Dive Brief:
- Ermenegildo Zegna Group reported an unaudited revenue of 463.2 million euros, or approximately $495.6 million, for the first quarter of 2024 up 8.1% year over year, according to a Tuesday earnings release.
- By segment, Q1 revenue for the company’s Thom Browne brand fell 30.2% for the period to 79.1 million euros from 113.2 million euros the previous year. The company said the dip was due to different delivery timing across quarters, a first quarter streamlining of its wholesale business, and “a lower-than-expected DTC trend in the Greater China Region, where management has taken important actions intended to improve performance.”
- Poor performance at Thom Browne was offset by other brands, including the company’s Zegna brand, which reached 324.9 million euros, up 1.7% from 319.3 million euros for the same period in 2023. The company’s recently acquired Tom Ford Fashion business saw Q1 revenues of 65 million euros but had no year over year comparison.
Dive Insight:
Zegna Group joins a small collection of brands, including Hermès and Prada, which have consistently bucked a luxury industry slowdown.
While the decline of the Thom Browne business may be a sign that tides are turning, Chairman and CEO Ermenegildo “Gildo” Zegna said in a statement that he was nevertheless upbeat. He praised the company’s growth in the Americas and expressed optimism regarding its Zegna One Brand strategy, launched in 2022 to focus its core products under one recognizable moniker.
“I am confident in the decisions we are making to accelerate our direct control of the business, in particular at Thom Browne and TOM FORD FASHION, and we have also reinforced our talent and leadership across all levels, knowing how critical our people are to delivering results,” Zegna said. “Finally, we are continuing our focus on clienteling and customer experience, both of which will further strengthen the long-term value of all our brands.”
The company’s DTC revenue in Q1 was up 20.4% to 328 million euros, while wholesale branded revenue was down 11.5% year over year to 99 million euros. Meanwhile, the company saw “strong double-digit growth in the Americas” with a 57.7% revenue boost to 114.2 million euros for the region, which accounted for 25% of the company’s revenue, per the release. That offset a 15.3% downturn in China for the period, where revenue fell to 139.4 million euros, representing 30% of the company’s total.
Its Q1 earnings follow previously reported confirmed fiscal 2023 gross profits of 1.2 billion euros year over year and a 108% year-over-year profit increase announced earlier in April.
“Looking at the rest of the year, we have a clear and defined path in front of us,” Zegna said. “I am confident that we are taking the right actions to make our brands even stronger and to deliver on our medium-term ambitions.”
