Zegna Group records strong Q3 growth across brands and geographies

Ermenegildo Zegna N.V. reported unaudited revenues of 357 million euros for the third quarter of 2022, an increase of 27.5 percent year-over-year.

The group’s revenues reached 1.09 billion euros for the first nine months of the year, up 22.9 percent.

Commenting on the third quarter trading, Ermenegildo “Gildo” Zegna, chairman and CEO of the Zegna Group, said: “This quarter was one of our strongest yet thanks to exceptional performance by both Zegna and Thom Browne in Europe, the Middle East, and the U.S., as well as a rebound in the Greater China Region.”

Review of Zegna’s third quarter results

The Zegna segment, which includes Zegna branded products as well as the textile and third-party brands product lines, recorded revenue of 289 million euros, up 27.2 percent, showing an acceleration in 3Q thanks to the strength of all product lines.

The Thom Browne segment revenues for the quarter of 69 million euros, were up 29.5 percent year-over-year.

Zegna branded products revenues grew 18.6 percent, reaching 224 million euros for the quarter. The company said that the focus on luxury leisurewear continues to prove successful, with steady growth in that line, particularly in knitwear, while the growth in shoes remains robust. Tailoring and made-to-measure lines also saw a strong rebound this quarter, particularly in the U.S.

Thom Browne revenues grew 29.8 percent, reaching 69 million euros. The company added that womenswear continued to grow faster than menswear, now accounting for almost 30 percent of the brand’s revenues. Growth across the brand is supported by strong wholesale demand, e-commerce growth through T-Mall in the Greater China Region, and four new store openings during the quarter, bringing the total of directly operated stores to 57 as of September 30, 2022 - up from 53 as of June 30, 2022.

Zegna Group further said that the recent appointment of founder Thom Browne as the next chairman of the Council of Fashion Designers of America is yet another sign of the brand's growing success and momentum.

Textile revenues for the quarter reached 30 million euros, up 33.3 percent, with growth across Lanificio Ermenegildo Zegna, Bonotto, and Dondi. Tessitura Ubertino was consolidated as part of the group as of June 2021. In the first nine months of 2022, Tessitura Ubertino contributed an additional 3.9 million euros in revenues compared with the first nine months of 2021. Third-party brands revenues grew 64.2 percent, reaching 32 million euros for the quarter with strong contributions from Tom Ford and Gucci, the latter having more than doubled in comparison to the third quarter of 2021.

Zegna Group’s revenue performance across geographies

The group’s Greater China Region returned to growth for the quarter, enjoying a solid rebound in July and August before new lockdowns started having a negative impact in September. The group continues to see dynamic growth in the Middle East and ongoing strength in the U.S. and Europe.

Revenues in the Greater China Region amounted to 116 million euros for the quarter, up 3 percent year-over-year. Growth for all of APAC was at 13.7 percent for the quarter, with revenues reaching 153 million euros.

The EMEA region exhibited the strongest growth for the quarter, at 42.8 percent to reach 119 million euros in revenues. Of that, 16 million euros came from the Middle East and Africa (MEA) region, an 86.4 percent growth year-over-year for the quarter. The UK also continued to grow, with revenues for the quarter growing 61.6 percent year-over-year to 15 million euros.

Revenues for the Americas grew at 38.6 percent for North America and 33.2 percent for Latin America, with revenues for the quarter of 77 million euros and 7 million euros, respectively. The U.S. saw revenues increase 38.3 percent to 69 million euros for the quarter.

Revenues from the group’s directly operated store network, including e-commerce, were 217 million euros, a 20.7 percent increase year-over-year. Of that, 180 million euros was from Zegna branded products and 37 million euros from Thom Browne - a growth of about 21 percent for both segments over last year.

Growth in Zegna DTC revenues was driven by strong performance in EMEA, particularly in the Middle East, as well as in the Americas. The September decline in the Greater China Region due to renewed lockdowns was offset by a strong July and August, leading to an overall flat DTC performance for Zegna-branded products in the quarter.

Thom Browne DTC revenues grew 21.6 percent due to positive performance across all geographies, including the Greater China Region, which benefited from the additional contribution from e-commerce through T-Mall and new store openings.

Wholesale revenues grew 32.2 percent to reach 139 million euros, with Thom Browne showing growth of 41 percent for the quarter to reach 33 million euros. Third-party brands and textile also grew around 50 percent to reach 63 million euros.

Zegna Group expects mid-teens growth for FY22

In light of the group’s robust performance during the first nine months of 2022, and despite the continued volatility in the Greater China Region, the group is confirming its full-year revenue guidance of mid-teens growth.

The group continues to anticipate solid improvement in our Adjusted EBIT.

On May 17, 2022, at its first Capital Markets Day, the group announced its medium-term financial goals, aiming for revenues to exceed 2 billion euros and for adjusted EBIT to reach at least 15 percent of revenues.