Zegna Group posts strong first half

Ermenegildo Zegna N.V. has announced revenues of 729 million euros for the six months ended June 30, 2022, up 21 percent and profit of 21 million euros down 35 percent, while adjusted profit was 22.8 million euros.

In the second quarter, sales rose by 16 percent to 351.4 million euros.

Commenting on the trading update, Ermenegildo “Gildo” Zegna, the company’s chairman & CEO, said: “As we conclude the first half of the year, I am proud of the progress that Zegna Group continues to make as we execute our strategic plan, despite ongoing macroeconomic and geopolitical instability, which added to the still ongoing global health crisis, with the US, Western Europe and UAE more than offsetting the impact of Covid-19 related measures in the Greater China Region (GCR).”

“While our current performance is strong, including a healthy rebound in the Greater China Region, the global geopolitical and economic outlook remains uncertain.”

Zegna Group H1 revenue performance by segment

The group’s overall performance was driven by the continued strength of the Zegna segment, whose revenues increased 19 percent to 553 million euros.

The company said, shoes and luxury leisurewear continued to perform strongly, while tailoring and made to measure have rebounded, particularly in the US and EMEA.

Thom Browne continues to contribute strongly to the group’s overall growth, with revenues up 30 percent for the period, reaching 185.8 million euros driven by growth across all lines, and particularly womenswear, and the rollout of e-commerce through Tmall in the Greater China Region in the second half of 2021.

The company’s revenues increased significantly across all major geographies, despite a global environment that remains disrupted by the Covid-19 pandemic and other geopolitical factors. The only exception was the Greater China region, which was affected by COVID-19-related restrictions, primarily from mid-March through the end of May of this year.

Revenues in the Greater China region amounted to 247.2 million euros for the first half, down 14 percent due to lower DTC revenues resulting from temporary store closures and lower customer traffic. However, DTC revenues in the Greater China Region for the month of June 2022 increased compared to June 2021 due to the increase in e-commerce sales for both the Zegna and Thom Browne segments, and a rebound in sales at the directly operated stores.

Revenues in the rest of the world amounted to 481.8 million euros, up 53 percent, with an acceleration in the second quarter to 59 percent from 48 percent in 1Q 2022. The increase was mainly driven by a 91 percent increase in revenues in the US, reaching 124.3 million euros, a 43 percent increase in revenues from EMEA to reach 260.6 million euros and a strong performance in Japan and the rest of Asia.

Zena Group posts revenues growth across retail channels

Group sales from the company’s directly operated retail network, including e-commerce, were 428 million euros for the first half, up 13 percent and representing 59 percent of total revenues. They amounted to 209.9 million euros in the second quarter of the year, decelerating to a growth rate of 4 percent.

In particular, DTC revenues from Zegna-branded products were up 6 percent in the second quarter, compared with 23 percent in the first quarter. Similarly, for Thom Browne, second quarter DTC sales were down 2 percent, from 22 percent increase in the first quarter. Growth was high double digit in the United States, EMEA and Japan, and included eight net store openings worldwide compared to June 30, 2021.

In the month of June DTC revenues in GCR rebounded for both Zegna and Thom Browne, with the former close to June 2021 and the latter up double-digit relative to June 2021.

Wholesale trends in the first half showed 37 percent increase and the acceleration in the second quarter of 45 percent, with Thom Browne up 89 percent in 2Q 2022. Wholesale sales for Zegna-branded products, down 3 percent reflect the cancellation of Russian orders and the start of FW22 shipments only from July onwards.

At the end of June 2022, the Group store footprint consisted of 519 stores including 295 DOS compared with 530 on December 31, 2021 including 297 DOS and 525 on June 30, 2021 including 284 DOS.

Zegna’s financial performance across product lines

All product lines grew double-digit in the first half of 2022 compared to the same period of last year.

Zegna branded products were up 13 percent, primarily driven by the continued positive performance of shoes and luxury leisurewear, as well as the rebound of tailoring and made to measure offerings, particularly in the United States and EMEA, as well as the effects of price repositioning as part of the One Brand Strategy.

Thom Browne’s 30 percent growth was driven by strong demand for both seasonal and classic products. Textile revenues were up 55 percent as a result of strong demand across the whole platform and the residual consolidation impact of Tessitura Ubertino (4.6 million euros). Finally, third party brands revenues grew 44 percent thanks to strong deliveries to Tom Ford and Gucci in particular.

On May 17, 2022, at its first capital markets day, the group announced that the company is aiming for revenues to exceed 2 billion euros and for adjusted EBIT to reach at least 15 percent of revenues.