Brunello Cucinelli S.p.A. (BC) Earnings Call Transcript & Summary

Good evening, Chorus call operator speaking. Welcome to the presentation of preliminary revenues, the first half 2022 of the Brunello Cucinelli Group. [Operator Instructions] Speakers will be Brunello Cucinelli, Executive Chairman and Creative Director; Luca Lisandroni, CEO; Riccardo Stefanelli, CEO; Moreno Ciarapica, CFO; and Pietro Arnaboldi, Head of Investor Relations and Corporate Planning. [Operator Instructions] I'd now like to give the floor to Brunello Cucinelli, the floor is yours.

Good evening, ladies and gentlemen, and thank you for joining. It is a pleasure to have you back, as usual, investors, analysts, and there's always some members of the press joining us, and we're very pleased with that. So as it is -- it has become a habit for this year, we want to organize some extra calls, this one and the one in December, as we did in 2020, in 2021 and the same also for 2022 because probably next year, if there is total rebalance we'll go back to normal. But the idea that you can actually receive as many information about our company and as many details as possible, I have always been very much in favor of this. And I think that you also appreciate it what you think Luca, Riccardo, Moreno?

Yes, we all agree.

So before we start, we'd like to pay a very significant tribute to our very highly esteemed Cavalier Leonardo Del Vecchio who passed away a few days ago. And we wanted to pay a tribute to Leonardo because, first of all, he is an exceptional partner to us, a very serious partner, a wonderful heritage there. And I have to tell you that the last 2 appointments we've had with him, the last one was when he actually came to view the collection and you see we are on the verge of laughing because he was so fun. So when he came to view the collection for the ladies presentation in Milan, he stepped into a showroom where he actually see his glasses are -- glasses, that were presented showcased in a certain display in a certain manner. He really enjoyed and appreciated the visual. Then we had lunch there because there were his 2 -- 2 of his children and then my 2 daughters. And Riccardo and Luca, together, we said, we really like the fact that this story -- really like the story. And hopefully, it will be the same for us for the coming years. So a very special person. And also I read on the press of when his son said, to the father, I'm going to Agordo, and then he's starts -- replied how beautiful our factory, our plant is, and I feel this is really a great statement which means that he really loved the manufacturing, the factory, and the plant. And to conclude, I'd like to say that when we design these glasses, eye glasses, eye wear together, I said Leonardo, do you like them? And he said, "Well, I don't know whether they're beautiful, but I like them very much." But you should remember that they have been manufactured in the best way possible, the best way you can manufacture sunglasses. Just to give you an idea of how this -- what fascinating man was like. He really went down in history for the past 50 years of Italian manufacturers so thank you, Leonardo. And here we are. So the spirit of the enterprise. Well, for the time being, it is very, very high. We have an assembly on Friday as we usually do on a quarterly basis. We actually call it assembly. But actually, you can't really call that because -- but until Friday, I was the only speaker, so it was not really an exchange. But this time both myself, Riccardo and Luca took the floor, but this is a very interesting moment for our company because we take stock of how the collections are doing? How things are performing in general? How we are all steering? And I actually said it once again during the assembly, saying who were we in 2020? And what had we envisaged in March, April in back then, March, April 2020? What -- so we really should keep this very close to us. We believe that the pandemic is in its final stages. Honestly speaking, I was hearing President Draghi today, Italy is growing by about 5%. So we really appreciate this because we can't be concerned and in a bad mood all the time. I find that Italy is once again strongly credible. Of course, we are grieved by the war because as we were saying a month ago, at the same time, I believe in the wisdom of men. I would like it to be somehow -- the call of exclusivity of the brand, the schools of high contemporary craftsmanship, and I'll talk about this later and also the call of workplaces because this will definitely rank high on the agenda. Who will make these products in the coming 20, 30 years. So we are all here. Now I'd like to read out the press release figures and then we'd like to dwell on our vision for the end of the year 2022, then I would like to give you visibility on 2023 since the men's collection for Spring/Summer '23 is out then so what we believe of 2024 and vision that we believe is pretty visible. And then the 10-year plan, 2019, 2028, that perhaps -- we might say that we can complete it about 2 years in advance, and we're very happy with that. Then we will talk about markets, the collection. About 10 minutes will be devoted to the exclusivity of product to the Casa Cucinelli project you are familiar with and also the training schools for the young artisans for the coming 30 years. So I'd like to read out the highlights of the press release. So net sales of EUR 415.2 million, up 32.3% at current exchange rates and 28.3% at constant exchange rates compared to the first half 2021. We call this beautiful sales growth in the second quarter, which further improved the trend that was already very positive. The trend that was reported in the first 3 months of the year. And this happens across all channels and geographies, and we'll go back to that. So very relevant growth in Americas, plus 52.7%. And of course, you should also consider that the comparison of the first half of last year, then Asia, plus 27% Europe 20% (sic) [ 20.7% ], Italy 19% (sic) [ 19.7%]. Then strong revenue growth in both the retail channel up 47% and the wholesale channel that you -- no, it's about 40% of our business there, and this channel was up 16%. So very, very good performance in the first half of the year, the deliveries of the full Winter '22 collections that are going very well. And we will finish -- complete this in about a month time, the regularity of the production activity and the particularly positive favorable moment that we feel our brand is experiencing, all this leads us to estimate for 2022, we would like to call it a record-breaking year and a nice growth of revenues of around 15%. With equal confidence and concreteness, also on the basis of the very positive feedback that actually accompanied the presentation of the Spring/Summer '23 men's collection, and also the related almost completed order collection, we can, therefore, envisage a healthy good growth in the region of plus 10% for 2023. So we are very satisfied with the path we are on, and we finally envisage that we'll be able to reach a turnover of around EUR 1 billion in 2024. And we highlighted this because we believe that is quite a good achievement. So this is my comment on the first half 2022. It was -- it has been particularly good with important -- significant sales in terms of both quantity and quality. The autumn season started. It was off with excellent results and with a strong image of the brand -- strong image value. And therefore, all this makes us envisage a record-breaking year with a sales growth of around 15%. In the great capital cities of the world, we have set up spaces that we call Casa Cucinelli and which we feel are you see bestowing nobility and prestige onto the brand. The relevant or the remarkable order intake for the Spring/Summer '23 met collection allows us to think of next year with a healthy growth of around 10%. So as to the first half of 2022, so a very, very beautiful semester growth worldwide. So as of 31st of December, we -- in the U.S., we had 34%; Europe, 42%; and in Asia, 24%. And nearly half of which was accounted for by China. And honestly, at the end of 2022, we believe that it could -- should be more or less the same, maybe with just a point difference. Generally speaking, the taste of the brand seems to be very high. And we see taste pleases us not really in the fashion end. We are just an understated recognizable brand, and we're very happy with that. We have delivered autumn/winter very, very well. We actually are still delivering, we're still shipping something, and we it be complete in a few days time but the interesting thing is that we had no raw material issues there. We all had raw materials in-house. So nothing to report there. And the first sales of the fall/winter collection usually starts towards the end of June. And the first feedback is excellent. But what we are mostly interested in is the fact that the taste is very widely appreciated because if the taste is right, then you can really have quite a good visibility on the rest of the half. So no issues on the raw material, the materials and to conclude, I'd like to say that in the past couple of years, you see we did not have that much inventory. So the suppliers do not have any raw material. That's why it was a bit difficult with deliveries, but this was not our case. So as I was saying, in the 2020 plans in April, I think that none of us could have imagined this but then, we drafted 5 different budgets. And in the writings that I usually have, you see this is my hobby -- has been my hobby for the past 40 years. I remember writing that I would have paid fortune, if I could guarantee that nobody would be actually fired in 2022. And I have even written that I would also dispose of 20% if we had managed to do this in that. I have to say that we were managed not to lay off anybody and to restore the balance, but I couldn't have -- never concede that. So what about the second half 2022. So we have a very good visibility on that. We envisage that we will have a healthy gracious growth, and we'd like to consider it a record-breaking year with growth around 15% in terms of revenues, and EBITDA around 18%. A figure that we consider to be attractive and healthy. Just a couple of things because we talked about this about a month ago, healthy profits and I as an Italian citizen, I feel proud of my country and on the tax rate, too. This year, it will be around 29%, but we have enjoyed 5 to 6 years, Moreno, with benefits coming from our government. And in the past 5 years, on average, we paid 24%. Healthy investments and healthy inventory too, healthy dividends, around 50%, as you know, but you know all this from the April call. Then prices. We believe that they are balanced, these prices. As you know, twice a year, we set prices when the collection comes out in the summer and winter. So if Europe is worth EUR 100, EUR 120 is the U.S. and EUR 128 is Asia. And then in the past, actually, in the last road show, 1 of your analysts asked me a nice question, but and it was a first for me. They said, do you believe that your prices are ethical and honestly speaking, I don't know whether they are ethical, but we think that they are the right just fair prices to have a fair profit. Then e-commerce, it is also performing very well with a balanced and soli sound growth. It is a very important channel for the image of the brand. We more or less, we have understood that 50% -- 55% of our customers come to the shop after viewing something online, which means that the presentation, the way we showcase and display the lifestyle of our items really is highly valuable. So we attach -- it is very important for lifestyle and we like the e-commerce in terms of showcasing their product, and it's also very important for growth. Then 2023. So the men's collection has been released, then Ladies collection coming out in the next week, then the orders or the collection for men's wear, well, they really all go well. And also the summer season sellout rate was very good. So we feel pretty strong, I would say with about a 10% growth in the coming year with a healthy EBITDA and profitability. Orders have been collected then the value of the sellout is extremely high. And as we were saying this morning in the Board meeting, we try to really keep high the idea of exclusivity and craftsmanship of the brand. We keep it very high. Of course, it's not up to us to express any judgment on taste that's up to you. That's not something we can gather or rule, but we can definitely vouch for the fact that it is in line with the identity of the brand. But I think the exclusivity is something very important, and we would like to keep this exclusivity very high on our agenda. So for 2023, we are happy with that. As for 2024, we still envisage a good year, and we should be able to achieve this amount, the famous billion. I have to say when we were farmers, when I was a young man, in the village, there were a couple of entrepreneurs who were celebrating achieving ITL 1 billion, and they would organize a great party, invite all the workers, and you see this idea, this billion liras has [ already stated it ] it is stuck with me. So it was always a great kind of achievement. So, now at this point, we can envisage that the 2019-2028, 10-year plan, we believe that it might end 2 years in advance, 2 years early, therefore, in 2026. So this is for the highlights in terms of results. So the Casa Cucinelli, to tell you the truth, they really are providing a lot of satisfaction to us. We have -- it's in Milan, New York, Paris, London, Tokyo and Solomeo, obviously. And we are about to open in Dubai, Hong Kong and Shanghai. And what do we do in these places? Well, these are places, places where we meet people and you see -- it's not just reserved for VIP clients. This is just a meeting place. We organize dinners with customers and what we realized is that they really provide high value to the brand. You are happy to look at [indiscernible] yes. So now moving on to product, and then we'll talk about employees, the workforce. I keep saying that in order to make your company survive for 1 or 2 centuries ahead, you need to focus on your product. If your product is contemporary, then it means that you can maybe have decades ahead of you. Maybe you can run into a bit of difficulty if you get some investments long way. If you have high-quality exclusive products, in that case, your company is definitely [ vesting ] to survive a few decades more. Few decades longer. You know that there's 52%, we have measured this. Technically, 52% and the garment is pure craftmanship is made with the hands of workers. So as to the assembly on Friday, we, of course, gave thanks for the creativity, the taste, the deliveries and everything. We basically offered a gift to our coworkers because we want to. I'm going to give them a supplement of 3 to 4 points to account the inflation for the whole of 2022. So workers for the whole of 2022 that will receive about 3 or 4 points of the supplement in their wages. So we decided to do this but only in favor of those who earn less than EUR 2,500 a month. So we have 2,500 employees, 1,250 staff in the retail stores worldwide, and we think they make quite good wages. And then it is not that difficult to actually go to work in Monte Napoleone in [ Bond Street ] is quite appealing, whereas working in a factory it should also always have more an economic dignity attached to it, and we need to work on this. This morning, we really had a very wide and deep discussion this morning in the Board meeting because we talked about who will be manufacturing this exclusive handcrafted goods. And we said that I seriously believe that in the coming decades, the problem will not be to whom we will sell extremely high-quality garments or who will buy them. But actually, the issue might be on who will make them. So for us, as you know, we have set up the schools, and we would like workplaces to always be somehow special because you see the workplace, especially in factories and plants, we were always discussing this with Leonardo Del Vecchio offices usually are very pleasant to work in. They might have some works of art displayed. But one, when you actually step into the production department or the assembly line, then there are -- there's no proper lighting. There are no windows because the habit is that -- what we have been accustomed to thinking is that if you raise your gaze to the sky, you waste the time. Whereas I am of the opposite opinion. I believe that if you have a chance to raise a gaze into maybe to look outside, then your spirits will be lifted. So for a couple of months, we carried out a research on that, and we actually realized that project for a very high -- for production of the highest quality, it won't run up into any difficulties until 2030, 2032. The average age of our craftsmen is about 45. So they're about 45 years of age on average, and we're now working, we're now seeing to it that the future craftsman will be trained for the next 30 years. It might sound preposterous or odds, but you see if we can find young artisans who are 25 or 30, you can actually envisage them working for the coming 30 years. And we were talking about this on -- you see in an evening out in the festival of Spoleto last Sunday, we always believe [ the thing ] that it's always up to the [indiscernible] of others to apply some trades, but we are of the opposite opinion, we don't think so. So -- so workplaces is a big issue. We believe that workplaces should be particularly special. And you see, as we were saying this morning, you can maybe work in the dry cleaners you see. But if you have a full window in front of you, and you can see outside, if you are -- if you have a beautiful equipment, if you have proper lighting, everything changes, and nobody can actually make me change my mind on that. So going back to wages. So we are not -- we're not talking about those who make more than EUR 2,500. But we believe that with just 1% less EBITDA, you can definitely change the workers' lives. The genius hands of your company or our company can remunerate in a different manner. And I'll just give you some -- an example here. If you make EUR 1,500 or EUR 1,400 you can -- a month, you can live well in Umbria compared to the large city. But if instead of that, you make EUR 1900 or EUR 2,000, that really changes your life. So if we do this with -- if we apply this kind of thunder to those who perform slightly more humbler jobs, and we consider these people as thinking source, as we saw the ascended the other day, I think that we can achieve really good results. In 2013, we the -- in our ability in our [ hamlet ], we set up these high craftsmanship schools. So these schools really are providing a lot of satisfaction to us because currently, we have young tailors who have been hired in New York, Los Angeles or Milan. And as you often tell me, if you go into a store and if you are met with a 35-year-old tailor, a tasteful tailor, then, of course, it's much better than being met by an elderly man. So what about these schools? So 60% of these people work in the company as employees of the company, and they perform specific duties. Whereas in the village, we have schools for men's and women's tailoring. To do that, you need for at least 2, 3 years to train a tailor, a men's tailor and you see works with the factory and the seamstress can cooperate with 60 young style people and there is a very high contribution in taste, and this is very important. But the difference is these people, they work for 8 hours in our company, whereas in the hamlet, they work for 5 hours a day because we want that -- you see them to have a -- in the -- switching from school to work. I mean they need to take it slowly. So instead of 8 hours, they work just basically work 5 hours. They receive a fair remuneration. And then the interesting thing is that once they end the training cycle, of course, we ask them whether they want to join our company or not. But we have actually realized that we have students from all over the world, so maybe some of them go back to their own country of origin or maybe they go back to Tokyo, and they can go and work in our store in Tokyo as a tailor but this means that you are an open company. It's not that you train for 3 years to become a tailor and you are forced to stay in Solomeo. You might go to Mr. Armani and say I have attended schools there and will you hire me? So what do we want to do today? In about 2 weeks' time, we will be convening the whole Umbrian press to talk about the value of these schools and of these traits, of these crafts. In 2013, we dropped the first 5-year plan, which ended. Then we dropped the second plan. It was between the 2018 and 2022. Of course, for 1.5 years schools were nearly closed. And now the third project is starting the third plan, 5-year plan, up until 2027. But you might say why are we having a call on these topics. Well, because we believe we very much believe that high-level, high craftsmanship products can definitely make the difference on the market. Of course, in order to do that, what I'd like to say in conclusion is we need to have very special workplaces. Last time there were with these 6 entrepreneurs, they were asking me, "How can you do that?" and I answered, you see my father, my brothers, they worked at places they can't even envisage, can't even conceive that a human being can work there. So for us, it's very easy to understand and allow me to say that it does not depend on what kind of industry your in because if you were at steel work, I can really prove that our friends from the steel works in [ Perni ] was able to make his company contemporary and very modern. And now this company has been bought by another Italian company, but he was able to provide very good working conditions for his employees. So what we would like to say is that we work in a peace of mind. We actually discussed this during the assembly the other day. And every day, I keep saying that we don't want to be dragged down by the ordinary issues that we can't possibly change. We want to focus on what we do. But at the end of the day, the daily recommendation is maybe we can go back and read what we wrote back in 2020. The 5 scenarios that we depicted in 2020 in March, April. What did they say back then? We had very different thoughts back then. Well, if we just take a look at them, of course, we are relieved and then now we can envisage the coming future, 20, 30 years, but also with a pinch of optimism because if we keep worrying about something every day, you see it's not healthy and also around the governance, I'm 68 years of age. I experienced 62 changes of government. Next year, they will be 63. So we should not be dragged down by that weighed down by that. We are very happy. We are very confident. Of course, you need a beautiful contemporary product because no matter what kind of marketing strategy you have, you can have the most stellar marketing strategy in the world, but if your product does not go along the same lines, then you have difficulty. And then the great value of exclusivity. We have always claimed and maintained this. But still today, you see we are very happy. The other day we welcomed the CEO of [ Ashron Costento ] came 2 years ago, and we'd be very happy to welcome my -- a friend the CEO of Mercedes at the end of October. 9 managers will come too in order -- in October to talk about luxury, quality and exclusivity. So there is a kind of desire for special products. So we will have August, October and December and then if everything goes back to normal next year, we'll give you the figures in July and December. We report in July and December. But you see some people might say, why so many calls? Well, I feel more confident. I feel safer if we convey, give you visibility every month or 1.5 months. So thank you. Thank you. And let's now open the floor to questions.

The Chorus Call -- [Operator Instructions] First question from the Italian conference call by Flavio Cereda, Jefferies.

So I have 4 questions, as many as 4 questions today.

Yes, I know. I know. Well, we have time. You see we are open to that. Whatever, we are not able to discuss in the time allotted, we can send e-mails anyway.

So the first one, inflation. And I'm really pleased with the initiative that you mentioned to help the employees below a specific salary bracket. That's really praiseworthy. Then as to the supply chain, what kind of issues, if any, are you envisaging there? Any issues with suppliers having to do with the inflationary trends? So that was the first question. The second question, either you or Luca can answer. The dollar -- the dollar equal to the euro, the parity. So if I was your American customer, I would shop. I would really go binge shopping in Europe, and then bring everything back to the U.S. if the situation was to persist, what are you going to do? Are you going to act and intervene on prices? Then three, multi-brand stores. When you talk to them, do you perceive any concern from them? Meaning that there is no slowdown, but they actually make commitments, they buy goods because they think they can buy them. So I wanted to understand their take? And then the last question. You talked about schools and the fact that craftsmanship that you also make sure that there are no bottlenecks in the future. Whenever I come to Italy, but the same applies to U.K. or U.S., you see young people, they have disappeared. Everybody is looking for staff.

Yes, we'll be pleased to talk about that.

So I was wondering, but these candidates, are you able to find them? Are they good? Are they -- they seem to be -- have disappeared in thin air.

Thank you, Flavio. First of all, and I'm speaking in favor of Italy. And so we had 1 day of meeting with the new President of Milan, AC Milan and his coworkers, and it was a very interesting meeting. They're really fascinated of the fact that the both AC Milan that they come into Italy. So maybe soccer might change also thanks to the fact how the executives behaved. So I really like the fact that they did come to us 1 day to try and understand how to do the visual marketing. So inflation, as I was saying before, we supplemented the wages to our employees. We did it for the first half, but we will do it for the second half too, and then we'll see about next year. So then in -- as to the supply chain, no issues there. Nothing wrong to report, but I have to say that we actually have prices that changed twice a year. And honestly speaking, they really have such a huge workload of this [ 5,000 ], [ 3,500 ] worked with us. They work 12 months a year because they have so much business, so much work, and the remaining suppliers half of which work for us and half for Hermes and Chanel. They's are too -- are performing well and making good money. Then the dollar, Flavio, I believe that such wealthy, well off individuals, you see they will not really be interested in how the dollar is performing or the exchange rates. We set the exchange rates every season before we come out with the collection. So you should never expect any profit or loss from Forex. Of course, this season will -- benefited from the performance of Forex performance. And if that persists, the same will also go for 2024 -- for the collection, '24 collection. But you see we never changed prices during the year. We have the price list twice a year, and we set them when the collection comes out. So the price list that the multi-brand are using, these are the price list that they will have also in January, February, March and April. And the orders for the men's wear collection, we have to say that many multi-brands have a lot of plans ahead. Everybody wants to renovate, wants to expand. But this trend had already started about a year ago. They have basically reorganized their network of vendors, the vendors they want to invest in. Some of them have renovated, refurbished their stores. Of course, the worries in the background. But what I do notice is there is a brief about the war, but not because of any economic concerns. Draghi said, we will grow by 3% but you see we do not actually see that. Schools, that's a very important topic. So first of all, we -- as we discussed during the Board meeting this morning, many people have resigned and they don't want to back -- go back to the old workplaces, which means that your workplace needs to be pleasant. Usually, we receive between 50,000 and 70,000 resumes a year. but not just for the style, the offices. The reason why we receive this is also because they want to apply those traits. But the thing is if I come to work, and I am a tailor and at 22 years of age, I can make EUR 2,000 a month, and I can work surrounded by a dignified environment, knowing fully well that the company, the enterprise behaving properly with the environment, that does make the difference because there are 2 important topics that we mentioned this morning. First of all, the problem of being online all the time. All those who are white collar workers in offices in any company, they, of course, maybe they work better. But -- they are all online all the time. They call you on Saturday and Sunday to talk about this market or the other markets and people are -- you see they're really [indiscernible]. And the only advantage of workers or blue collar workers is that after 5:30 p.m., nobody will call you. And this is a true benefit there. But now going back to what I was saying before, wages and workplaces really rank high on the agenda. And I say it once again with just 1% EBITDA and Moreno can confirm that, if we just allocate 1% of our EBITDA, we can end up really changing the lives of the artisans of our crafts people because between EUR 1,500 and EUR 1,900, if you make that EUR 400 more. That's when your life changes. That's why we will be -- hold this press conference locally so that we can once again return more of dignity to some jobs and also economic dignity accordingly. Some TV brought -- have some research has been carried out. And someone said we need to pay them more. There's no way around it, but it also depends on what kind of work conditions you have. The other day. I visited is a very important factory. And if you see it from the outside, you might be taken it back. It's really wonderful. Then you actually step into production, and you actually realize how tough it is. Of course, people need to work, but we want to strive and change these conditions because we are fully convinced that they will -- the problem will not be who we will sell our goods to. But the problem will be who will make them, and I am sure about this. And we invested in this. That's why we call this the year of schools in our 5-year plan. Hopefully, we will have twice as many in by September. But -- but we said even if we want to increase to 100%, then we would do that. So we can definitely make the difference there. I don't know if I've answered your question, Fabio. If there's something more that I can add.

No, very clear.

And also for AC Milan, we'll introduce you to the President, [ Novara ]. You see I was fascinated by that because this is a very important issue. He said that perhaps the era of patrons in football and soccer is finished because if we could change this also in our football companies with such huge revenues, maybe it could be -- we could restrike the balance. But the idea is good. Thank you. Someone might say, well, they're talking football. Well, there are a few listed companies there.

So next question from Andrea Randone, Intermonte.

I have 3 questions. So very strong first half and also the sell-through. Maybe if you can expand on the sell-through number. Secondly, your availability to comment on what you see. I'd like to explore this to have an update on what your take is on the -- on China? Because it's not really understandable in terms of openings, and you had fantastic stellar numbers there on the rise. So I'd like to understand from you what the mood is of consumers. And the last question is your plus 15% in the year as -- so in the second half, there should be lower revenues than in the first half.

No, no, no. We'll try and explain this. So first of all, something nice that happened in the past 1.5 years. There has been a new rebalance in stores in terms of sales -- sales season. So sales -- the sales timing has been complied with, and this is very interesting. Of course, the performance in the first half. Last year, we had some closed stores, and this is very important to be remembered. But there is a rebalancing. So sales started on June 25, which is the right time in different countries. You see -- so we're very happy with this new sales season. Luca, maybe you can talk about China here. What I want to say is that, be careful. You see out of 24 points in Asia, 13 is from China. So dear analysts and investors, you should really consider this. And before it escapes me, I'd like to say that I'm fully convinced that the first half results of all brands will be very interesting, but this is not my trade, this is my impression. I have the feeling that it will be very, very interesting. Then of course, there is...

Yes. We are very satisfied with the fact that we were able to grow in both the quarters in China. I think that our results is consequence also of our size, as Brunello was saying. And the fact that you see we can catch up on the last days, on the day of closures. But I think that 2 elements contributed to acquire increasing number of customers in China, first of all, is this very strong desire and craving for exclusivity in that market. Brunello was saying this before. I think that this is particularly true in China. And if you look at the different segments in our industry, all brands with the highest positioning, they have experienced a better. They have said better. Then secondly, clothing is really taking center stage, not just in China, but worldwide. The growing visibility of each and everyone of each player really is such that we want to take care of our products. And clothing is a very important way of showing one's image one person a visual image. So thanks to the kind of offer that we have, we were able to have a great first half. The rest of Asia also offers a positive contribution. Brunello says Japan very well, Korea very well and Emirates very well, too. And for this reason, as Brunello was saying, in the geographic breakdown by continent of our revenues, in spite of the fact that this first half was a bit tough in China, we still -- yes, but January and February, it was definitely not tough. It was actually very interesting. So 2 months were fine, and they compensated the rest. It was not really in storm or troubled. Yes, we could still see a lot of opportunity there -- so our comment was that there will be great first half results, but that's what we -- this is just our opinion. And about the multi brand, Chinese multi-brands, too, they have -- but they were very excited about this campaign, a sales campaign. And then in the second half of the year, we envisage this kind of figure. But last year, the second half has been very good. And there was the pleasure of going returning to stores, to physical stores. So we are very confident on this. And it was a particularly good half in all markets with a lot of fascination and the desire to return to brick-and-mortar stores.

Next question by Guido Lucarelli, Citi.

Three questions. The first one, can you give us some color on how the quarter evolved whether there has been an improvement or a deterioration in the quarter in the retail, I mean? And also how July started?

Yes, I will answer your question. If you want to know about the first days of July, of course, I will tell you. but you see we just ended a wonderful first half. And you see -- and now you want to know how the first 7 days went of the new semester went. No, but I'm just joking Guido. Yes, I remember, in New York, I had a meeting with someone in early December. And I said, I'll come here to talk about the coming year. And he said, no, actually, I'd be just interested in the first 8 days of the month of the year. And I said, well, why don't we just have a coffee together, and that's it. But Guido move on. Of course, we will be very clear in our answers.

Now I was asking this question because I saw -- we saw a dip in the consumer confidence in June and then July. So I'd like to understand whether you have actually experienced any slowdown in Russia? And then if you think that -- given what you're saying about the other brands, what's your take on your -- the Russian consumer, whether your product is helping here? And the last question has to do with prices. very useful indication on the difference of price in -- depending on the country. I'd like to know vis-a-vis the price adjustments that you do twice a year. In the half in question, if we were to think of the contribution purely from the price increase, whether it's the same this year or last year.

So I want to start off from prices Guido. As we were saying, we set exchange rates then the collection comes out and the same price will be the same for multi-brand and mono-brand twice a year. So you have no issues. This has always been the case and there will be no changes or increases from 1 month to the other because since we deal with the multi-brand, you have to respect the price you sold at. So that's it. Then we do not expect any capital gain or any capital loss in terms of prices. We have always maintained -- done it this way. It's also part -- once someone asked us, as I was saying before, just think the prices are ethical. What I want to say is that we would like to have a balance between America, Europe and Asia because if I was a Chinese customer, and I have a very high price compared to Milan, while I would be -- feel uncomfortable, it's not that I cannot afford it because I'm sure our customers can afford it, but it's really uncomfortable. The other evening, we paid EUR 70 instead of EUR 30 at a restaurant. It's not that we can't afford it, but you're not -- is not right. So as to the first half results, we believe they will be very interesting. But of course, it is up to you to judge the brand and the different brands because I think that we have gone back to a few years ago when there is a huge gap between exclusive through luxury and what was used to be called accessible luxury and lucky enough, this is no longer in use, this term. I was there with [ Loropiana ] in Milan, the [ Bacol ] University. There was Giovanni there. There was me, Loropiana, and [ Giovanni Burani ] and Giovanni had just bought a company in [ Peruja ] by friends. And they were selling a set of ITL 27,000, EUR 12 more or less. And he said, I firmly believe in accessible luxury and said Loropiana looked at me and said, what was that? I don't understand what that is. But seriously, talking, that's when accessible luxury was born and that's true luxury. We want to only talk about true luxury brands. So we don't want to talk about products that are more commoditized because we don't know this kind of market, small town market. Well, if you have any questions, you can call us tomorrow, send us an e-mail because this is the first call of the half results, semester results. So we don't want to mislead you, not with our figures, but maybe with our comments.

Next question Melania Grippo, BNP Paribas.

I have a few questions on the EBITDA performance. You gave us an indication for 2022. But since you are already accelerating on your targets, what can we expect in 2023 and 2024 in terms of the EBITDA margin? And also, given this is the first half of the year in terms of top line, it's very strong. Can we expect in the first half of this year the fact that you exceed the 2019 level? Second question on the potential gas rationing in Italy. How are you tackling this issue? Are you getting prepared? I think that you do not have the high dependence on gas, but I don't know whether this can imply something in terms of electricity contracts and how you are tackling the whole thing.

So Melania, as to the gas question. Well, roughly, we do not see any issues there truth be told. Then if they shut it down completely tomorrow, I'm not sure. But so far, we feel that it is not an issue anymore than what our governor -- our rulers are saying to us, too. In terms of EBITDA, this year, hopefully, we can achieve our 18% target, which is the EBITDA level that is somehow pleasing or pleasant. As to '24 and '25, we definitely do not want to go down that path that you might be used to, continuous increase. We believe that the EBITDA of this company should be the 1 that I mentioned. Because with this kind of EBITDA, it means that we can have a 10% net income. We believe that this is what we call a fair profit, balanced with a fair balance between profit and giving back. We do not want to chase because we believe that new generations that I myself too, I do not buy products of companies that have a preposterous profit unless I have to buy something exclusive. For example, a few years ago, someone very, very important came to us to visit. And of course, I was -- and I said I will buy a product because it's 1 of a kind. Someone once said to me, I dive on Amazon. [indiscernible] [ Pietro ], I buy on Amazon because everything costs less. But I said that you're an analyst. So seriously, what we say is we firmly believe in having a fair profit and/or therefore, in fair EBITDA. A few years ago, Melania, fashion, the fashion industry had about 16%, 18% EBITDA. That was the average level. And I have always maintained that if you pay people properly, this should be the fair degree level of EBITDA for a company. So the idea is that you should not expect EBITDA of 25% from us. Well, if we decided to perform a price increase, we could -- I'm sure that we could sell. But nevertheless, I believe that younger generations would not agree with that. But you see when we welcome the 4 monks here about a month ago, there were 4 young monks, and 1 of them said, let us eat a fair amount of that enough is left for the rest of mankind. I found this very, very relevant as a comment. The fact of having balance, fairness, where you work, how you work, how you behave with mankind. Personally, I do not buy any product that is actually with a preposterous profit. We call our product expensive and because we basically paid the whole of supply chain, but this is just a strategy. When we went public at the beginning, we told you, yes, we would like to have a constant 10% growth. And in the past 20 years, we grew by 13.1% on average. That's what we mean. I have many friends who say, we are always chasing 10 basis points on EBITDA, and so you should never expect this, never, not from us. I don't want to be boring, Melania, but this is what we think. Since we believe that what really matters, you see the value of your enterprise is not provided by 2 extra points of EBITDA, but rather is how your image is and how people -- and people want to know who you are, how you behave. And we already answered your question on gas.

Next question, Paola Carboni, Equita.

I have 4 quick questions. First of all, have you noticed in the past quarters a different performance between Tier 2 and main cities, Of course, considering Europe and United States? Then another question on the multi-brand, positive mood there. I was wondering to what extent you have a feeling that this positive mood is translating into higher market share for you and knowing that the environment could slow down the scenario could slow down or whether you -- these multi-brands still believe that there is a supportive context? So whether this mood has to do with the market or your brand, with the strength that you have? Then 1 question on pricing.

So no changes in price during the season, but if we thought about '23 spring/summer, that we already presented. We already sold it Paola. Yes, already sold.

Whether this collection has a price increase compared to spring/summer '22?

Well, this, yes, like every season, the season starts, you see the cost, employees, raw materials, and we set the exchange rate. So we are in line with the historical. Yes. Yes. So multi-brand, we do not see any difference than on the performance wherever you go, there is no free hotels or free restaurants demand no matter whether you are in small or big cities, everybody is going to cocktails, restaurants. There is a desire craving to go back to normalcy and sometimes even exaggerated, I believe. I had 41 dinners in a row. This is the way it is. I see it even very much so. Multi-brands have good budgets, but not just for us. That's the way it is in general. And the prices is a choice. We change it only twice a year, and that's final.

And the last question, we saw 3 openings of stores in the first half. Do we need -- what about the second half of the year?

Yes, we have a beautiful store. We are about to open in Palo Alto for the Silicon Valley customers. And then we have the renewal in [indiscernible] and 1 in the Emirates. So 2 openings and 1 refurbishment. Actually on expansion into Zurich. So these are plans. We are pretty confident. Of course, the product is key. The question always is whether your product is contemporary that you see we have no issues in terms of production. Very often, we complaint about deliveries, but very few people have taken on risks. So you see you need to procure ahead, for example, the fabric for your shirts. You need to procure them ahead.

As a follow-up question, any openings plan for 2023?

Yes, of course, '23 and '24. Well, Hopefully, you will be here in 2050 and '60 -- in 2060. But when we -- you see also this is something we talked about with [indiscernible]. You have to invest with a high and great value of brand and exclusivity, very fascinating. All these people, I really like the fact that we have so many people coming to visit. But what really matters is to find the right people to make watches too because spending 8 hours you see looking at the same thing and making watches, of course, you are very tired by the end of the day. We need to protect production. That's what it is. Thank you very much.

[Operator Instructions]

If there are no further questions for us, it has been a great call, and you see that's what we were saying before. Just think -- So thank you very much from the depth of my heart. Enjoy your summer and whatever you need. We are here for you. Enjoy your evening. Goodbye. Goodbye.

Chorus call operator's speaking. The conference call has ended. You can now disconnect your phones. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]