Shares in Italian fashion house plummet after allegations of ties to russia

Shares in Italian fashion brand Brunello Cucinelli fell after accusations of circumventing sanctions against russia, Bloomberg reports.

On 25 September, research company Morpheus Research said that the Italian luxury cashmere brand was misleading investors about its russian business.

Cucinelli's shares fell 5% in Milan trading, after which trading was suspended due to volatility. After trading resumed, Cucinelli's shares fell 15%. This was the sharpest drop in the company's shares since Cucinelli's initial public offering in 2012.

Morpheus' allegations came shortly after hedge fund Pertento Partners told the Financial Times that Cucinelli was continuing to operate in russia in circumvention of sanctions. At the time, the company claimed that its stores in the country were closed and that its remaining sales were limited and fully compliant with EU requirements.

During an investigation that lasted more than three months, Morpheus found that Cucinelli continues to operate several stores in Moscow with a wide range of goods worth thousands of euros.

‘We have obtained the financial statements of Cucinelli's russian subsidiary, which show that the company's revenue in 2023 and 2024 was around €15 million, despite the alleged closure of key stores,’ Morpheus said.

According to the statement, secret visits to stores in russia showed that Cucinelli boutiques sell goods with tags confirming that they were manufactured in Italy in 2024 and 2025 — several years after the EU imposed sanctions on luxury goods.

Trade data shows that intermediaries from countries such as Lithuania, Iran and China exported Cucinelli products to russia, Morpheus claims.

In a comment to Bloomberg, the Italian firm denied Morpheus' allegations, stressing that its russian subsidiary fully complies with all regulations.

Cucinelli said its sales in russia had fallen by more than two-thirds compared to 2021 and now account for about 2% of the company's total sales, and that it was considering legal action to protect its reputation.

Source: LIGA.net, Bloomberg