CEO Brunello Cucinelli talks about breaking the luxury recession: Don’t be greedy

Copenhagen, Denmark – On the day of the 2012 IPO. brunello cucinelli Investors were given an unusual ultimatum. If you want short-term profits at the expense of harming the environment or harming people, you shouldn’t invest.

In stark contrast to an industry with flat sales, the Italian luxury brand known as the “King of Cashmere” is currently bucking the trend, reporting a 14% revenue increase in the first three months of this year.

Meanwhile, other big luxury brands such as Gucci and Louis Vuitton have weathered deep recessions and recorded little growth.

Brunello Cucinelli’s success in producing high-end apparel, including diamond-lined knitwear and $1,000 T-shirts, is tied to the company’s ethos of choosing long-term integrity over short-term profiteering, co-CEO Riccardo Stefanelli told CNBC.

“There’s no need to be greedy,” he said on the sidelines of the Global Fashion Summit in Copenhagen. “If you’re greedy, that means you’re taking value out of the supply chain and draining someone.”

Dressed in white from Brunello Cucinelli’s Solomeo in White collection, the 45-year-old CEO explained how the company is expanding without losing its soul. The company consciously operates on low profit margins to maintain a healthy supply chain and what it calls “graceful” growth.

The focus on ethical operations is rooted in founder Brunello Cucinelli’s experience and has now evolved into what the company calls “humanistic capitalism.”

What matters is how you deliver the benefits, how you meet your goals and how you respect the value chain by trying to give back before earning higher profits, Stefanelli said.

In keeping with that philosophy, the Cucinelli family retains 51% ownership of the business.

“That makes all the difference. We have control,” says Stefanelli, now the founder’s son-in-law. “We have to think long-term, not the short-term perspective imposed by the stock exchanges.”

Brunello Cucinelli maintains strict pricing principles, keeping retail prices 7 to 8 times higher than industrial production costs.

The formula is divorced from much of the industry’s behavior during the COVID-19 luxury boom, which ended in 2022. Many brands aggressively raised prices and achieved revenue growth of up to 30%, but the lack of perceived quality improvements drove customers away.

Luca de Meo, the new CEO of Gucci owner Kering, recently said the price hikes had gone “too far.”

“We want to maintain the perception between real value and retail price,” Stefanelli said. “If you miss that, you have the problem of customers understanding, or not understanding, why price increases are not translating into real (value) increases, as they have been for the past two years.”

“I also LVMHof kering. I respect them,” Stefanelli said. “We have different jobs.”

The luxury goods market is currently experiencing rapid polarization. While generalist conglomerates that cater largely to aspirational consumers are struggling, ultra-luxury brands are thriving.

The narrow focus of having only a single brand and the relatively small size of the company allows the company to target steady and controlled annual growth rates between 10% and 12%, while keeping volume growth modest to maintain brand exclusivity.

Brunello Cucinelli has a market capitalization of about 6 billion euros ($7 billion) and posted sales of 1.4 billion euros in 2025, much smaller than many of its peers.

Brunello Cucinelli appears to be avoiding the luxury fatigue that plagues many of its peers by avoiding mass-market expansion and focusing strictly on what the company calls “absolute luxury.”

And while Stefanelli recognized that there was particularly room for growth in Asia, the brand refused to change its DNA to follow trends, even if it meant missing out on opportunities.

“What we won’t change is our visibility at home, our attitude at home and our attitude in Italy,” he said. “We listen to the market, but if the market wants something that isn’t ours, we shouldn’t produce it.”

Some of its competitors have tried to acquire a larger, more motivated customer base to generate higher profits, but that means “you can never go back to the top of the pyramid,” Stefanelli said.

Analysts at Jefferies said the company’s quarterly report in April confirmed the “excellent staying power of affluent luxury shoppers.”

However, maintaining this premium image requires market disruption.

Last September, short seller Morpheus Research alleged that Brunello Cucinelli was misleading investors about its Russian operations and evading international sanctions.

The allegations caused stock prices to plummet by more than 17%, the largest single-day drop on record. The company strongly denied the claims, but the stock price has yet to fully recover its losses.

Italian luxury brands have also been shaken by recent investigations into worker exploitation and poor factory conditions, threatening their prestigious “Made in Italy” image.

Stefanelli argued that the solution is simple: pay workers more.

Raising wages is also essential to encourage the next generation to enter artisanal occupations such as tailoring and spinning, where labor shortages are acute. Without the promise of dignified pay, Stefanelli said parents are unlikely to steer their children into these career paths.

“If you believe your company has to be around for the next 50 years, you’ll plan just like we do,” Stefanelli said. “It does come at a cost, but it’s a choice.”