Revenue forecast based on retail stores: a study on reliability

Posted by Pierluigi Vinciguerra on

In Re Analytics we grab, analyze and synthesize a huge amount of data, in order to give answers to the most important questions about retail business, such as: is there a way to build a pertinent and realistic forecast about financial results of a fashion firm? In some circumstances, as an example if the firm’s trends have been linear over the last years and it relies heavily on its retail network, yes, it’s possible.

Brunello Cucinelli is an Italian listed company that has been working in the luxury fashion business for the last 30 years, becoming a key player in the premium fashion scenario.

During the last four years Brunello Cucinelli has built a positive trend in different areas: sales, revenues, number of stores, retail presence.

The number of monobrand stores, in particular, has almost doubled from 2011, starting from 68 and reaching 120 in the last year, including 36 wholesale monobrand and 84 retail stores.

Brunello Cucinelli stores monobrand number

 

More than half (51.1%) of its revenues comes from monobrand stores all around the world, with a ratio of 2.33:1 respectively from retail stores and wholesale monobrand stores. In the past five years this ratio has been raising from 0.74 in 2011, up to 2.25 in 2015, with a constant, even if marginally decreasing, positive trend.

Isolating the revenues originated by the monobrand network, we have noticed that the firm’s annual sales per store ratio have increased over the last years, reaching € 2.39 millions for the retail stores network, and € 0.93 millions for the wholesale monobrand.

Brunello Cucinelli sales per stores

 

 

In April, crossing this information with the respective number of retail and wholesale stores, we forecasted for the 1Q ’16 a final amount of € 233.76 millions originated from the firm’s monobrand stores: on May 11th Brunello Cucinelli released its 1Q ’16 sales results, revealing a monobrand sales total of € 234.97 millions, not higher than 1% compared to our result.

Re Analytics Cucinelli sales estimates

 

This is just an example about how a detailed data analysis can be helpful in financial forecasting and in supporting investing decisions in brand businesses, luxury retail and many others.

 

 

Assumptions:

  • According to Brunello Cucinelli’s report on FY ’14 results, the brand planned to open 2 boutiques during 2015, thereby we assumed that the final amount of Wholesale Monobrand was 36 as of Mar. 31st 2016;
  • Knowing that the total amount of Monobrand Stores at the same date was 120, we were able to affirm that the Retail Monobrand stores were 84.

 

For further analysis and feedback, contact us at intelligence@re-analytics.com

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