Zegna Group posts sales growth across brands and markets

Ermenegildo Zegna N.V., owner of the Zegna and Thom Browne brands, announced unaudited revenues of 428.3 million euros for the first quarter, an increase of 13.4 percent and 13.1 percent at constant currency.

Excluding the impact from Tom Ford products, revenues were up 19.1 percent and up 18.9 percent at constant currency.

Commenting on the update, Ermenegildo “Gildo” Zegna, chairman and CEO of the Zegna Group, said: “We started 2023 with an encouraging upswing led by further reopening in the Greater China region following Covid-19-related restrictions. We also saw robust growth across our business in the United States and Europe driven by our own retail. For Zegna growth was driven by a healthy increase in productivity, which is one of our strategic priorities.”

Highlights of Zegna Group’s Q1

For the first quarter 2023, revenues for the Zegna segment amounted to 319.3 million euros, growing by 12.6 percent and 11.9 percent at constant currency. Excluding the impact from Tom Ford products, revenues were up 20.2 percent and up 19.7 percent at constant currency.

Revenues for Thom Browne were 113.3 million euros, up 15.4 percent and up 16.1 percent at constant currency, with the brand continuing to grow across all channels. Womenswear and children’s products saw strong revenue growth, outpacing growth for men’s products during the quarter.

Revenues for Zegna branded products were 271.9 million euros, up 21.4 percent year-over-year. This growth was driven by a healthy double-digit growth pace recorded by footwear, luxury leisurewear, and by made to measure products.

Revenues for Thom Browne were 112.6 million euros, up 14.9 percent, with the brand continuing to grow across all channels.

Textile revenues were 33.8 million euros, up 11.8 percent, reflecting broad-based strength across the group’s luxury textile platform. Third-party brands were negatively affected by the expiration of the Tom Ford International distribution licensing agreement with the fall/winter 2022 season deliveries last year, resulting in revenues of 8.9 million euros in the first quarter, a 63.5 percent decrease. Excluding the impact from Tom Ford Products, the product line saw revenues grow in excess of 60 percent.

Zegna Group’s performance across retail channels

The group’s DTC revenues increased 24.9 percent for both Zegna and Thom Browne during the first quarter. DTC accounted for 64 percent of revenues in the first quarter, compared with 58 percent in the same period of last year.

DTC revenues for Zegna were 229.6 million euros, up 24.8 percent, with double-digit growth across all regions. DTC revenues for Thom Browne were 42.8 million euros, up 25.4 percent due to comparable store growth, and the addition of net 11 stores worldwide compared to the first quarter of last year, reaching a total of 62 stores as of March 31, 2023. Japan and the EMEA region performed particularly well during the quarter as well as the Greater China Region.

Wholesale revenues were 154.7 million euros, down 2.4 percent due to the impact from Tom Ford products on the third-party brands and textiles wholesale operations. Wholesale revenues for Zegna branded products were up 5.5 percent, while Thom Browne wholesale revenues were up 9.3 percent year-over-year. Third-party brands and textiles wholesale revenues were down 21.8 percent, however, excluding the impact from Tom Ford products, revenues grew by mid-teens at constant currency.

Zegna Group’s results across geographies

Revenues from the Greater China Region were 164.5 million euros, up 15.9 percent and 17.2 percent at constant currency, benefitting from the normalisation of operations following Covid-19-related closures. This led to revenues from the APAC region totaling 205.3 million euros, up 17.4 percent, with Japan up 31.9 percent and 38.8 percent at constant currency.

Revenues from the EMEA region were 150.1 million euros, up 11.6 percent. Excluding the impact from Tom Ford products, revenues in the EMEA region were up high-teens compared to the same period of last year. The Middle East and Africa especially outperformed thanks to strong retail trends in the United Arab Emirates.

Revenues from North America were 65.6 million euros, up 6.2 percent. Revenues from the United States in particular were affected by Tom Ford products but still grew 1.9 percent, driven by DTC outperformance for both Zegna and Thom Browne. Excluding the impact from Tom Ford products, revenues from North America were up mid-teens, and revenues from the United States showed low double-digit growth, both at constant currency.

On April 6, 2023 the company announced that it intends to make a dividend distribution to the holders of ordinary shares of 0.10 euros per share, corresponding to a total dividend distribution to shareholders of approximately 25 million euros.

At the end of fiscal year 2025, the group is aiming for annual revenues to exceed 2 billion euros and for adjusted EBIT margin to reach at least 15 percent, excluding the Tom Ford Fashion business. The group expects 2023 results to show that it is on this trajectory.