Cucinelli becomes billionaire by knitting $1,920 cardigans

Brunello Cucinelli, the 59-year-old founder of the luxury fashion house that bears his name, has become a billionaire.

Knitwear brand Brunello Cucinelli SpA has more than doubled in value since its initial public offering in Milan last April, giving Cucinelli a net worth of at least $1 billion, according to the Bloomberg Billionaires Index. He has never appeared on an international wealth ranking.

“From the beginning we hoped for a positive and gentle listing,” Cucinelli said by phone from his Milan showroom through a translator. “Investors appreciate our quality, our positioning in the absolute luxury market and our Italian heritage.”

The Solomeo, Italy-based company, which sells $4,530 suede jackets and $1,920 cashmere cardigans, had sales of $360 million in 2012, up 16 per cent in a year. It forecast “modest double-digit” revenue growth for 2013, Bloomberg News reported in February.

“It is chic sportswear where the quality of the finishing is very high,” Armando Branchini, founder of Milan-based luxury consultant Intercorporate, said in a telephone interview. “Cucinelli offers couture finishing, elegance and sophistication and yet you can wear it in a very casual way.”

Cucinelli’s 63 per cent stake is valued at $947 million. He collected more than $90-million selling shares in the intial public offering (IPO). Company shares rose four cents to ^16.75 in Milan trading today, giving it a market capitalisation of $1.5 billion.

Fashion fortunes
“I am thankful, but in all honesty, my life has remained the same as when I was working alongside my father, farming in the countryside,” Cucinelli said, without commenting specifically on his net worth. “The most important thing is that we managed to achieve this success while respecting our workers, the people of Solomeo and the environment.”

Cucinelli joins new fashion billionaires such as Tory and Chris Burch, as well as Alberto Prada Bianchi and Marina Prada Bianchi, all of whom have benefited from a booming luxury market and the resulting surge in values of fashion retail companies.

The Bloomberg European Luxury Goods Index, whose nine constituents include London-based Burberry Group Plc and Germany’s Hugo Boss AG, has risen 13 per cent in 2013. In its annual luxury market report in October, Boston-based consultancy Bain & Co said global sales of apparel, accessories, cosmetics and fragrances would expand by 10 per cent in 2012 to $270 billion, and estimated growth of four to six per cent per year between 2013 and 2015.

Medieval hilltop
A one-time engineering student, Cucinelli dropped out of college and founded his company with half a million Italian liras ($550) in 1978. His bright-coloured cashmere sweaters proved popular and, in 1987, he moved his workshop into a converted 14th century castle in the medieval hilltop hamlet of Solomeo, which is located in Italy’s Umbria province, east of Rome.

The company’s website features quotes from Socrates, Aristotle and Immanuel Kant, and over the past 25 years, Cucinelli has helped restore and renovate Solomeo, building a theater, amphitheater and gardens for workers and residents.

This is part of a business philosophy that he set out in his letter to shareholders in the company’s 2012 annual report, referring to it as “humanistic capitalism.”

“Throughout the company’s 35 years, I have invested everything in human dignity, always believing that working in the best conditions makes people more creative ingenious, and responsible,” he wrote.

Milan debut
Cucinelli’s shares rose 50 per cent in their trading debut in Milan, after investors sought to purchase 17 times the amount of stock available in its initial public offering, Bloomberg News reported in April 2012.

“There are only a few luxury brands that can justify Cucinelli’s price positioning,” Goldman Sachs analyst William Hutchings wrote in a March 5 note. “Design, history, quality, manufacturing and provenance all support its price position and the company is well positioned to benefit from growing global demand for high-quality, authentic luxury products.”

The billionaire owns his shares through Solomeo-based holding company Fedone Srl, according to his company’s website.

“We want to grow but in a way that protects the exclusivity of the brand,” he said. “This definitely can be done. The world is a big place. Currently we export to 59 countries so maybe in five years we will export to 70.”