Brunello Cucinelli SpA shares fell after short seller Morpheus Research alleged that the luxury Italian cashmere brand is misleading investors about its Russian business and engaging in “aggressive discounting.” 

Morpheus, which includes alumni of Hindenburg Research, said a three-month investigation it carried out showed that Cucinelli continues to operate stores in Russia even though the company said it had closed them. Sales of luxury goods in Russia have been sanctioned by the European Union since the country’s full-scale invasion of Ukraine began in 2022.

The shares fell 5% in Milan before being halted for volatility. Cucinelli has been a stellar performer on the stock market since its 2012 initial public offering, increasing in value about 13 times over that period.

Secret visits to stores in Russia showed that Cucinelli boutiques are selling items with tags that show the items were made in Italy in 2024 and 2025, according to a Morpheus statement published online. The short-selling firm said it had spoken to former employees and partners and analyzed trade data as part of its investigation. 

Morpheus also said that other findings showed that Cucinelli was aggressively discounting its products to manage its “bloated inventory”, with items ending up in stores like TJ Maxx, diluting its exclusive position in the luxury market. 

“Even ignoring our findings, Cucinelli trades at about 46 times next year’s earnings, a higher multiple than any luxury peer, despite slowing revenue growth, average operating margins, and rising competition from peers like Khaite and The Row, each reporting triple-digit growth,” Morpheus said. 

The allegations come not long after hedge fund manager Pertento Partners previously told the Financial Times that Cucinelli continues to operate in Russia in violation of the EU sanctions. Cucinelli said then that its Russia stores are shut and its sales have declined there. Limited sales there are compliant with the sanctions, the company said.

On Thursday, Cucinelli did not immediately respond to a request for comment on the discounting and referred to its earlier comments on Russia. 

Morpheus announced itself as a “new investigative research group dedicated to exposing corporate misconduct and fraud” in a March 14 X post. On that same day, Nate Anderson, who earlier this year disbanded Hindenburg Research, said Morpheus included some of his former team members.