Good evening. Chorus Call operator speaking. Welcome to the presentation of the nine months 2017 revenues results of the Brunello Cucinelli Group. I'd like to remind you that all participants are in listen only mode. Following the presentation, there will be the opportunity to ask some questions from the financial markets. In order to receive aid from an operator through the conference call, press star followed by zero. Now, I'd like to give the floor to Mr. Brunello Cucinelli, CEO of the company. Mr. Cucinelli, the floor is yours.
Thank you. Good evening. Before we start, I'd like to make a special thanks to everybody, investors, analysts, journalists, because you see, this is a special time because you have accepted the postponement of our call.
The idea of being a guest in this huge technological event organized in San Francisco by Marc Benioff during his Dreamforce event 2017, and having the possibility to discuss with him in the famous Yerba Theater on the great topic, technology and humanism, was very important to me. I'd like to thank you for having accepted this postponement of the call. I'd like to talk about the following. As usual, I'd like to give you the financial highlights, then I'd like to read the forecast for the full year 2017, then visibility on 2018, and then I'd like to dwell on the market, the product, and then this fascinating world of the web. We are all here. There's eight of us attending the call.
Net revenues, EUR 384.2 million, plus 10.3% at current exchange rate compared to September 2016. Important growth on international markets and on the Italian market too, 10.4% plus and 9.8% plus sales, respectively. Europe, plus 10.4, North America, 6.3, Greater China, 37.7, rest of the world, 8%. Increase in sales in all distribution channels. Retail, plus 19.8, wholesale mono-brand, adjusted plus 3%, wholesale multi-brand, 7.7%. I'd now like to read out my comment. We have almost reached the end of this most interesting 2017, a year that we would like to define as particularly satisfying in terms of both financials and brand image, positioning and credibility. Sales of the winter collections are proceeding very well.
We can say with confidence that we will deliver double-digit growth in terms of both revenues and profits. The order intake for spring/summer 2018 was also very good in terms of both numbers and image. Our customers and the international press both delivered an excellent feedback on the collections. We assume that 2018 will be another very important year with healthy double-digit growth in terms of both revenues and profits. The digital world, ever so fascinating and partly still unexplored, keeps providing food for thought on how we can possibly humanize our relationship with the web so that it does not steal the soul that the creation has given to us. Let's start from the final forecast, 2017. We've reached the end of the year. I would say that this year has been spent working.
By the way, I'm not speaking too fast, so that my interpreter can translate better. She always does, but we have more time than usual. We've reached the end of the year, almost, yet another year that we have spent in serenity, quiet, with the fair amount of time spent online and a fair amount of working hours. Not too many, not too few. I have to say that we keep believing that creativity is very strong when human beings have had a very well-deserved rest. We think that the brand is surrounded by a beautiful mood of contemporary, with a lot of quality, craftsmanship, and on top of it all, exclusivity. This is true, especially for the web world.
The value of visual merchandising is still very high because the products can actually convey the place where you work, the way in which you work, respect for the human being, the wildlife and the earth as a whole. There is a strong widespread heritage and culture by the SAs in our stores, where we would like everybody to feel politeness, style, education. We wouldn't want our SAs to hassle or pester our customers, because also we want to highlight the value of anticipation and longing. This has a great value because maybe a product is not ready yet, but you have a longing for it, and this makes it even more exclusive. The idea that you actually receive your suit two days later from the tailoring shop, but it carries the label with your name.
Well, it is a very good idea. It is an expensive item, yes, but you will never throw it away because you will pass it on to the future generation. We want to use this in juxtaposition to the frenzy of modern times, because this frenzy, the fact that we're always frantic, actually brings about some sorrow in our daily life. The idea that drives our, the way we have of shopping is to buy without wasting. This is the general idea of our enterprise. I want to sum it up, although I know that you're all very familiar with it. We would like to confirm that for this year, we expect good growth, double-digit growth, in terms of both revenues and EBITDA that is more than proportional.
We would like to focus attention to the patent box. Which actually brings about a welcome benefit. This is basically an acknowledgement to us because we believe in our splendid Italy and its ability to produce special artifacts. Unfortunately, we are struggling a little bit as a nation with football, with soccer, because we were kicked out last night and, you know, I'm very sorry. I think everything is going slightly better in Italy, GDP and everything, and we have been ruled out from the World Championship, and this is not something negligible for us. The company, obviously. We envisage a net financial position around EUR 25 million at the end of the year against the EUR 51 last year. We think that we can argue and state that for us, debt has ceased to be a problem.
We keep saying that repeating that the product is key. The product must be contemporary, youthful. It must be presented in a fresh manner, and all this is true, especially for menswear. We'd now like to give you some visibility on the next, in the coming year. As we said, the winter sell-outs are performing very well. We've nearly re-reached the end. The spring/summer orders have already been placed, and they are particularly good. Our online boutique is providing very pleasant results. All this considered, we can envisage a beautiful 2018 with healthy double-digit growth in revenues and profit. This is what we envisage for 2018. Now We would like to make some remarks on the market and the customer requirements that are pretty fascinating. The first interesting remark to be made has to do with local customers.
I would say that local customers have resumed their shopping with enthusiasm, with attention and care. Especially for clothing, local customers are very important. We want to obviously abide by the tradition, culture and taste of the local place, of the local geography. We keep viewing beautiful shop windows when we talk to our staff. They are always very looked after. They're very appealing and enticing, as if it was a very pleasant experience. Especially for menswear, because men tend to basically mix and match all the old and the new, because men, they don't like to throw away clothes. Another important and clear thing is that once you step into the store, you need to be met by a very fresh, youthful image of the product.
You need to be accompanied by very polite salespeople, and with whom it should also be possible to strike a human relationship. They basically give you suggestion, advice. They pamper you as a customer. So that when you walk out of the store, you have to say, "I've been to a beautiful store." I have always thought that our relationship with department stores and in particular Harrods, Selfridges, Neiman Marcus, Saks, and the Japanese ones, this relationship had to be and is still special. How can we make this relationship special? With special, timely delivery, special visual merchandising, training the staff and imbuing them with the culture of the brand, and then organizing trunk shows. Very pretty events where customers are very happy to take part in.
As of today, we can say that the results with the department stores are very, very interesting. Now I'd like to make another special remark. Because we had discussions and meetings with these very top quality 18 Chinese multi-brands. Very interesting. We had the feeling that customers, our true luxury customer, they want to shop in beautiful multibrand stores. Listen to what they say, and I agree with them. They say it is less enticing and appealing to buy online because nobody knows about the kind of product you acquired. They want to walk out of the store carrying the carrier bag, which is very chic. Maybe somebody comes to pick you up, or with a driver at home. You can maybe ask for a discount, which is part of their culture, although they are multimillionaires.
Those are their comments, and I think that we are basically returning to a very beautiful relationship between exclusive boutiques and exclusive customers as it was 20 years ago. As I said, many times in the past, my next door neighbor would fly to Paris on the weekend just to come back with the Chanel shoppers instead of going to Milan or Rome. For some of these multibrands, the online sale of super luxury is already less fascinating. We take a lot of care in what we do, and we have no doubt that in this country, there will be many different luxury multibrands. For those like us who believe in the multibrand channel, this is something definitely magnificent. Let's now move on to this experience, this on the web.
It's been now one year since we have resumed the direct management of our online boutique, which we consider the top boutique worldwide, and the biggest one, because it is viewed by millions of people. Everything happens from here in Solomeo, the early headquarters of our factory. We are particularly satisfied with this boutique sales-wise but also in terms of image. It is working very well, especially in the institutional part of the website, where when you log in, you can basically grasp the principles on which our company rests. When we actually decided to insource this business, we asked Salesforce to carry out a project, so that we could profile our customers according to their needs and requirements, so that they wouldn't receive too many emails or communications.
We asked Salesforce to put together a special solution. With them, we basically clustered our customers into six or seven categories, so that some of them might receive one email every 20 days, some others every 10 days, and so on and so forth. Basically profiling them and making them receive emails according to their liking. Because if I feel hassled, I leave and I stop shopping from that brand altogether. This is my feeling, but it is shared by many. Without repeating myself, of course, we wanted a very human relationship with our customers, not too invasive, but with handwritten notes. We can select very exclusive outfits for our customers, and our online customers love it.
Maybe they buy the blazer, and we put together a special outfit without pushing it on you or saying you have to buy it, but basically just suggesting you a possible combination. This is proving to be very successful. The idea, basic idea is never to be too pestering or hassling. We are very happy with this relationship with Salesforce. Although they are a giant, giantly sized company, they actually listen to us when we ask them to put together a tailor-made solution for our company. That's what we talked about with Marc Benioff. As you know, Marc Benioff is the CEO and founder of this beautiful company, Salesforce. We discussed with their staff, too. Especially Paolo Bergamo from Salesforce.
You see, it was a very important fact that he was there because I don't speak English very well. With him, I could speak Italian because he was the one who actually came the day after the dinner party we organized in San Francisco. He came to me. He turned up to ask me how we could humanize the web. You see, it's a very serious topic. This idea of talking about technology and humanism, well, came about more or less a year ago when I was invited by these tech guys to San Francisco to a dinner party to talk about the future of the world, knowing damn well that I have always been fascinated by grand humanistic themes. There were 12, 13 people around the table.
During this dinner, I told them that they represented the young contemporary Leonardos. Leonardo was a humanist, was the humanist par excellence. Those of you who will be using the human factor in the web will be the true Leonardo. That's when it all started, and we decided to meet again and discuss this great gift of the creation, the World Wide Web. It is a very important present that we were given, but somehow we have to manage it. Marc Benioff, the founder and CEO, as I was saying before, is somehow the driver, the propeller, so to speak, of these fascinating discussions. He invited me to this yearly event conference in San Francisco, Salesforce, Dreamforce, that is particularly interesting. Three days of discussions back-to-back.
Our discussion was entitled, and listen how good he was, Gracious Technology. Technology, well, the word garbata was gracious was left in Italian as garbata. We were invited to this Yerba Buena theater in San Francisco, we tackled the grand topics on the use of this fascinating technology that is, however, difficult to grasp. As I was saying to them, "You basically invited me to the cradle of the genius." I received a round of applauses but I think that calling them geniuses was nevertheless a good compliment.
Since we believe that the Internet is a gift from the Creation, I urge them to get together to discuss and to tell us the way how we can possibly use these technologies at best, so that they do not steal the soul of our children, of our grandchildren, that we were given. We had about an hour dialogue and discussion. It was very interesting to talk with him for 55 minutes, and we talked about overwork. We talked about the fact that we are online too much, and that maybe creativity is stronger when you are well-rested. When you are well-rested, you listen more, even the things that you might not share. I said to them that 20% of our time is usually devoted to nothing, and maybe we could use it to for our private life.
I even said something that I deem very interesting. I said that in my view, the future luxury will consist in living a life that is unknown to our travel mate. That is the smartphone. Living a life that is separate, hidden from the public life, and this kind of secret life should not be always shared with the smartphone. We agreed on the fact that maybe half of mankind does not need anything. Although I'm very well aware of the issue of poverty. Truth be told, I have to say that the whole of mankind is looking for something. At the end of the meeting, Marc said something really pleasing.
He said, "You see, this was supposed to be a kind of technological event, 170,000 attendees." It was difficult to find a hotel to stay at. He said, "And in the end, it has basically turned out to be a human, spiritual, technological discussion." I was very happy with this comment. In one of these very interesting dinner parties, we had two during the week with these young people. There was a 32-year lady who had EUR 1 billion revenues in with her company, so very fascinating.
A very powerful thing that we discussed with this very important person was, he said, "Remember, Brunello, technological change has only reached 20% of its path." I said, "My God." Yesterday, as soon as I got back, we met with our staff, and we said, "Let's do something. Let us embrace this change, this remaining 80% change." You see, such a powerful statement made by such a powerful man was definitely fascinating. We basically organized a meeting for next spring at the Solomeo Theater. We have to set the date together because we want to discuss once again, to see whether there is the possibility to mix technology and humanism.
We would like to meet at least once a year, and I'd like to go there at least once a year because whenever I come back from America, I'm always fascinated. I'm always brimming with 1,000 ideas. I don't know whether they're all interesting, but there's always plenty of them. Marc, before stepping on stage, he said, "I just received a message saying that a mountain lion had just walked past my house." He said to me, "Would you like to come to my house for dinner tonight?" I said, "Yes, well, the mountain lion is there." I did go there, and I was so scared, and I didn't get out of the car until Marc opened the front window.
The idea of having this mountain lion, free, roaming in San Francisco, actually, peppered things up. At the end of the day, my esteemed investors, analysts, and journalists, truth be told, they have been three very intense days where we basically were completely imbued and immersed by this digital world that is not easy to understand, for me at least. We have brought home some very interesting insights. I'd like to thank you all. A special thank to my friend, Marc Benioff, and all those innovators who welcomed me because I'm not extremely young, I know, but I like this idea of taking part in a changing mankind. Thank you very much for now. We keep working with serenity. If you have any questions, I'm available for you. 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 keypad. In order to exit the waiting list, press star followed by two. Please ask your question using the receiver, speaking into the mic. Whoever wants to ask a question, press star followed by one now.
First question from the Italian conference, Andrea Randone, Intermonte.
Thank you, and good evening.
Hello, Andrea.
Good evening, Brunello. I have a question on technology, meaning that a very well-exploited factor by your competitors, too, is that of trying to gather information on, and data on customers in order to better understand the evolution of their taste and better serve them.
I'd like to know from your side, how are you structured in terms of the informatization of the customer database, the physical customers with the online customers, and whether you can give us your take on how many of these customers are repeat customers and how many new customers you add every year. I don't need any precise figure, but just your feeling on this.
Very interesting because we discussed specifically this with Salesforce. Just one thing. I logged in the website of an important company for five days, and I received 29 emails in five days. That's when I deleted my account. We would like to do the opposite because if you keep pestering me and hustling me, and I'm a wealthy man, I don't want to know anything about your brand any longer.
We try and gather as much information as possible on our customers, but we try not to push them with emails and messages and proposals of outfits because, in my opinion, luxury is also this, leaving you some space and enjoying your shopping. Sometimes we do make some phone calls because maybe we have, we know that you would like to receive a phone call, so we do have data available. The future lies in not hustling our customers because if I feel hustled, then I would leave the brand. I already told you this story, and I was supposed to buy a car.
I left my phone, mobile phone number with a car dealer. Immediately the week after, I started receiving phone calls on Monday, on Tuesday. On Wednesday, what we did, we bought the car but from another dealer, which means this dealer lost the sale, but also me as a customer for the rest of his life. You see, human beings are overwhelmed by so many messages and information. Especially in the luxury segment, we want to be different. I don't want to be a hassle for my customers. We do have data, but we don't want to exploit them. As far as the number of customers is concerned, we are very pleased with the fact that we have many repeat customers, but also many new young customers.
I have actually experienced this at these meetings in San Francisco full of young people, none of which was wearing a tie and suit and a tie, but they were all wearing luxury, sporty, chic clothes, and I was very pleased with that. Much so that the store that we have in San Francisco basically represents the idea of clothing for these chic millennials that is, of course, never too conservative. Thank you.
Thank you.
Next question by Paola Carboni, Equita.
Good evening, everybody. Good evening, Brunello. I have two questions. One might sound trivial, but what I'd like to do is to share something on the performance of the Italian market, where we see some acceleration in the last months.
I'd like to know whether you do experience this in the retail sales or if it's just to do with deliveries. Your feeling on the Italian and European domestic markets. The other question has to do with the retail channel and in particular, the new boutique in Milan, whose format stands out compared to the other boutiques, and it's a very signature format for your philosophy. What I wanted to know, in the light of the results of this store, do you maybe have the idea to redesign the other major boutiques along the same path?
Well, very interesting questions. Starting from the boutiques, I have to say that on the Madison Avenue, basically the boutique is very similar. The mood is very similar.
The Milan store was slightly larger. We were given it at a very convenient price. No, I'm joking. It's a very expensive space, but it has a good taste. It does represent us. The same thing can also be said for the London boutique or the Madison, N.Y. boutique. This is specifically the kind of store that we like, where as soon as you step in, you should be enveloped by the atmosphere and the heritage of the brand. As far as Italy is concerned, we are very happy that it's going well. Of course, there's Montenapoleone that accounts for a lot, but I'm really happy with the 7.7% of wholesale, which means that the product is liked and appreciated because this is the truth.
I think that as we saw during the sales campaign in September and early October for women, what customers are looking for is products that are exclusive. That's the main requirement. This is very strongly felt with not a lot of distribution. One thing I'm pretty convinced of, and that I is that the web massifies products. As I said, last time, there was a lady here who decided not to wear a specific shirt because she had already seen it around in nine different websites or messages. That's why I think that the web massifies everything, and we must be good at being guardians of the web, like we have tried to do on the physical stores.
Exclusive, both in brick-and-mortar stores and online, because in the web, you can't really tell the difference between luxury and just an average product. Generally speaking, I'm very happy with Italy because there's a different mood on it. Very interesting, the results there, too. Especially in Italian multi-brand stores, we can feel this idea of working for one's customers, work for the local customers. You see, multi-brand stores are now starting once again to take care of their local customers in Frankfurt or Düsseldorf, and this is interesting.
Thank you.
If you want to ask a question, you can press star followed by one. Next question by Francesca Di Pasquantonio, Deutsche Bank.
Good evening, Brunello. The Indian Francesca. No, no longer. I'm Londoner now. Congratulations on the prestigious contribution in San Francisco. It must have been really special.
I wanted to ask you a question on the U.S., and this is my special interest because what we learn from other companies is that the market, it keeps being pretty tough, polarized, at least, and wholesale channels are increasingly difficult to support in a clean way, so to speak. I was wondering, besides the product presentation and the visual merchandising for That is an important help for their traffic, the traffic of your multi-brand customers. I was wanting to know whether you are actually perceiving a change in mood, in trend, maybe an improvement in the management of other brands, or whether the performance, your staggering performance, is just yours and is not shared by others.
Yes. Very interesting, Francesca. As you know, the U.S. is a very strong market for us.
Thank you for your compliments, for the invite. I have to say that there are some American multi-brands that are really fascinating because I went to a Hirshleifers just outside New York recently, and they have some beautiful monobrand stores, Chanel, for example, or us, but they are basically very close to their multi-brand stores. You can walk from one to the other. That's why I said to them, "You can also add some products from other brands in our monobrand stores, so that the whole concept is more fascinating." I think it is essential to show the product properly, and also the people working in the store. This is a very important asset, how they combine, how they sell.
Talking with Karen Katz, who is the president of Neiman Marcus, she said to me that things are improving there. She said we need to be more fascinating. This is true for everybody because if I step into a store, I need to be met by a beautiful product, wonderful visual merchandising. Of course, we companies must be special. Why is that? If I was the CEO of Neiman Marcus, I can't possibly have 20 people in charge of visual merchandising, and the very same person looks after Cucinelli, but also the Armani, Versace. It means that the company itself must be organized in such a way that visual merchandising can be done properly in those beautiful spaces, like it happens for Chanel or so on.
It is only us that can make the product more fascinating, and this is what they beg from us. On top of that, they require exclusive products from us because obviously, you know that when everything is too distributed, then the charm is lost. I was talking to Selfridges in London the other day, they really are the example of the modern, young, contemporary department store. We are working together. Things are going very well for them, and that's the very same relationship that we have with the online vendors like MR PORTER and NET-A-PORTER. When we talk to them, basically what we mean is a physical brick-and-mortar store, but online. This is also happening in multi-brands. They are really making some sacrifices and efforts in order to change.
I'm particularly positive and confident, we need to be contemporary. This is true for each and every one of us. For us companies, it is very important to be contemporary in the product you offer because sometimes we tend to focus too much on marketing or other things. Product really is the core of everything, especially when we talk about clothing, where volume, lightness is very important. You know, there must be the difference between a store in Hamburg or in Athens in terms of weight and fit. I'm very positive and confident, Francesca. We need to have a contemporary product.
Thank you.
Mr. Cucinelli, for the time being, there are no further questions.
I'd like to say goodbye to everybody, and I'd like to thank you also for accepting this change of time. We also wanted Mr. Ferragamo, that I truly respect, to hold this conference, too. Thank you. Good evening.
Chorus call operator speaking. The conference is over, you can now switch off your phones. Thank you