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

Good evening, and welcome to the presentation of the results of the first half 2025 of the Fashion House Brunello Cucinelli. Speakers will be Brunello Cucinelli, Chairman, Executive Chairman and Creative Director; Luca Lisandroni, CEO; Riccardo Stefanelli, CEO; Dario Pipitone, CFO; Moreno Ciarapica, Co-CFO, Senior; and Pietro Arnaboldi, Investor Relations and Corporate Planning Director. [Operator Instructions] I'd now like to give the floor to Luca Lisandroni and Riccardo Stefanelli.

Good evening, everyone, and it's a pleasure to have you back. It's Luca here, and we are all gathered here in Solomeo, except for Brunello, who is in Prague, attending one of our typical traditional events that we mentioned to you very often. Brunello, can you hear us?

Yes, I can hear you very well.

It is actually the first time, Brunello saying since when we listed that I attend the call remotely, so to speak.

So we organize these interesting events because we usually invite between 120 to 170 guests. But I wanted to be among just think of how many people I need to be surrounded by. The only problem there is that I have to take pictures with everybody and especially with ladies, ladies are like themselves so you have to do retakes. But I'm very happy to be here. I'm very happy to be part of this call. Luca, Riccardo, I give the floor back to you.

So we are here for this half year call when actually we are reaching the end of the third quarter. So what about the call? So I will organize it in three main topics. So the analysis of the results and I'll be reading out the results as in the first page of our reports and a quotation from Brunello, then our CFO, Dario, here beside me, will provide you further insights. Immediately afterwards, Brunello will confirm our guidance for 2025 and 2026. And to conclude, I will take back the floor to offer you an update on our markets. And Riccardo will give you a comprehensive overview on production, supply chain, themes that are very dear to us and also including the opening of the -- on the extension of the Solomeo factory and the opening of new artisanal factories and with investments to be completed this year. So now starting from the half year results with great satisfaction, we can say the first half of 2025 closed with very, very good results in terms of revenues, profitability and net income. Revenues amounted to EUR 684 million, up 10.2% at current exchange rates and 10.7% at constant exchange rates versus June 30, 2024. EBIT, EUR 113.8 million, up 8.8% versus H1 2024 with a margin of 16.6%, 16.9% as of June 30, 2024. As to the net income, it amounted to EUR 76.7 million, up 16% versus June 2024 with an incidence of 11.2% vis-a-vis 10.6% in H1 2024. 2025 represents a most important year for investments with the early completion, 1 year ahead of plan of the 2024 - 2026, 3-year program or plan for artisanal made in Italy production. This includes the doubling of our Solomeo factory, ensuring a serene working environment until around 2035. As of 30th of June 2025, investments totaled EUR 63.5 million versus EUR 44.8 million in 2024. The balance sheet is very sound with a net financial debt at EUR 197.2 million, reflecting both the above-mentioned investment plan and the dividend payments of EUR 68.8 million altogether. And as of 30th of June 2024, net financial debt was EUR 102.3 million. So the very, very positive sales trend in July and August in continuity with the growth of the first 6 months as well as the excellent start to the fall/winter '25 collections in our boutiques. This strengthens our confidence for a full year revenue growth of around 10% with healthy and balanced profits. Now let's take a look at 2026. We can see the spring/summer 2026 sales campaigns are performing excellently. The men's campaign has already been completed, while the women's campaign is still ongoing with extremely positive feedback. So these excellent outcomes, together with the pleasant atmosphere surrounding our brand reinforce our outlook for revenue growth of around 10% also in 2026. Brunello Cucinelli commented as follows. So we closed the first half of 2025 with excellent results in both revenues and profits, achieving that healthy and gracious growth, we so deeply cherish. We strive to enable the work of our craftsmen to conduct business whilst respecting the moral and economic dignity of the human being with the impression that each of us is constantly searching for a sound balance in life, in work and in the much long for human relations. Fall/winter sales have truly started very well as have the men's and women's Spring/Summer 2026 orders. All this, together with the pleasant atmosphere surrounding our brand, allows us to work serenely and to envision closing 2025 with healthy and beautiful revenue growth of around 10% with equally healthy profits and to look towards 2026 with the same balanced growth, once again, around 10%. Dario, the floor is now yours.

Good evening, ladies and gentlemen. Let's now take a look at the main economic financial performance in the first half 2025, inviting you to go back to the slide presentation on Slide 14. So the revenues confirm the preliminary figures of June 10 of revenues growth of plus 10.2% constant exchange rates, 10.7%. As for the other items in the income statement, Slide 15 shows at 30th of June 2025, margins, cost structure that is very balanced. EBIT and net equity up plus 18.6% when compared to 30th of June last year. First, margin, 74.5% of revenues, unchanged vis-a-vis the first half 2024 as mainly as a result of the sales mix per distribution area and geography that are basically in line with the past half year. Operating costs show an increase by 8.5%, and they mirror the expansion of our company. And now on Slide 17 to analyze the main cost items, personnel cost, rents and communication. Here, we can say the personnel costs as of 30th of June 2025 amounted to EUR 125.6 million and it shows an increase of plus 11.5%, slightly more than proportionate than the growth of revenues with an incidence of 18.4%, 18.2% last year, 18.3% at the end of 2024 full year. As of 30th of June 2025, the number of human resources amounted to 3,283 full-time equivalents with an increase of 262 FTEs vis-a-vis June last year. And this is ascribable mainly to the targeted expansion of our retail network, but also the strengthening of the production personnel pertaining to the increase in internal production. Cost of rents net of the IFRS 16, EUR 104.6 million or 15.3% as incidence on revenues, up by 20% vis-a-vis EUR 87.2 million or 14.1% as of 30th of June 2024. And this increase is down mainly to the new selected openings and expansions in the second half of 2024, the renewal in contracts and partly to the costs for the expected expansions in the second half of the year already accounted for. Then investments in communication, EUR 44.4 million with an incidence of 6.5% vis-a-vis with EUR 44.6 million or 7.3% of revenues of 1st of June 2024. The lower incidence of this first half 2025 is the result of a different planning of events, artisanal events organized by our fashion house. According to this planning, more events are concentrated in the second half of the year with a natural effect that you can envisage with the rising investment in communication in the second half rather than the first one and up compared to 2024 full year. Before moving on to the commenting the main KPIs of the income statement below the EBITDA, I'd like to talk about transportation and tariffs, EUR 33.9 million in 2025, 5% of revenues vis-a-vis EUR 27.9 million last year, 0.5% as incidence on revenues. This item shows an increase by 21.5% more than proportionate the net revenues, mainly due to the introduction on April 2, 2025, Liberation Day, on the Liberation Day of the higher tariffs on sales in the U.S. We'd like to remind you that the introduction of the higher tariffs in the U.S. does not -- is not mirrored in -- does not mirror an increase in prices in the second half because during this season, we never, never changed our price list for the spring/summer 2025 collections. And then to wrap up on Slide 17, as of 30th of June 2025, D&A EUR 86.8 million vis-a-vis EUR 73.2 million at June 2024, and they show an increase of plus 18.6% or EUR 13.6 million, mainly due to the new rent lease contracts that we signed during this period. So in line with the rents at the end of the first half, depreciation and amortization without the application of IFRS 16, that would amount to EUR 26.1 million vis-a-vis the EUR 23 million of the first half 2024, fully in line with 3.8% incidence of revenues, in line, as I was saying, with what we achieved last year as a result of all this, as I said in the introduction, EBIT, EUR 113.8 million, up by 8.8% with an operating margin of 16.6%, 16.9% last year. Also, there was this increase in EBIT with financial charges of EUR 6.5 million tax rate, 28.6%. Net income as of 30th of June 2025 amounted to EUR 76.7 million with an incidence of 11.2%, up by 16% vis-a-vis last year. So before concluding on income statement, I'd like to go back on the financials part with Slide 18, where we have reported the usual breakdown, highlighting a recurring component and a component having to do with ForEx and then also shareholdings. The increase in the recurring part, 54.5%, EUR 7.2 million is mainly due to the financial charges calculated on the liabilities for leasing, EUR 13 million 30th of June 2025 vis-a-vis EUR 9.2 million last year as a result of the new lease contract related to the new openings and the renewals of some stores, but also the increase in net financial charges linked to the financial debt. The component linked to ForEx, it shows an income, an increase by EUR 10.2 million and it is basically the result of the unrealized gains of the net income coming from the swinging of ForEx, and this is subject to the changes from time to time. Now Slide 19 and following to give you some short comments on the following items in the balance sheet, net working capital investments and financial net debt. Net working capital, including current net assets and liabilities is equal to EUR 303.1 million with an impact on revenues in the first half of 2025, equal to 23.2% versus 19.3% as of the 31st of December 2024. Now the detailed items, we can say that trade receivables in the first half 2025 have an increase by 24.3%, mostly due to the excellent performance in revenues in the second quarter with particular reference to the wholesale channel. And this confirms a very sound situation. We would like to point out that losses are almost negligible as it has always been the case and changed payment terms and trade receivables, trade payables equal to EUR 173 million versus EUR 160 million as of the 31st of December 2024. The incidence of inventories on the rolling revenues is equal to 28.2% and is basically in line with what was reported as of the 31st of December 2024. And this level of inventories is considered to be sound and normal for our business. Other net assets and liabilities have a negative result equal to EUR 5.2 million versus EUR 36.5 million as of the 31st of December 2024. And these changes are mostly due to the fair value evaluation of derivative instruments to hedge current exchange rate risks. On Slide 20, you see the investments. In the first half, we have EUR 63.5 million, 9.3% of our revenues versus 7.2% of last year. EUR 32.1 million are the important trade investments to support the image of our Casa di Moda and the expansion of our showrooms and renovations, EUR 24.4 million are due to other very important investments invested in technologies. Last but not least, to conclude, the net financial debt typical of the core business, as you can see on Slide 21, is equal to EUR 197.2 million in the first half '25 versus the EUR 102.3 million as of the 31st of December 2024, including the payment of the taxes. The net financial position is the result of the positive economic result of the period, the important investment plan, the changes in the net working capital as described above and the payout of the dividends for EUR 68.8 million. Thank you very much for your attention. And Brunello, I would leave the floor to you because I've concluded my remarks. Thank you.

Thank you very much. Now I would like in the next 3 minutes to share with you our outlook on how we are going to close 2025. Prior to dwelling on other topics, we would like to confirm the year-end forecast that we confirmed in July. So turnover up 10% approximately. Margin, EBIT slightly improving compared to last year. Investments equal to about 10.5%. This is very important. But please keep in mind that 2026 and 2027 investments will be around 7% as usual. Those large investments that were carried out in 2024 and 2025 have laid the foundations to work with peace of mind in the following decade. So as you may have understood, we are very, very happy with the performance in 2025. As far as 2026 is concerned, you know that the men's collection has been released. We've collected orders for wholesale. The collection has been extremely successful, but very important is also the feedback of journalists as collected during PT in Milan. As far as womenswear collection is concerned, we are halfway in the collection in the campaign, but we can say that results have been very good. Let's wait until September for the World press assessment. As you know, this judgment is very important. This opinion is very important if the international press say the collection is not contemporary. Well, this is a major issue. The third very important element is the very good start for the fall/winter '25 sales. As you know, they start in the beginning of July. And so we are very confident for 2026 with growth that we always like equal to approximately 10%. So this is it as far as '25 and '26 are concerned. In our conference call in July, we dwelled on topics that are fundamental for us. Let me recap these topics in a minute. We work in the absolute luxury end only. So everything we say should be considered for the absolute luxury bracket of the market only. And then the value of deliveries is extremely important for us. The value of quality, the value of craftsmanship in our products are also key. We are at over 62% mannered work in the manufacturing of our garments. And then great value has exclusivity as well. We also provide great value to multi-brand stores in the world, 400 as it has always been the case, and we've never had issues with payments. And last but not least, communication. You know that we keep on saying that today, we would like -- well, that tomorrow, we would like to be less known than today. That's for sure because we think that we have a sort of an overcommunication right now. And if we do believe in exclusivity, this is what we have to pursue. Last but not least, tariffs. Well, on April 3, we set up within the company a sort of task force of crisis unit because of the tariffs, which was closed after 4 months. In our company, tariffs impact only 5% and only in the U.S. market. These are the key topics for us. Now Luca will provide you with an overview of the market. Riccardo will give you an overview of the Italian supply chain, and then we will recap all this together. Luca, you have the floor.

Thank you very much, Brunello. And let me start with what you said earlier. So we consider only the very top end of the market. Let's start with July and August sales. For us, they maintained the very positive trend that has accompanied us throughout the first half of the year. And this figure is very significant for two reasons as we are already at the end of August, this means that we have set the stage for very good third quarter results. And then they show the excellent start, as you said, Brunello, for winter collections. And this is very important because it confirms that we have menswear and womenswear products that are highly appreciated by our customers. On the one hand, we can say that we've closed a very positive summer season. On the other hand, and we can say that we've started the winter one in the best possible way. So we think we will be able to achieve a third quarter as well with a very sound, healthy, well-balanced and steady growth in line with the previous quarter. Again, so early in the season, we see that we have very exclusive, very high-quality garments that looks full, and this is a common denominator throughout the world. Let's now go into the details of geographies, and let's start with North America. Here, the situation has been very, very good. New collection means new prices incorporating the new tariffs, as already mentioned. And we have no material effect on the willingness to buy and on sales results.

With that, Luca, let me interrupt you for a minute. I'd like to highlight the level of pricing, 100 Europe to 125 Europe and 128 Asia. All right. So as far as Europe is concerned, Europe is extremely strong, a very good summer. Again, a strong contribution came from domestic regional customers. And we also had a positive contribution by tourists, high-end tourists who continue to focus on Europe as the most attractive summer destination. As far as Asia is concerned, the situation has been excellent in China as well. China has been very positive across all its regions, Mainland, Hong Kong, Macau and Taiwan. As for Japan, Japan is going back to its essence to its nature. So primarily -- it's primarily domestic market, and it's very positive for us compared to last year. As you may remember, this -- well, last year was a very special year. And so again, we expect a very beautiful, very successful third quarter. Let's now have a look at the market. I have three brief remarks. First, it seems to us that we've come back to the past. Brunello often reminds us of the difference between the so-called high-end brands and upper middle range brands. And these were brands following completely different strategies and completely different dynamics. It seems as if the current situation resembles what Brunello has always described to us. And our remark that holds true, especially for Western markets and for high-end luxury markets. We perceive sort of a greater distance between the brands and their customers. And this distance may stem from a feeling of doubt, a sort of suspicion, I would say, due to the price increases that took place in the past and which is now further fueled by the investigations into supply chains. So how did we respond to that? First, we maintained a very well-balanced pricing policy. Secondly, we've been organizing events, as Brunello said in the beginning, and we kept on investing a lot in people, in our human resources working in the stores. As far as prices are concerned, you know about our strategy. We believe a price increase equal to 3.34% per year is a sound pricing policy with a revenue growth plan of 10%. As for events, we strongly believe in events, as often mentioned. We believe that there is nothing more effective than meeting people in-person. And one of the things that positively struck us in recent months has been the reaction of customers to the letters that we write to thank them for attending one of our events. And we thought that saying thank you could turn a moment into a memory, and this was the case. But our customers have exceeded our expectations and remind us of the importance of simple gestures and especially the importance of saying thank you to people, as Brunello said, well, the presence of Brunello is very important, but also we as a family and I was personally in Stanton for an event, Carolina, Camilla, Alessio were there, too. And so the possibility of having relaxed evening together without feeling the pressure to buy something and then the possibility of taking pictures together. And another important thing besides spending time with the families that regardless of the country where we organize the event, be it Japan, the Middle East, the approach doesn't change. There is this very same desire of taking part in that moment of proximity with us and with the brand.

Thank you, Ric. And another important thing is investment in people, staff in the stores. We keep doing this with great conviction. You have seen this in the numbers that you saw before that Dario mentioned. We keep telling the same thing to these people. They need to be aimable. They need to be really to be the face of the brand. They need to be the protagonist and embody the gentle luxury that inspires us. And basically, we expand the size of our stores because we want to dedicate time and attention to all our customers. So the last comment on markets has to do with China. We have the feeling that you see the wait for a Chinese restart as the engine of industry growth, a new moment of discontinuity that interrupts what many call a suspended time. Well, this wait keeps getting longer, we have the feeling. Well, now taking a look at the higher part end of the market already today in -- on a daily basis, we see a China that is balanced and modern, very modern, that is very healthy in its approach to luxury. It remain -- in our opinion, it remains the market destined to provide the luxury industry as a whole with millions new customers year after year. But it will probably do so with more gradually and without the excess of the past. For us, China is already important today as a market, accounting for about 13% of our turnover and will become increasingly so. But through -- how do I say, to a process of organic gradual growth that is always driven by the search for exclusivity and garments of the highest artisanal quality. So we have planned for the following years, the opening of 1 or 2 stores -- new stores per year, if possible, 1 or 2 enlargements, expansions depending on the opportunity that might arise. And we expect still today that within the existing Chinese stores, we can achieve healthy comparable growth. So -- and the decisions that we made together is the following. Even at a time of great opportunities for our brands because we have never received, as we were saying in July, we have never received so many proposals for beautiful prime locations to expand our retail network, but we have decided not to accelerate either in distribution or in communication. As you know, we believe that China is a place where young Chinese people are hyperconnected and everything risks being naturally faster. We attach, however, great value to the opening of the Casa Cucinelli in Shanghai, which is scheduled for the second half of next year. And you see it is a very traditional Chinese home that has been refurbished impeccably in a particularly fascinating location. And you have a few low traditional houses surrounded by a skyscrapers. And we believe that the opening of the Casa Cucinelli can be a very important tool to promote a deep knowledge of our brand. Now I'm drawing towards the conclusion. What do we expect for the last months of the year? What are the activities and objectives? First of all, 2025 openings plan, everything confirmed with respect with -- to what we already told you, the opening of IFC Pudong Shanghai, one store in Macau, the Abu Dhabi Galleria store. And to this, we're bringing forward by a few months compared to the forecast for 2026, a street boutique in Camel by the sea, one of the -- on California's iconic locations. And it is an area that we feel very akin to us. It's very, very familiar to us. And then in addition to that, let us recall the relocations with enlargements in Paris and saddling 2025 and 2026, we have the Geneva store. And in the first half, we already expanded the Vienna store. As to the events and communication, Dario already said -- gave you detailed numbers. But in the last quarter, we will have a concentration of this year's investments. There will be four relevant significant meaningful events. The first one in October with Brunello, we will spend a week between Japan and Korea with different events that will be particularly enticing. Then on December 1, Brunello is to be honored in London with the British Fashion Council award. And there, there will be a total takeover Harald windows precisely on that occasion. This takeover will last for the whole of December and January. So a very nice switch between the winter and the summer collection and then the premiere of the movie. All this should accompany, so to speak, sales, which in our retail naturally peak in absolute value in precisely in the last quarter of the year, also thanks to the higher average value of the winter collection. In any case, we envisage 2025 with harmonious growth as balanced as possible across quarters, channels and geographies as has been the case so far this year. And then as to 2026, so regarding 2026, the most important piece of news is undoubtedly the excellent spring/summer 2026 sales campaign. And this means not only wholesale revenues, but also a very first and very important reassurance about the quality of the product offer we will have in our -- all our stores in the first half of the next year. As to 2026 openings, as usual, as it is customary for us, most of the openings are already secured by contracts. We envisage 3, 4 openings and 3 or 4 enlargements. And we keep feeling that our brand still has many opportunities, our brand and our fashion house. And we try and approach all this with enthusiasm, balance and sobriety. Riccardo, the floor is yours.

So thank you, Luca. As Brunello reminded us, I will update you on production-related matters such as the doubling of the Solomeo factory, then the new artisan factories in Penne and Gubbio. And then I will conclude by saying something and telling you about the value of our artisanal supply chain. So the most important figure here is what we said in July. The production investments of the 2024, 2026 3-year plan are nearing completion and will be definitely concluded by November of this year, as already mentioned during the July call. That's 1 year ahead of schedule. And we really like the idea of finishing earlier. We like the idea of having these spaces to be there ready, welcoming for the coming 10 years. Therefore, we confirm the 10.5% incidence of investments on revenues, which will return to around 7% in 2026, as Brunello mentioned. And when we talk about our ratios 10% growth and we envisage 6% in volumes, 4% in price mix. We believe that this can cater for our growth for the next 10 years or so, these investments. So now drilling down the doubling of the Solomeo plant has already -- is already operating. The first part of the new plant is already operational, while the second will be completed and fully functional by November. Another important update on September 4, on Thursday, we will open the significant expansion of Penne. As you know, it is a crucial pivotal place for Amazon because it has always represented a district of excellence for blazers, especially menswear, outerwear. This is an important investment, not only from an industrial perspective, but also socially and culturally as it strengthens an artisanal tradition deeply rooted in the region. Added to this is the Gubbio project, which you will know equally well as a district. And this investment is also close to completion. So thanks to these 3 projects, we can affirm that the 2024-'25 investment cycle will already be completed this year. And as we were saying before, we hope and we envisage that this will cater for the growth of our fashion house for the coming 10 years until approximately 2035. Luca. Well, it is nice to see how more and more customers ask to visit and tour the plants and factories, and we're very happy to accommodate this wish because really, they have this desire, this curiosity to know. And this attaches even more value to their preference when making their purchases in their shopping. We'd like to highlight once again even better the importance of the Italian artisanal supply chain. And it remains central. It is made up of over 400 small artisanal enterprises with whom we, as a brand, we repeat it very often, we do want to say that we enjoy a direct relationship with all these subcontractor suppliers. It's never intermediated by platforms. And to these subcontractors, we have always guaranteed a fair profit, and we'll go back to this later. So these 400 small enterprises employ around 8,700 people in total. And I remind you that at the end of December 2024, there were just 8,000. So as you can see, it is on the rise. 70% of these workshops, 400 workshops work exclusively for us, while the others also collaborate with the major French fashion brands, which as they themselves admit, produce about 70% of their goods in Italy. And this enhances even more the value and the worth of this artisanal supply chain, not just for Italy, but also for the foreign brands. Today, we can say that this network is sound, not only economically, but also from a generational point of view in the average age of owners is 49 nowadays. And we like that because in the past 5 years, the average age has not increased with the passing of time. So it means the new owners have stepped in, new young entrepreneurs who decided to follow in the footsteps of their parents. So the average age of their workers is 43. But I'd like now to go back to a fair profit because if we brands can are able to guarantee and we behave in a fair manner, and we can guarantee to this network a fair profit, well, this is the essential component. This is the trick to have young people decide to take up these jobs. And this is really something yes, because it means that they can see the future. They can envisage that out of that job -- traditional family-run business, they can actually have a future. I have to say that in the past few months, many have asked us what our approach is to the supply chain. And I have to say that besides this direct relations that is fed on a daily basis because we always go there to check them out. We also have some sort of additions. For example, at the end of the fall/winter 2025 production, and we do it every year, we send them a letter where we tell them how deliveries went, how the quality was, and we always thank them because there's always top-notch quality. We do a planning, and you heard it from Brunello and Luca that the sales campaign for spring/summer '26 is performing really well. And this results in the fact that the work of these workers between September and February will be pretty important. Then the third aspect that we dealt with in this communication, well, we give them a strong reminder of the importance of taking care of workplaces and people's conditions. And I have to do that they're very good at that. They need to really take care of their workplaces because this is something we have always seen to. We do this together. And it's very important to strike an important balance between work and private life as well as looking after the economic and more conditions. And the balance between private and work is one of the fundamental elements of what we like to call fair work. So we have a direct relationship and very frequent communications. And also, we meet in-person. And on October 3, next, we will meet them all, all the workers, the subcontractors in our strategic annual meeting on October 3. And this is an opportunity to comment on deliveries, quality, production plans and it is important to plan with serenity. This has always been a very nice time for me, Luca says, because in the very same week, we organized a huge meeting of salespeople, and it's nice to see how everybody meets and gathers around the very same goal.

Thank you. Thank you, Luca. And it is also very nice to see the level of participation where we strike a balance of the year. We have a highly participated event. And well, these are small entrepreneurs, and they are able to plan together with the company. Last but not least, I'd like to conclude with another great topic, which is the great value of Italian district. And I would like to close on that with a reflection. As I said, the Italian supply chain is certainly acknowledged around the world as one of the most reliable and high-quality supply chain in the world. It's not by chance that major financial -- major French brands produce about 70% of their products in Italy. This proves the extraordinary manufacturing capacity of our country and also the uniqueness, the exclusivity of our country. There are products that can be manufactured only in Italy. But there's more. Each Italian district has, over time, not only served established brands, but has also set the stage for new ones to emerge. And so this unique ability to both serve and create is what makes our district an unparalleled model globally. So you can hardly find similar districts worldwide. And for us, this is the best guarantee for the future. The fact of being able to rely on a network of subcontractors of women and men who with their hands materialize ideas of beauty, exclusivity, authenticity. And this is our idea, our gentle luxury. Thank you. Thank you very much. And I'd like to give the floor back to Brunello.

Thank you. Thank you very much. This is the first time that I've listened to you, and I must say you are pretty good. So let's now draw some conclusions. So some days ago, we released the autumn/winter advertising. And I'm in a sort of a maze of books. We like this image very much. As you've probably understood, we work in a great atmosphere focusing on a single theme, our fashion Casa di Moda is a ready-to-wear company positioned in absolute luxury, which we call gentle luxury, and we also offer lifestyle products.

[Operator Instructions] The first question by Andrea Randone, Intermonte.

I have a couple of questions, but you have already provided a lot of details, but I have these two questions. The first question is a rather conceptual one. You hinted at the fact that some important players may have increased prices excessively. Some others may have not monitored the -- their supply chain correctly. Do you think these trends are supporting you in strengthening the loyalty of our customers? Or do you even have customers who were not your customers and who joined your brand? Can you make some examples about that? And the second question is rather financial question. We've seen the development of the working capital and you have provided extensive details on the development of CapEx for 2026 and '27. By the end of the year, can we consider for the net financial position as of the end of June proxy for the end of the year? And can you briefly comment on the development of the cash flow in the following months?

Thank you Andrea, I will answer your first question, and my colleagues will answer the second question. As far as that behavior of brands is confirmed. Well, we don't know what we can tell you. We like the fact that the people congratulate with us when they enter the stores and they meet kind staff. So this is what we have been saying for a long time. This is the only thing that I would like to point out. But I wanted to highlight of the high value of the Italian supply chain. And now for the second question, you can answer.

Yes. Well, as for the net financial position expectation, let's go back to last year for a second, December 2023, the net financial position was mostly equal to -- was basically equal to 0. And in the first half, we reported a net financial position of EUR 100 million. And this was the same increase that we achieved as of the end of the year. And so we started that the first half with an increase of EUR 100 million, reaching EUR 200 million now. And we believe this will be the net financial position as of the end of 2025. So it's a very good proxy for the -- well, the June net financial position is a good proxy for the year's end.

The next question, Luca Solca from Bernstein.

I have a question on the perception of exclusivity and on the importance of keeping that feeling of contemporary products. I realize this is a fundamental element for the business and for the attractiveness of the brand. And so the exposure to the wholesale channel is key in this respect. How can you reconcile that and the perception of exclusivity with the fact that on the market, in the Internet and in multi-brand stores, you may find some discounts. And you may actually see that products are available at a lower price compared to the original one. So what have you -- what are you planning to do in order to restrict this risk?

Well, let me start with this last risk, which is nonexisting. We have 42% of multi-brand stores, but multi-brand stores are the real custodians, guardians of products. If they don't like your product, you're ruined. And they judge your collection. When they say -- one would say the collection performed well, it is because multi-brand stores judged it. You have store managers, but what can they judge or evaluate if they haven't seen products for the upcoming season. That's the great topic in order to focus on contemporary collection. And then exclusivity, the topic is always the same. We do believe in exclusive products. And now exclusivity has been replaced by replaceability. And in the Italian language, these concepts are completely different. Well, I have a Constantine and an iPhone before me, but well, Constantine may have 100 years of history. iPhone well is shared by billions of people. One is an exclusive product and the other one is a desirable product. And then -- well, look, we've never organized or carried out smart working home office policies. This has restricted creativity and stifle creativity a lot. Creativity is based on teamwork and people meeting one another. And this was not the case during the smart working period. Young people could not learn anything. They may have understood that they will work just a couple of days a week. There is no separation between physical work and home. And this has penalized creativity. Creativity has not only to do with style. It pertains to production. It pertains to anybody coming to work. Our goal is, therefore, to work 8 hours per day or 7.5 hours, but to come to the workplace and work. We believe in exclusivity. We believe in multi-brand stores. We have 400 multi-brand stores in the world, which judge the collection, Luca. And if you are courageous enough to listen to them, you change your collection. If you're not courageous enough to listen to them, you will go bankrupt in a couple of years. And then, of course, you can give some special rebates or discounts of the market, but this has no impact on the exclusivity of the brand. So thank you. Very interesting question.

Next question from Oriana Cardani, Intesa Sanpaolo.