Zegna opens the year with an 8% increase, making up for lower sales in China in America

MADRID – Italian multinational group Ermenegildo Zegna, owner of the Zegna and Thom Browne fashion brands and licensing rights to Tom Ford's fashion business, released sales records for the first quarter of the new fiscal year 2024. The three-month period ending March 31, which the company completed by increasing Its sales volume increased by +8 percent, despite the sharp decline experienced in China – more than compensated for in America – and in the Thom Browne brand, in this case as a result of its ambitions to control its business. Exposure in multi-brand channel.

Based on unaudited accounts provided by the management of the Italian multinational, Zegna Group reported a first quarter of the year in which the company was able to close with total revenues of €463.15 million. A figure that represents an increase of +8.13 percent compared to the €428.31 million invoiced during the same period last year, which leaves the Italian multinational growing by +22.66 percent compared to the €377.57 million invoiced during the first quarter of year 2022; The first year in which the company has reached completion as a listed company after moving to the New York Stock Exchange in December 2021. A growth that continues to demonstrate the high resilience that the company shows in the face of tensions and uncertainties affecting the entire luxury fashion industry within which it operates. Some signs of strength have prompted it to continue to remain positive, despite the sharp decline in China, while at the same time making decisive progress in its ambition to take greater control of the Thom Browne brand's business. The company whose sales decline resulted in the group as a whole recording negative organic growth of -5.3%, once excluding Tom Ford's new fashion business, as a result of the sharp decline in sales experienced by Thom Browne in the wholesale channel.

“Closing the first quarter of 2024 with revenue growth in the double-digit range, at constant exchange rates, is reassuring, given the challenges facing the sector,” Ermenegildo Zegna, President and CEO of the Ermenegildo Zegna Group, wanted to put it. Through statements shared from his own administration. “Our growth in the Americas – also double digits – and the continued success of our ‘Zegna One Brand’ strategic plan gives me added confidence that we are moving in the right direction,” she said. “I am confident in the decisions we are making to accelerate the process of seizing direct control of the business, in particular At Thom Browne and Tom Ford Fashion, as we “leverage our talent and leadership at all levels, knowing how important our people are to achieving results.”

The fall in China and the growth in America

Briefly delving into the performance seen by the Group throughout the first quarter of 2024, by business lines, the Zegna brand continued to emerge as a major source of income for the multinational, as sales remained on the rise until eventually reaching €282.87 million (+4%). A good performance was not accompanied by Thom Browne, the second major brand of the Zegna Group, whose sales during the first quarter ended up falling to 79.20 million euros (-29, 6 percent). The amount included in the quarterly sales balances supplemented by income earned by Tom Ford's new business, amounting to €65 million; Those produced by the Textiles Division of the Zegna Group amounted to 33.24 million euros (-1.7 percent); And those acquired through its operations and services to third parties, which decreased to 2.81 million euros (-72%) mainly affected by the discontinuation of the Tom Ford agreements and the integration of the fashion business from the American House into the corporate business. An Italian multinational company, now through an exclusive exploitation agreement under the licensing regime granted by its new owner, the cosmetics company The Estée Lauder Companies.

In terms of its development, through distribution and sales channels, the direct sales business of the three main brands managed by the company, Zegna, Thom Browne and Tom Ford, in line with the strategic objectives of the Zegna Group, ended up rising to 328 million euros. (+20.4 percent), with Xenia growing to €239.61 million (+4.4 percent) and Tom Browne to €44.71 million (+4.4 percent). A development that came to compensate for lower sales in the wholesale channel, where income fell to 99 million euros (-11.5 percent), with Zegna growing to 43.25 million (+2.3 percent) and Thom Browne sales shrinking to 34.48 million euros (-50.5 percent). .

Meanwhile, in terms of market, the Asia-Pacific region remains the main source of income for the Zegna Group, with sales in China falling to €139.39 million (-15.3 percent), while in the rest of the world in the region's markets they rose to €52.43 million ( +28.7 percent). Added to the figures recorded in Europe, the Middle East and Africa, amounting to 156.56 million euros (+4.3 percent); in the Americas region with €114.17 million (+57.7%); Those resulting from transfers of licenses and agreements amounted to approximately 585 thousand euros (+7.5 percent).

With growth of +10% annually in the medium term

Looking ahead to the rest of the year, Xenia maintains its forecast, advanced at the beginning of April 2024. The estimates confirm its decision to remain focused on the long term, aiming to achieve sustainable annual sales growth in the range of +10 percent for the group as a whole, and more than 10 percent for the Tom Ford fashion business.

“We continue to focus on customer service and customer experience”, tools that “will enhance the long-term value of all our brands”, as Gildo Zegna himself defends in this regard. As a result, “looking forward to the rest of the year, we have a clear and well-defined path ahead of us,” he adds, “and I am sure we are taking appropriate measures to further strengthen our capabilities.” brands and meet our medium-term goals.