Zegna Group’s Revenue Dropped by 7.8% Year-on-Year Last Quarter, with a 22.8% Decline in Greater China

11月 15, 2024

On October 22, the Italian luxury group Ermenegildo Zegna NV (hereinafter “Zegna Group”) (NYSE: ZGN), headquartered in Milan, released its unaudited financial report for the third quarter and the first nine months of fiscal year 2024, ending on September 30. The group reported third-quarter revenue of €397.3 million, a year-on-year decline of 7.8%, with an organic decline of 6.7%. Revenue for the first nine months reached a total of €1.3574 billion, reflecting a 1.7% year-on-year increase, though an organic decline of 4.0%.

In the Greater China market, which accounts for 26% of the group’s revenue, weakened consumer confidence led to a 15.8% year-on-year revenue decline over the first nine months and a 22.8% decline in the third quarter. The Americas, EMEA (Europe, Middle East, and Africa), and Japan outperformed other regions.

Commenting on this, Ermenegildo Zegna, Chairman and CEO of Zegna Group, stated: “The first nine months of 2024 saw our revenues grow 2% from the same period last year. Although third quarter revenues showed a slowdown for the Group, I am reassured by the continued positive performance of the ZEGNA brand, boosted by the DTC channel, and also by the quality of talent we have brought into Thom Browne and TOM FORD FASHION as we work to strengthen those teams.

Looking ahead to the fourth quarter of 2024 and into 2025, we continue to foresee an uncertain environment, particularly in the Greater China Region. However, I believe that our Group is fully prepared to face the future with stronger brands, a clearer vision and strengthened management team.

As of the close of October 22, Zegna Group’s stock had declined by 1.84% compared to the previous day, with a latest market cap of $2.019 billion. Over the past 12 months, Zegna Group’s stock has cumulatively declined by 34.69%.

Key Developments for Zegna Group in Q3

  • Appointment of Creative Director for Tom Ford Fashion: On September 4, TOM FORD announced the appointment of Haider Ackermann as Creative Director, effective immediately. In this new role, Ackermann will oversee the creative direction for all fashion categories at TOM FORD, including menswear, womenswear, accessories, and eyewear, guiding the overall brand vision.
  • VILLA ZEGNA in New York: On September 5, ZEGNA introduced its new concept experience, “VILLA ZEGNA,” in New York. This immersive event represents ZEGNA’s innovative way of interacting with customers to build emotional connections with the brand. VILLA ZEGNA New York marks the second chapter in the global journey of VILLA ZEGNA, with the first held in Shanghai in May. The concept draws inspiration from Ermenegildo Zegna’s 1938 voyage to the United States, where he traveled with his son across the Atlantic to meet Italian tailors in New York City, laying the foundation for ZEGNA’s development in America.

By Division

Zegna Division

For the first nine months of 2024, the Zegna division, which includes the ZEGNA brand, textiles, and other revenues*, reported revenue of €944.4 million (compared to €936.8 million for the same period in 2023), marking a year-on-year increase of 0.8% (2.0% on an organic basis). Third-quarter revenue reached €283.9 million, a year-on-year decrease of 2.9% (1.3% on an organic basis), as growth in the ZEGNA brand was offset by a decline in the textiles segment.

*Note: “Other” revenue primarily includes income related to third-party brands.

  • In terms of specific business segments, revenue for the ZEGNA brand reached €810.6 million for the first nine months of 2024 (up from €783.6 million for the same period in 2023), reflecting a year-on-year increase of 3.4% (4.8% on an organic basis). Third-quarter revenue for the brand increased by 0.9% year-on-year (2.5% on an organic basis), driven by strong double-digit growth in the EMEA, Americas, and Japan markets. However, performance in Greater China declined quarter-on-quarter due to weakened consumer confidence.
  • The textiles business recorded revenue of €101.5 million for the first nine months of 2024, down from €108.6 million in 2023 (a year-on-year decrease of 6.5%, or 5.4% on an organic basis). In Q3, revenue for textiles dropped by 16.3% year-on-year (15.3% on an organic basis), attributed to a decrease in third-party orders.
  • Other revenue totaled €11.3 million for the first nine months of 2024, down from €23.3 million in 2023 (a year-on-year decline of 51.6%, or 29.9% on an organic basis), impacted by the termination of distribution licenses for Tom Ford products following the acquisition of Tom Ford International LLC on April 28, 2023.

Thom Browne Division

For the first nine months of 2024, the Thom Browne division reported revenue of €220.4 million (down from €281.6 million for the same period in 2023), a year-on-year decline of 21.7% (26.9% on an organic basis). Third-quarter revenue reached €53.5 million, marking a year-on-year decrease of 27.4% (26.8% on an organic basis), continuing the trend seen in the previous six months and reflecting the decision to streamline the wholesale business. The DTC channel in Japan and Korea maintained stable growth, but this was offset by negative performance in other regions, primarily in Greater China.

Revenue for the Thom Browne brand closely aligned with that of the Thom Browne division, totaling €220.1 million for the first nine months of 2024, compared to €280.1 million for the same period in 2023 (a year-on-year decline of 21.4%, or 26.7% on an organic basis).

*Note: The difference between the Thom Browne division and the Thom Browne brand lies in the revenue from Thom Browne stores in the MEA (Middle East and Africa) region, managed by Zegna Gulf Trading LLC. When segmenting revenue by brand and product line, this revenue is categorized under “Other” rather than directly under the Thom Browne brand.

Tom Ford Fashion Division

For the first nine months of 2024, the Tom Ford Fashion division generated revenue of €213.9 million, a year-on-year organic decline of 3.8%. Third-quarter revenue for the division was €65.4 million. The DTC channel saw a 2.5% year-on-year organic growth, driven by strong performance in the U.S. and EMEA DTC channels, while the wholesale channel experienced a year-on-year organic decline of 29.6%, mainly due to timing differences in deliveries.

By Channel

DTC (Direct-to-Consumer) Channel

For the first nine months of 2024, Zegna Group’s DTC channel generated revenue of €953.6 million, up from €865.2 million during the same period in 2023, reflecting a year-on-year increase of 10.2% (2.0% on an organic basis).

  • For the ZEGNA division, DTC revenue grew by 4.4% year-on-year for the first nine months (4.8% on an organic basis), leading the group’s growth. Third-quarter DTC revenue rose by 4.2% year-on-year (4.1% on an organic basis), driven by strong double-digit growth in the EMEA (especially the Middle East), Americas, and Japan markets. By the end of September, ZEGNA had a total of 285 self-operated stores, with a net increase of six stores in Q3 2024.
  • The Thom Browne division recorded a slight year-on-year increase of 0.7% in DTC revenue for the first nine months, though it declined by 12.9% on an organic basis. Third-quarter revenue fell by 14.1% year-on-year (13.2% on an organic basis), reflecting challenging market conditions, particularly in Greater China, though Japan and South Korea showed strong performance. As of the end of September, Thom Browne operated 106 self-owned stores, with a net increase of four stores in the Asia-Pacific region during Q3.
  • The TOM FORD FASHION division’s DTC revenue reached €136.2 million for the first nine months of 2024, with a year-on-year organic growth of 2.0%. Third-quarter revenue increased by 2.5% on an organic basis, driven by consistent growth in the U.S. market and solid performance in EMEA, though the Asia-Pacific region remained weak. By the end of September, the division had 62 directly operated stores, with a net increase of six in Q3, including new locations at Beijing China World and Saks Fifth Avenue’s women’s section.

Wholesale Channel

For the first nine months of 2024, the wholesale channel’s revenue for Zegna Group was €291 million, down from €337.1 million in 2023, marking a year-on-year decrease of 13.7% (17.9% on an organic basis).

  • The ZEGNA division’s wholesale revenue reached €120.4 million for the first nine months, slightly down from €122.5 million in 2023 (a 1.7% decline year-on-year, but up 4.7% on an organic basis). Third-quarter revenue showed weaker performance with a 12.9% year-on-year decline (4.5% on an organic basis), impacted by timing differences in deliveries and the conversion of certain wholesale locations to direct operations.
  • Wholesale revenue for the Thom Browne division decreased significantly to €92.9 million for the first nine months of 2024, compared to €153.9 million in 2023, reflecting a year-on-year drop of 39.6% (38.0% on an organic basis). Third-quarter revenue fell by 46.0% year-on-year (45.9% on an organic basis), reflecting the group’s strategic decision to streamline wholesale channels and shift some locations to direct operations.
  • TOM FORD FASHION wholesale revenue totaled €77.7 million for the first nine months of 2024, up from €60.8 million in 2023 (a year-on-year increase of 27.9%, though down by 11.1% on an organic basis). However, third-quarter wholesale revenue fell by 29.2% year-on-year (29.6% on an organic basis), mainly due to timing differences in deliveries.

By Market

In the first nine months of 2024, revenue from the EMEA region (Europe, the Middle East, and Africa) reached €485.6 million, marking a 2.2% year-on-year increase (with a 1.6% decline on an organic basis), accounting for 36% of the group’s total revenue. In the third quarter of 2024, EMEA revenue declined by 2.1% year-on-year (1.6% decline on an organic basis). This reflects robust double-digit growth from the ZEGNA brand, though this was offset by weaker performance from Thom Browne.

For the Americas, revenue in the first nine months of 2024 amounted to €358.2 million, representing a 15.7% year-on-year growth (2.9% growth on an organic basis) and contributing 26% to the group’s revenue. In the third quarter, revenue in the Americas fell by 6.1% year-on-year (2.9% decline on an organic basis). While the ZEGNA segment achieved double-digit growth in DTC channels, the wholesale channel for all three brands underperformed.

The Greater China market generated €353.1 million in revenue in the first nine months of 2024, a year-on-year decrease of 15.8% (14.6% decline on an organic basis), accounting for 26% of the group’s revenue. In the third quarter, Greater China revenue dropped by 22.8% year-on-year (22.3% decline on an organic basis) due to waning consumer confidence in the region.

Other Asia-Pacific markets reported €158.8 million in revenue for the first nine months of 2024, marking a 23.9% increase year-on-year (6.2% growth on an organic basis). Third-quarter revenue rose by 6.1% year-on-year (7.4% growth on an organic basis), driven by continued robust double-digit performance from ZEGNA and Thom Browne in the Japanese market.

| Source: Zegna Group Official Website and Financial Statements

| Image Credit: Zegna Group Official Website

| Editor: Wang Jiaqi