed by zero. Now I'd like to give the floor to Brunello Cucinelli. The floor is yours.
Here we are. Good evening, everyone, and it is a pleasure to be here. As usual, I'd like to really thank, from the bottom of my heart, all the investors, analysts, and the press, as usual.
Well, since we are drawing close to the end of the year, we like to call this an end of the year call because as a matter of fact, the end of 2019 is only a month away. We were just saying this morning, time really goes by very fast. In my case, now I have reached the fourth part of my life, the last stage. As my esteemed Seneca puts it, we need to try and be senior advisors to the young generations. I often say that personally, I'm very fond of these calls because it is a time for exchange, and whenever there is an exchange, there is growth there. Of course, the main condition is that you are always willing to listen, but we somehow have lost the patience of listening.
Well, we're here with the whole team, and I would like, first of all, to give you the highlights of the first nine months of the year. I'd like to supply you a strong visibility on 2019 because the year is nearly over, and then I'd like to give you quite good visibility on 2020, and a good visibility too on 2021 for this business plan, 2019-2021, the three-year business plan. Last but not least, we'd like to tackle this big topic with you, this great topic of harmony and sustainability that we have just commented. Net revenues, EUR 459.2 million, +8.8% in current exchange rates, 7.7 constant exchange rates vis-a-vis EUR 422 last year. Increase in the international markets by 10.2%, Italian market 2.2%. Europe 9.6%, North America +9.2%, China up 14.4%, rest of the world up 11.3%.
There has been an increase in all distribution channels, retail 11.2%, monobrand wholesale 3.2%, multi-brand wholesale 6.9%. I have defined this specific time as follows. We have nearly reached the end of 2019, an excellent year for our business in terms of both results and image. The fall/winter sell-out rate was very good, and our brand seems to be enjoying much appreciation. Based on these results, we can already envisage the year closing with a good revenue growth of around 9%, coupled with a healthy profitability rise. Given the global development of luxury made in Italy ready-to-wear, and the buoyant order intake for spring/summer 2020, we believe the next year too will deliver positive growth in revenues and profits in line with our 10-year plan, 2019-2028.
A special thanks to all our coworkers whose creativity enables us to push ahead with the project we call Working and Living According to Nature. We have reached the end of the year, and we can say we have reached 50% of the fourth quarter. We have a like for like of around 4%, and for us, it is a satisfying result, I should say. The third quarter reported a more or less 10% growth, and our forecast, as we were saying before, since just a month is missing, we believe that the fourth quarter will see some slight acceleration, too. It is out of doubt that taste plays a very important role at this moment in time, and we have to say that lately, the general taste has moved and shifted towards the general DNA of our business for menswear, but especially for womenswear.
As I was saying last time, we subsequently work with more energy and serenity. Experience actually tells us that trends tend to last four, five years. Whereas when the trend, the five-year trend, is less fitting or in keeping with your taste, then it is tougher. This does not mean that designing a fresh collection is an easy task. We believe that the next four, five years to come will be slightly more in favor, advantageous to our company. Of course, it goes without saying that we must be modern, fresh, and innovators, because unless you have a valid product, then the rest goes down the drain. Compared to last August call, there is one great piece of news we'd like to convey from the commercial point of view.
We have secured the contract, the agreement for two beautiful boutiques, one in Paris, Avenue Montaigne. We had been in the lookout or searching, seeking it for four, five years. It's not always easy to find a spot in that specific street. We're very pleased. The other one in the Meatpacking District in New York, neighboring the beautiful boutique of very highly regarded Hermès. We believe this is a new neighborhood that is really up and coming, very chic, very trendy. I would say very young, too, because the average age there is 35 to 45. It is a very contemporary, upbeat neighborhood with restaurants. We're very confident in this beautiful boutique. Two new boutiques under our belt. They will be opened in the early months of next year.
From the economic viewpoint, we invested more or less EUR 4 million. This amount is to be considered as some sort of advance on the 2020 investment plan. Our plan to invest in our investment plan 2019, 2020, 2021, it does not change. The investment plan for the three-year business plan does not change. What about the end of 2019? What do we envisage for that? We called this year excellent, and revenues slightly above EUR 600 million, EBITDA growing more than proportionally, profits rising. The tax rate should stand at around 30%-31%, and we call it quite a good rate. By the way, we still enjoy the advantages of the Patent Box. In the last five years, this initiative has resulted in a taxation rate of 22%-23%.
We can definitely call it an appealing and interesting five-year term for an Italian company. 6% of revenues is the net financial position. As to the dividends, I would say 45% is what we envisage, 45% of profits. We consider this some sort of ideal stage, ideal level in keeping with our strategy, the 10-year strategy. As we also often put it, we feel pretty sound as a company. We have a net equity that slightly exceeds 50% of sales. We honestly keep thinking that true luxury, and mind you, this is a very powerful concept. We have witnessed this in the last 3-4 years. True luxury really requires huge investment because everything ages very fast, so the store, the showroom, everything needs to be refurbished.
If you want to be contemporary and up with the times, you need to change, reinvest, refurbish, revamp. This is true both for the physical world and also for the online world. Now we would like to provide you with what we call a very wide-ranging and precise visibility on 2020. Why do we call it wide-ranging? Because we have already had the order intake for spring/summer, excellent amounts there. What really matters here is also the feedback, the inputs we received about our collection. The multi-brand stores were very positive about our collection, and this translated into huge orders. There's yet another important feedback that coming from the press, another excellent feedback there. As you know, sometimes the press can be enthusiastic about the collection, and maybe your clients are maybe less enthusiastic.
In this case, you should maybe be concerned because maybe your product is not as good. The best situation is when both feedbacks are aligned. The fact that you enjoy good feedback on the goods that will be displayed in our stores until June, the fact that this happens, this has happened, makes us work with serenity and peace of mind. As to the projections for 2020, we would say the following. Revenues rising by 8% approximately, EBITDA that is more than proportional, then profits more than proportional there, too, investments around 8%. You should also consider that EUR 4 million were already invested in 2019, improving net financial position, and then dividends around 50%. Next year, this should be the optimal, the ideal level for us to be delivered in 2020. For 2020, we expect yet another wonderful year.
As I said before, these sell-out rates for fall/winter is very important for this season of the year, because in January, they will all come back to you with the budget ready to do the buy, and it depends on how the previous season fared. Since we have reached November, we can be pretty sure about what will happen in the coming months. I'd now like to give you some highlights on the 2021 estimates. This is to be the last year of the three-year plan. Good revenues, still more than proportional EBITDA investment, and then net financial position improving and dividends 50%. These are the rough figures for the next three years. Hopefully, everything goes according to plan.
You see, we have somehow the feeling that these plans are well-balanced, they are deliverable, they are pretty pragmatic, and we would like, hopefully will manage to, we would like everything to grow with grace, with moderation, or at least that's what we would like. We'd like to keep working in an environment that is pleasant, as we like to say pretty often. I'd like to now give you the highlights on what we discussed last August. We spoke about the great value of physical stores. We're still very confident in the brick-and-mortar channels, and also it is very important to have the so-called brand ambassadors in the stores. We have set up a school for brand ambassadors in Solomeo, the kids line collection, and we have given you the details of that, too.
Also the value of made to measure for menswear, and also the importance of believing in menswear, especially in suiting, because these are very important. It's a very important garment. These are the main topics. Last August, we also mentioned the importance of darning and mending garments, of reconditioning them, and this goes hand in hand with the idea of not wasting anything. You see, personally, I have to say I do not shop for many new things because I have always maintained and argued that if you have a well reconditioned and mended garment, it still has some sort of appeal and charm better than the new one. As I was saying last time, in our company, we have a very interesting department where we recondition our garments. We do it in-house.
When we receive the garment, the item, then we can recondition and send it back in a very short time. Another very important time is the update of the institutional website. Three years ago, we decided to redo completely our institutional website, and the website was made up of two main parts, the institutional site and then the online business. I'll give you a couple of highlights on that. As to the institutional part, we wanted it to tell our story, who we are, where we live, how we work, our idea, our take on life. I have to say that three years down the road, the feeling is that it was pretty much appreciated. In the last couple of months, we have tried to introduce some contemporary changes.
As to the boutique part, we are very, very pleased with the way it's doing. We wanted our online boutique to really depict our identity as much as in the physical world. It is important for sales, but even more so for communication, to convey the taste and the lifestyle, all those things that you are already familiar with and that we wanted to show. Two days ago, we have updated our website by publishing our thoughts, the life of the company, some highlights on the places where we work. Another thing I wanted to mention, another thing we'd like to receive your feedback on, we have tried to tell the story, to put into writing our idea of Human Sustainability that we called Living in Harmony with Creation.
This is the great job that we carried out, and as you know, it is very important because once you write it down, once it is set on paper, it stays there. We have always supported these ideas for 40 years. Hopefully, you will appreciate it now that you can find it written somewhere, and hopefully, we can practice what we preach. First of all, we provided a general document on what we mean by Humanistic Capitalism and Human Sustainability. Then there are the 10 rules we want to comply with, we try to comply with. Then we have broken down into three actions. There is a first part devoted to the relationship with the local land, the environment, architecture, as if we were somehow some temporary guardians.
By the way, we live and work in former industrial premises of the '70s that we have refurbished to make them contemporary. Here we have an architecture plan, a landscape plan, and a guardianship plan. Because you see, maintaining things is pretty costly. We know that in a few years these, and our factory, will have to be refurbished completely. Also we explain how we behave with the wildlife, how we grow our plants and our vegetables. Another part is what we do inside the company with our coworkers, that we call them loving, lovable, endearing employees. You can find there what we do in our company. Another important part, the third one, is devoted to the relationship with our partners.
Because we always ask them to really share our views in our relationships, hopefully we ask this in a kind way. We use the conditional mode, and we say, "We would like you to do that." "We would like you to share our views," because we always try to entertain inspired relationships with others. We didn't want to impose anything. We just wanted to highlight what we would like to do together with them. Now, drawing towards the conclusion, I'd like to tell you that we will keep doing our road shows. On the one hand, there will be me doing the road shows, and then some others will be held by Luca and Riccardo, who will be the new young CEOs starting from next year. We will be traveling the world.
Somehow we have a chance to meet you in America, in Europe, all around the world. You should know that these meetings are really inspiring for us. There is definitely a lot to really take home from these meetings. I keep repeating, seven years after going public, I keep saying this, you must be willing to listen, because when somebody disagrees with you tend not to listen. It is important to listen nevertheless. All the figures, the results that I provided you with of the three-year period, 2019, 2021, all these figures are expressed through the old accounting principles. From next year onwards, we will also have a comparison with the new system in force. Now we would like to convey to you the mood with which we work. It is always a serene, a peaceful mood. It's always attentive.
It is never pressing, because we are always on the lookout for the contemporary taste. Today, during the board meeting, Andrea Pontremoli, our director, he's always genius-like, He said we should really consider our business as it has a plan forever. Everything must be open to the world. If something changes in the world tomorrow, we must be able to change accordingly. We are very confident in the world. We like the atmosphere surrounding our brand. Generally speaking, we are very confident towards mankind. Thank you very much for your attention. Now we are open to welcome your questions. Besides that, do not hesitate to contact us, to write to us. We're always very happy to have an exchange of views with you. Thank you immensely for now.
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 keypad. In order to exit the list, you can press star followed by two. Please ask your question, speaking into the microphone. Whoever wants to ask a question, please press star followed by one now. The first question from the Italian conference call by Melanie Fluke, JP Morgan.
Good evening. I will speak Italian. Yes. If I could speak English like you speak Italian. I'd like to go back to two topics. The first one is investment. There has been a jump to 8% of sales last year, too. The comment you gave was that great luxury needs great investment. I think that's what you meant. I'd like to maybe have a few more colors on how you want to invest these funds. What changed? Maybe there's a change in terms of speed in the refurbishment.
I'd like to understand, or the digital world, maybe, if you can give us some more colors on these investments. Let's start with this.
Well, yes. I believe, Melanie, well, you see, we can say that we started coming up with this idea more or less three years ago. The idea is the following. You come to the showroom to view the collection, and you take pictures of everything. What happens is that before, the showroom would last for three seasons, whereas now every season you need to change it. Maybe you would go to Pitti, the biggest trade fair for menswear in the world. Your stand would change every three years. Now it's every six months, because if I take a look at the pictures that I've taken in the stand, in the booth, if the booth is the same, the collection looks old, too.
Of course, this is true also for physical stores even more so. Everything must be contemporary, fresh. The colors, the packaging, the visual merchandising. As far as technology goes, what I say that we need to buy the most up-to-date technology. I've always thought that we need to buy the most advanced technology. That's why we are working with Salesforce, and we're doing wonderful things with them. As to the workplaces, well, the workplace, maybe that's where there were the least changes, but you still need to change somehow because you need to be creative. When we start to design the new collection, we change with just small tweaks, but we do change something in the office, too. I think the biggest investments are in the physical stores, the showrooms, the contemporary spaces, because you must always look fresh and contemporary. Melanie, everything ages very, very easily.
At least for our company, you see, before we thought that in ordinary business would be an investment of 6.5% of revenues, whereas now we have brought up this amount to 8% for the next three years.
The second question is on the change of taste that is more favorable to you. You also commented on this last quarter. Can you maybe help me understand this change? Other companies talk about less streetwear, casual chic, is there something that you can share with us?
Yes, I can definitely give you some ideas here. I have been doing this for 40 years. My taste stems from my esteemed Jil Sander, Armani, Yohji Yamamoto. The taste I prefer is quite clear, linear, and history tells us that usually taste lasts for four or five years. Maybe you can't say that taste is more or less sophisticated.
It's always somehow sophisticated, but that's the way it is. We stem from a culture that started with Armani, Yohji Yamamoto, Max Mara, a great Italian company, also 40 years old, very special. This is the taste, I would say, very similar to ours. For us, working in a trend that is slightly more in keeping with your taste is easier. This does not mean that it is automatically that you design great collections, but the taste is the same.
Yes. Thank you very much. Very clear.
No, thank you.
The next question from Andrea Randone, Intermonte.
Thank you. Good evening, Brunello.
My question, I’d like a few more comments on what you see geography-wise, and in particular, I’d like a comment on the multi-brand performance in Italy, whether something is changing there, if you see any change there, and maybe some comments on Asia, where many of your colleagues mention Hong Kong or Japan. We know that they do not affect you usually that much, but if you can give us some more color on the trend of this important region.
Yes, of course. As far as multi-brands are concerned, we, as you know, believe very much in the multi-brand channel because they really are the guardians, the custodians of your brand, because they tell you how your collection is doing. You understand that because if they buy your collection, then it means that your brand is doing well.
The multi-brand is undergoing interesting changes. This is basically what, as far as the sales assistants are concerned, that we prefer to call brand ambassadors. They are the one promoting the products. Three, four weeks ago, we invited some managers of the multi-brands in Asia, and they are wonderful multi-brands, EUR 12 million, EUR 13 million, EUR 14 million revenues, 500, 700 sq m. There is no doubt that in a few years, there will be really a whole range of new multi-brands. As far as maybe that part of the world, China, is concerned, things are going very well. Of course, Hong Kong does not weigh very much in our business. I would say just over 2%. It is offset by Macau, Shanghai, Beijing, and Japan has had a great year.
Andrea, I would say that as far as we are concerned, when we put together the budget, one year there will be maybe an issue in Paris. One other year there will be some turmoil in Hong Kong. Do you remember when there was some disease? I can't remember where it was, in Korea or somewhere else. Of course, when putting together the budget, you always need to provide for something unpredictable, because you see that in such a global world, there is always something that cannot be predicted. You always have to set aside some sort of provisions for that, and we usually do that. China has around 10% incidence with a sound growth of around 15%. We are very pleased with that. We are very happy with Japan, we're very happy with America.
I have the feeling that everybody tends to look at special kinds of garments. You see, this is our business, and we don't really want to boast, but you have to be modern, contemp orary, and exclusive. This is yet another important adjective. Thank you.
Thank you very much.
Thank you, Andrea. Thank you.
I'd like to remind you that if you want to ask a question, you can press star followed by one on your keypad. Next question from Paola Carboni, EQUITA.
Yes. Good evening, everybody. Good evening. Here is Paola. Just two questions from me. Geographically, a few comments from you on the American market, where you have maintained your growth trend. Some players mention difficulty, volatility. I'd like to understand what actually enables you to, as usual, outperform and maintain this sound performance. Secondly, looking at 2020, I wanted some indication on openings.
In light of the visibility you enjoy at this moment in time, what are your store openings plan in 2020, and also any plans to convert from wholesale to DOS? Thank you very much.
No, thank you. As far as the U.S. is concerned, we are very happy with this market. We enjoy a great relationship with the department stores. With them, it's not just a question of displaying your goods. You have to really intervene. Individuals, for example, we have 60 people coming from all over the world that we call brand ambassadors. They work for these companies, and they come to our store to be trained. Your space needs to be treated in a special way.
These brand ambassadors must always give you a great experience, because if you step into a department store where actually nobody helps you out, and you have to help yourself, it's not really a nice experience. A great evolution there. In our company, we have always had this culture of the multi-brand. We were born with a multi-brand. Still, the percentage of our business there is 50%, so it is easier for us to build with them a special image in their department stores. Last but not least, truth be told, there is also this interest in high quality Italian ready-to-wear. It's very strong, this trend. It used to be very strong in the '90s. In the past 20 years, ready-to-wear decreased, and now there is a lot of request, a lot of demand for the U.S. market.
Conversions, just a small thing in Taiwan, not very relevant. Four, five openings, pretty meaningful ones. In London, we replaced a store, and we were allotted a great store, a very low rent, obviously, very low. Of course, joking. We also are very happy with the stores in New York and Paris, the locations that we were able to secure. I would say four, five openings, four openings and one extension. This is the strategy for next year, truth be told. We are very confident. To conclude, I would say that I'm very confident taste-wise. I'm also very confident for menswear. They say that menswear is a bit running into difficulty, and they don't want to shop. A 35, 40-year-old businessman, gentleman, I feel they need something special to be induced to shop. You know what? Why we think that?
50% of our made-to-measure items, they're not classic suits, but seasonal patterned jackets. Which means that chic 35-year-olds want to have a made-to-measure garment, but it is a blazer, not the suit. I have this idea that the fashion is going towards this kind of taste, and we are very pleased with that. The truth is, you must always be smart, exclusive, and as far as the online is concerned, the corporate e-commerce is doing very well. What I like about this is that all the people who log in to our website, you know what people do? They come to the stores. They want to talk to us. There's something else I wanted to tell you.
This idea of mending and darning things instead of throwing them away, this is really providing us with great results, and I don't want to waste your time on this, but a very important lady, her husband passed away, and she wanted us to adjust her husband's blazer for her to wear it. Our tailor worked on it, and she was so happy, and that's the idea of adjusting, mending, and darning instead of throwing away.
Thank you.
Thank you very much, Paola.
For further questions, please press star followed by one on your keypad. The next question from Flavio Cereda, Jefferies.
Good evening, Brunello. Good evening. A couple of things. Going back to Paola's question on the retail, you have given visibility for 2020, but adopting a bit of somehow of a longer view, five, six years, what kind of openings, how many openings would be sustainable?
The weight of retail in your revenues, will it still be 50%, or do you want to increase it? The second question is whether you can tell us something on the online, how the online is performing.
Great questions, Flavio, as usual. Thank you. See, when I say the calls are very interesting, that's what I mean. The retail and wholesale plan, we would like it to always be around 50% wholesale or retail. If it is 53% and 54%, nothing changes. Still, there should always be a balance, because I'm ready to bet that the 38 multi-brands we have today in China, there will be 100 multi-brand stores in China in three years' time. You see, Flavio, we were born with the multi-brands, and you see, if your managers in your company are 45, well, I'm sure the only thing they've known is retail.
What is the multi-brand? Sometimes they think that the multi-brands are someone that really make it difficult for you to sell. We believe that it is quite a modern choice to have the multi-brand in your account. The online world, we attach a lot of value to the online world, not just for our revenues, although worldwide revenues, there is more or less 7.5%, 2.53% with the brunellocucinelli.com. All people log up to the website, and then they actually go to the physical store to talk to the people there. The important thing is that when they log in to your website, it's because they want to know where your production is located, what you do, how you behave. This is something that we have been saying for years, but it is particularly strong nowadays.
Thank you very much, and congratulations.
Thank you.
May God help us, Flavio.
I know, we must be contemporary.
The next question from Francesca Di Pasquantonio, Deutsche Bank.
Good evening, Brunello. Good evening, everybody. Good evening, Franci. I have a short follow-up question. Here we link up all our questions, one to another. In your answer, you touched upon something interesting, i.e., the fact that with a direct channel, and especially with the online, consumers can really find out everything about the brand. Since most of your revenues happen outside of your control, how can you make sure that the special messages of the brand, sustainability, Humanistic Capitalism, as well as Human Sustainability, how can you be sure that all these concepts that make you stand out in terms of positioning communication actually get through? Yes, a great question, Franci.
First of all, we'd like to say once again that we have 500 multi-brand accounts worldwide, not 5,000. Some of them have been with us from the very beginning, Goodman, Neiman Marcus, and Saks. What do we do with them? We always discuss with them what they put online. A couple of days, our staff went to Dallas to discuss how the product should be presented in the Neiman Marcus website. Now, this evening, I'm having a dinner with 60, 70 brand ambassadors that come from department stores, meaning that they try to convey the idea of where we live, how we live, how we work. Two days ago, we publicly posted something, and it is a very important document for us.
It's the first time we wrote it down, you know that when something like that is written down, they will never be canceled. Do you really do it or not? Do you believe in it or not? There is really a lot of desire to better understand and know. People want to know where you work, what you do, how you behave with your employees, if there's gender equality, and also in the way you treat employees and their working hours. It is very strongly felt. I myself, before I shop, I gather information on your product, if this company does not behave properly, I don't want to buy your product. This is a very strong, harsh change that is taking place in the world.
In the next couple of weeks, I will be holding a speech at Bloomberg specifically on this, and I will say, repeat it once again, that the 181 companies that signed the document, that it is really a watershed change. We were saying this with Marc Benioff the other day. Next week we are going to the Pope to talk about this. There is really a lot is being said, a lot of buzz is in the way you work, how you treat the architecture, your surroundings. This is very strongly felt. What I say, and I go out of my way to say it, is that first you have to talk about the company and then the product. Of course, if the company is good but the collection is not appreciated, then it's not working.
If you have a good product but the company does not abide by some specific key parameters, then you won't have a long life ahead. This is the big theme. If you have a company that respects its workers, then the creativity rate shoots up, because if you work for many hours, you get tired and you can't be as creative. We thought long and hard about it, and then we decided to write everything down, and we posted this document. I think that what comes out of this document is that we want to respect also our subcontractors. Our subcontractors, they are the owners of their companies, and they are the ones in charge of their companies. We ask them to be inspired by us, which means that if you share our thoughts, then we can work together. Otherwise, we won't.
I feel this very strongly, especially for young people. It is not just a trend of the more sophisticated ones. If you talk to 18 to 20-year-olds, they share these ideas. It means that mankind is taking this step. For example, Greta Thunberg, there is no doubt that the eyes of a child make you change your opinion. There's no human being that does not change their mind when faced with the face of a child. I'm sure about this. Well, somebody does, actually, but let's not talk about this. Franci, this is the trend. There's no way you can stop it. If you do not accept the change that happens in your time, you will be left with the worst of it, as Voltaire put it.
We need a company whereby if we have a cashmere tax of 200%, then we have to be ready to react to that, which is a company that is open to the world, some sort of universalism of mankind.
Thank you very much.
Thank you, as usual.
Mita Cucinelli, no more questions have been booked. Then I'd like to thank you very much. You see, I spent half an hour telling about the company, and then the discussion followed. At the end of all this, we are particularly happy because it is a great, really great exchange of views on the strategies of the world. Thank you very much. We are here, and we will meet you all soon in America, in Europe, and all around the world. Thank you. Thank you, everyone.