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Ermenegildo Zegna Group said profits declined in 2008 although international expansion delivered higher revenue.
This story first appeared in the June 4, 2009 issue of WWD. Subscribe Today.
Including extraordinary items, net profit fell 10.6 percent to 62.3 million euros, or $91.7 million. Revenues rose 3.2 percent to 870.6 million euros, or $1.28 billion, as emerging markets offset softening sales in the U.S. and Japan. Dollar figures have been converted from the euro at average exchange rates for 2008.
At constant exchange rates, revenue increased 5.7 percent. China, India, the Middle East and Latin America together generated more than 25 percent of revenue. Sales in India, where Zegna opened its first directly operated store last year, doubled, while revenue in China rose 30 percent, making it the group’s second-largest market.
Sales increases by geographic area were 50 percent in the Middle East, 18 percent in Eastern Europe, 15 percent in Latin America and 7 percent in South Korea.
Apparel, including sales from Zegna’s women’s brand, Agnona, generated 75 percent of revenues; accessories accounted for 15 percent, and textiles the remaining 10 percent. Sales of Zegna-licensed products, including fragrances, eyewear and underwear, accelerated strongly, the company said, adding those categories and small leather goods contributed significantly to total revenue.
Zegna opened 15 directly operated stores in 2008, bringing the total to 291.
“The financial tsunami that struck the world economy in the second half of 2008 caused softer growth than forecast, even if our growth was in line with the most dynamic global luxury brands,” chief executive officer Ermenegildo Zegna said. “Despite the current economic environment, I believe a rebound is possible beginning in 2010, and as such we are even more committed to maintaining and reinforcing our share of the luxury men’s market through aggressive investments. While the current economic slowdown will surely impact our 2009 bottom line, I firmly believe now is an opportune time to seize opportunities so that when the crisis ends — and no one can say with certainty when that may be — we will emerge as winners.”
The firm said it is “intensifying” its investments this year as growing its retail network remains its most important strategic initiative. In Asia, it is expanding its network of Peter Marino-designed flagship stores, with openings in Tokyo’s Shinjuku district, Dubai and Hong Kong planned for this year. Zegna is adding 20 shops worldwide, with 15 in greater China (including Hong Kong, Macau and Taiwan), two in Singapore, three in Eastern Europe and one in Houston. In Europe, Zegna is renovating stores in Barcelona, Lugano, Frankfurt, Milan-Malpensa and Rome-Fiumicino.