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Jan 25, 2023
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Ermenegildo Zegna's performance slows down in 2022 due to China

Translated by
Jan 25, 2023

The measures put in place in China to combat the spread of Covid penalised Ermenegildo Zegna in 2022, which slowed its performance, particularly in the fourth quarter. Listed on the New York Stock Exchange for the past year, the Italian group specialising in high-end men's clothing, which owns the Zegna and Thom Browne brands, posted revenues of €1.49 billion last year, up 15.5% on 2021 (+11% at constant exchange rates), according to preliminary results.

The brand's last show in Milan - Zegna

In contrast, the luxury house ended the year down 0.5% (-2.9% at constant exchange rates) with €407 million in sales in the fourth quarter. "Excluding the Greater China region, which was affected by Covid-related restrictions throughout 2022, particularly from mid-March to the end of May, and then again in the fourth quarter, revenues would have increased by 42% year-on-year for the 2022 financial year and by 24.7% in the fourth quarter," the company said in a statement.

Despite this situation, the head of the group Ermenegildo "Gildo" Zegna believes that the company's growth in 2022 "shows the strength and success of our strategy, its global reach and impeccable execution, with continued success in the Middle East, the US and Europe." He was optimistic about the reopening in China, which he saw on a recent trip. "We are seeing a recovery in our business and in the industry in general," he says.

The Zegna brand, headed by Alessandro Sartori and centred since July 2022 around a single line, recorded a turnover of 924 million euros in 2022 (+9), thanks to the success of its high-end leisurewear offer and "the exceptional performance" of its footwear range, as well as its made-to-measure business, particularly in the United States and Europe. The Zegna segment, which in addition to the Zegna brand products includes the group's textile product line and third-party brands, generated 1.17 billion euros in 2022 (+13.7%).

For its part, Thom Browne achieved a turnover of 330 million euros, jumping by 25.3% over a year, driven in particular by wholesale sales, which soared by 47.7% last year. Direct sales recorded double-digit growth in the US, Europe and Japan. In the fourth quarter, the label posted an increase of 11.4% to 76 million euros. The company, headed by its founder and eponymous designer, announced on Wednesday that it had reached an agreement with its Korean partner Samsung C&T Corporation to take direct control of its activities in South Korea.

Ermenegildo Zegna targets 2 billion euros in the medium term

As far as forecasts are concerned, Ermenegildo Zegna Group expects a slight improvement in its operating result for 2022. In the medium term, its objectives remain unchanged. It is targeting an operating margin of at least 15% and a turnover of 2 billion euros.

Earlier this year, on January 23, the group signed an agreement to acquire a minority stake in the Canadian technical running shoe company Norda Run, with the possibility of gradually increasing its stake over the next nine years. In addition, as part of an agreement with Estée Lauder, the Italian company will manage via a long-term license the fashion activities of Tom Ford, which has just been acquired by the American cosmetics giant. So many strings to its bow to reinforce its stature as an important group in the luxury market.

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