Dive Brief:
- Ermenegildo Zegna Group reported preliminary revenue of 1.9 billion euros, or about $2.1 billion at current exchange rates, for its 2023 fiscal year, a 27.6% year-over-year increase, according to a company news release Wednesday. Its fourth quarter revenue was 570 million euros, up 40.1% year over year.
- The company experienced double-digit revenue growth across all geographies compared to the year before. The North America region grew the most, with a 41.6% year-over-year increase. The EMEA region amounted to 659 million euros, up 26.6%.
- In December 2023, the Zegna Group said it planned a company-wide compounded average annual revenue growth of more than 10%.
Dive Insight:
The luxury sector saw a consumer spending slowdown in 2023, and some companies are still feeling the effect. But recent earnings reports from Richemont, LVMH and now Zegna could show the sector has space to grow.
The Zegna Group, which owns Thom Browne, the Tom Ford fashion license, and the Zegna brand, saw a revenue increase in North America in Q4, which was a continuation of its positive Q3 results reported in October 2023.
Ermenegildo Zegna, chairman and CEO of the Zegna Group, pointed to the Zegna brand in particular as a driver of the 2023 growth. The brand segment accounted for 1.3 billion euros in 2023 revenue, up 12.4% year over year. The company attributed the increase to the brand’s DTC strategy, which offset lower wholesale revenue.
Wholesale revenue for the group overall during the fiscal year was up 11.3% year over year to 635 million euros. Its DTC revenue was 1.3 billion euros.
“The significant increase in our revenues in 2023, and especially from our network of directly operated stores, is a clear indication that demand for our brands remains healthy, and that we are successfully executing our strategy to increase their desirability and solidify their position as leaders in the luxury market,” Zegna said in the release.
He also noted that the company is focusing on enhancing its made-to-measure and personalization offerings as it continues to roll out its Zegna X platform, which uses AI to create a different shopping experience.
The Thom Browne segment accounted for 380 million euros for the full year, a 14.9% year-over-year increase. For the fourth quarter, the segment saw a 30.2% increase year over year due in part to the expansion of its DTC channel, as well as “strong wholesale deliveries compared to a low base” in the prior year. This reflects what the company predicted for the brand over the next few years in its December 2023 Capital Markets Day announcement.
Also at the Capital Markets Day presentation, the company said it expected to grow revenue for Tom Ford Fashion by more than “10% compounded annual growth rate in the medium term.”
The Zegna Group holds the exclusive license for the Tom Ford Fashion business. Estée Lauder Companies, which acquired the brand in May 2023, oversees brand strategy and manages its fragrance, cosmetics and skin care products. Tom Ford Fashion has earned 236 million euros since its consolidation into the group’s business on April 29, 2023.
