Shares of Brunello Cucinelli (BIT:BCU) fell more than 3% on Friday after a short seller report raised concerns over the company’s Russian operations, inventory levels, and distribution practices.
Trading in the stock was temporarily halted earlier in the day before resuming at lower levels.
The report highlighted three main areas of concern. It said Brunello Cucinelli’s operations in Russia may be in violation of European Union sanctions, citing local partners and third-party exports.
The report also noted rising inventory days, estimated at roughly 404 days as of the first half of 2025, and suggested that stock levels were high compared with peers.
Finally, the short seller pointed to the company’s distribution channels, reporting that products were available at off-price outlets, which the report said could affect the brand’s exclusivity.
Brunello Cucinelli responded with a statement reiterating that it is fully compliant with EU regulations regarding operations in Russia.
The company said Russia accounts for about 2% of group sales, with exports to its Russian unit valued at roughly €5 million in 2024, down from around €16 million in 2021.
The company said its local structure remains unchanged, with continued employee salaries, honored lease contracts, and showroom services provided to customers.
Products sold in Russia were reportedly shipped legally within EU limits, along with residual inventory delivered before sanctions were introduced.
UBS Global Research noted potential reputational risks linked to Russian operations. On inventory, UBS indicated that inventory as a percentage of sales may be a more relevant measure than inventory compared with production costs.
The report said first-half inventory represented about 28.2% of total sales, versus roughly 30% historically, and 42.5% of retail sales, compared with approximately 63% historically.
UBS noted that production costs used in reported margins exclude internalized labor and that changes in vertical integration and channel mix, retail represented 67% of sales in 2024 versus 28% in 2012, affect comparisons. Discounting was also flagged as an ongoing area to monitor.
Founded in Italy in 1978 and listed on the Milan Stock Exchange since 2012, Brunello Cucinelli specializes in luxury ready-to-wear.
The company offers menswear, womenswear, and childrenswear, introduced in 2019. The majority of revenue comes from retail, with wholesale channels contributing significantly.
Source :
https://www.investing.com/news/stock-market-news/brunello-cucinelli-shares-down-following-short-seller-report-4257012
