Russian storm on Cucinelli. A US-based hedge fund report accused the company of disregarding and circumventing European trade sanctions against Russia, also citing high discounts and stock level. The stock was suspended from the stock market, then readmitted, but collapsed right away. The company refutes the claims and threatens legal action.
Russian storm on Cucinelli
Morpheus Research is an American hedge fund that has the practice of shorting stocks. It basically sells a stock without owning it by betting that when it goes to buy it, its value will be lower than when it is sold. Based on a three-month investigation “involving interviews with former Cucinelli employees and partners, in-depth analysis of business data, and visits to Cucinelli’s Russian stores,” it released a report accusing Brunello Cucinelli company of never really closing its stores in Russia, despite European sanctions.
It also accused it of devaluing the brand through aggressive discounting and resorting to triangulations. The company allegedly brought its goods into Russia through logistics companies in Lithuania, China, and Iran. Often with lower than actual values to be under the prohibited threshold of 300 euros per piece indicated in the sanctions (source Corriere della Sera). Morpheus also emphasized warehouse management, which allegedly reached levels deemed “unusually high”. Bottom line: Cucinelli allegedly deceived shareholders.
Suspended on the stock exchange
The stock was suspended and then readmitted, but within hours the company lost hundreds of millions in market capitalization. Morpheus Research’s allegations follow similar ones reported by Pertento Partners, WWD notes. The company denies the allegations, and Luca Lisandroni, CEO of Cucinelli, told WWD that the company has “always acted in full compliance with the rules as it has already been ascertained by the Customs Agency inspections to which we have been subjected”. The CEO said Russia accounts for about 2% of the company’s sales compared to 9% in 2021. In fact, sales to Moscow dropped from 16 to 5 million euros from 2021 to 2024.
“Please allow me to point out that in this case there is a particular coincidence between who produced the news and who could benefit from an economic return”, Lisandroni said. The Umbrian company said in a note that it excludes “any hypothesis on the use of the Russian market for inventory reduction and disposal”, and is also “considering legal actions to protect its reputation and the interests of all its stakeholders”.
Photo from Brunello Cucinelli
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