Brunello Cucinelli Shares Plunge Amid Allegations of Misleading Investors and Aggressive Discounting
Brunello Cucinelli Shares Plunge Amid Controversy Over Russian Operations
Shares of luxury Italian cashmere brand Brunello Cucinelli SpA experienced their most significant drop on record, plummeting as much as 20% after short seller Morpheus Research accused the company of misleading investors regarding its Russian business practices and engaging in “aggressive discounting.” The stock ultimately closed down 17%, marking its steepest decline since the company went public in 2012.
Morpheus, a new investigative research group that includes former members of Hindenburg Research, conducted a three-month investigation alleging that Cucinelli continues to operate stores in Russia, despite claims of closure following the European Union’s sanctions on luxury goods in response to Russia’s invasion of Ukraine. The firm also asserted that Cucinelli is heavily discounting its products to manage excess inventory, which could undermine its exclusive brand positioning.
In a statement, Morpheus claimed that undercover visits to Cucinelli boutiques in Russia revealed items priced in the thousands of dollars, with tags indicating they were made in Italy in 2024 and 2025. Additionally, trade data suggested that intermediaries in countries like Lithuania, Iran, and China have been exporting Cucinelli goods to Russia.
Cucinelli has firmly rejected these allegations, stating that its Russian subsidiary is fully compliant with all regulations and is considering legal action to safeguard its reputation. The company reported that its sales in Russia have decreased by more than two-thirds compared to 2021, now accounting for only about 2% of total sales. Exports to its Russian subsidiary have also dropped significantly, from €16 million in 2021 to an estimated €5 million in 2024.
“We believe these figures provide a clear and accurate perspective on this matter and rule out any speculation regarding the use of the Russian market to reduce stock or clear excess inventory,” the company stated.
Morpheus further claimed that Cucinelli is struggling with a bloated inventory, with 404 days of inventory reported in the 12 months leading up to the first half of 2025—the highest among its luxury peers. The group’s analysis indicated that Cucinelli’s inventory write-down provisions have increased annually since 2020, reaching nearly €100 million.
Despite the turmoil, sell-side analysts remain largely optimistic about Cucinelli’s future, with nine analysts recommending a buy, eight advising clients to hold, and only one rating the stock as a sell. RBC Capital Markets analyst Nikolaos Lafioniatis noted that shares are likely to remain “range-bound in the near term” until investor confidence is restored.
Founded in 1978 by Brunello Cucinelli, who advocates for a more “humanistic” form of capitalism, the company has built a reputation for quality craftsmanship and ethical business practices. However, Morpheus emphasized the need for transparency, stating, “In the spirit of this ethos, we believe shareholders deserve more honesty with respect to Cucinelli’s Russian operations and inventory management.”
As the situation unfolds, investors and analysts alike will be watching closely to see how Cucinelli navigates this challenging landscape and whether it can restore confidence in its brand and operations.
