Published by Global Banking and Finance Review
Posted on September 26, 2025
By Elisa Anzolin and Tassilo Hummel
MILAN (Reuters) -Shares in luxury cashmere brand Brunello Cucinelli fell for a second day after a short-seller accused the company of misleading investors about its Russian business, an allegation the company denies.
The report raised questions about the Italian brand's continued operations in Russia despite EU sanctions on luxury goods due to the war in Ukraine.
Shares in the Italian company named after its founder, often called the 'King of Cashmere', dropped to 77.6 euros, their lowest since December 2023, before paring most of the losses.
Shares were down 0.4% at 1245 GMT.
SANCTIONS ALLEGATIONS SPARK INVESTOR CONCERNS
Previously seen as relatively insulated from the broader slowdown in the luxury sector due to its high-end positioning, the stock is now down nearly 40% from its February peak.
On Thursday, Morpheus Research alleged in a report that the company maintained significant operations in Russia despite EU sanctions on luxury goods priced above 300 euros. Brunello Cucinelli responded that all products shipped to Russia were "within the limits set by the European Union."
The share of the Russian market currently accounts for approximately 2% of its turnover, the company added.
Reuters could not immediately verify the claims. Brunello Cucinelli shares lost 17% on Thursday following the report.
Transfer prices, to which the sanctions apply, are typically lower than shelf prices, with analysts at Italian broker Equita estimating that Brunello Cucinelli is selling the final products for around three times that value.
Brunello Cucinelli's signature 'quiet luxury' pullovers and cardigans in Europe retail at 1,000 euros to 4,000 euros ($1,167-$4,667), while a jersey t-shirt sells from 430 euros, according to its website.
"Brunello Cucinelli needs to start damage limitation asap to protect its reputation with customers and investors alike," Bernstein analysts said on Friday.
FASHION INDUSTRY FACES BROADER CHALLENGES
The allegations, made during fashion show season, deal another blow to Italy's high-end fashion industry, which is already contending with the impact of U.S. tariffs and domestic investigations into labour exploitation.
"Initial checks in Milan during Fashion Week point to the idea that several companies in the luxury and fashion sectors have been expedient when it comes to implementing sanctions against Russia and that the industry has found ways – both kosher and not – to do so", Bernstein said.
SHORT INTEREST JUMPS
Morpheus Research, which said it has shorted the group shares - a technique used to make gains on a firm's stock market decline - has joined other funds betting against Brunello Cucinelli.
The estimated short interest in Brunello Cucinelli - the part of outstanding shares held by short sellers - rose to over 10% this week, according to data from market analytics firm ORTEX.
($1 = 0.8571 euros)
(Reporting by Elisa Anzolin in Milan and Tassilo Hummel in Paris and Gleb Stolyarov. Editing by Mark Potter and Louise Heavens)
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