MILAN — Zegna’s one-brand strategy continued to drive growth at the Ermenegildo Zegna Group in the first quarter of the year, as did Thom Browne’s momentum.
In the three months ended March 31, revenues at the Italian group rose 25.4 percent to 377.6 million euros.
“Over the course of 2021, the Zegna Group achieved a number of milestones,” said Gildo Zegna, chairman and chief executive officer of the group on Thursday. In December, the group listed on the New York Stock Exchange after a business combination with Investindustrial Acquisition Corp. and a rebranding of Zegna, which reworked the logo, dropping the first name of the founder, revisiting its store concept and communications.
The year 2022 “was off to a good start and is now looking more challenging due to the combination of geopolitical, economic and health-related uncertainties,” the executive continued. “Both our brands are coping well in the face of these increased challenges, and we will continue to execute against our strategic objectives.”
Assuming no further deterioration or geographic extension of the war in Ukraine, a normalization of the COVID-19 pandemic in Greater China before the summer, and no other unforeseen events, the group confirmed its outlook for the year, expecting a growth in revenues in the low-teens and continued improvement to adjusted earnings before interest and taxes. This can be achieved “building on the accelerated expansion achieved in 2021,” when the group delivered an adjusted EBIT of 11.5 percent on revenues, exceeding its own guidance of “around 10 percent.”
“Ours is a multiyear journey, and as we continue to monitor ongoing global developments — especially the recent COVID-19 spike in China — we remain ahead of our plan and confident in the strength of our brands,” Zegna said.
The company is planning a capital markets day at Oasi Zegna on May 17 where it plans to unveil its sustainability goals and provide an update on strategy and ambitions.
In the first quarter, the Zegna segment showed a 27.1 percent increase year-over-year to 283.5 million euros with “robust performance” in all product lines.
The Thom Browne segment rose 22.3 percent year-over-year, with revenues totaling 98.1 million euros with consistent performance in both direct-to-consumer and wholesale channels.
Zegna-branded products, which include apparel, bags, shoes and leather goods, as well as licensed goods and royalties, posted revenues that were up 22.1 percent year-over-year to 224 million euros. The group attributed this gain in large part to the growth in luxury leisurewear and shoes, and a strong rebound of made-to-measure.
Revenues of the group’s textile business saw a 64.6 percent increase to 30.2 million euros.
Zegna also saw a 56.8 percent increase in revenues for the third-party brands, which reached 24.4 million euros, reflecting its strong supplies capability.
Thom Browne continued to attract younger consumers globally, seeing growth across all channels. In particular, the company noted that womenswear grew at a rate that outperformed menswear.
By markets, North American revenues jumped 85.1 percent year-over-year to 61.8 million euros, driven by “very strong demand” for the Zegna brand’s new products and its luxury leisurewear collections in the U.S., where revenues were up 97.2 percent year-over-year.
Latin America also almost doubled thanks to strong direct-to-consumer revenues for the Zegna brand.
The group saw sales rise 38.9 percent to 134.5 million euros in the Europe, Middle East and Africa region, “with very dynamic performance in the UAE,” and the U.K and France also over-performing.
As Greater China slowed down since March due to the new COVID-19 restrictions, the Asia Pacific region showed mix results, reversing the positive performance recorded until February, and growing 4.5 percent to 174.8 million euros. Sales in the Greater China region inched up 0.3 percent to 142 million euros. The rest of APAC, excluding Greater China, rebounded by 27.8 percent year-over-year, as many countries lifted COVID-19 restrictions.
Sales in the group’s direct-to-consumer channel grew 23.1 percent to 218.1 million euros, accounting for 58 percent of the total.
The Zegna brand direct-to-consumer channel was up 23.2 percent to 183.9 million euros, driven by a strong recovery across geographies, especially North America and Europe, mitigated by the Greater China Region since early March.
Thom Browne saw a 22.3 percent growth in direct-to-consumer sales to 34.2 million euros, lifted by strong gains in EMEA, North America and Japan, offset by the COVID-19 related restrictions in Greater China.
Revenues in the wholesale channel grew by 31.4 percent to 158.5 million euros, driven by solid gains at both brands and further enhanced by the rebound of the textile and third-party brands business lines. The company noted that its wholesale shipments to Russia, which are currently suspended, “have not historically represented a material portion of the group’s revenues.”