Italian luxury group Ermenegildo Zegna announced its preliminary results for the fourth quarter and the entire year of 2023: Thanks to the strong demand for the ZEGNA and Thom Browne brands, the annual sales revenue increased by 27.6% year-on-year to 1.905 billion euros, of which the fourth quarter surged by 40.5% to 570 million euros, accelerating further from the 20.8% growth in the previous quarter.
For the full year of 2023, revenue in the Asia-Pacific region was 788 million euros, of which 596 million euros came from the Greater China area, with a year-on-year increase of 20.5%. In the fourth quarter, revenue in the Asia-Pacific region was 241 million euros, with income from Greater China reaching 176 million euros, up 35.0% year-on-year, benefiting from the execution of the ZEGNA One Brand strategy and the low base in the fourth quarter of 2022 due to the pandemic.
Ermenegildo “Gildo” Zegna, the Group’s Chairman and CEO, said: ““I am very proud of the Group’s success over the past year, which is demonstrated by our strong and continued revenues growth. 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.”
“The continuing improvement in the ZEGNA brand productivity, in particular, is a testament to the strength of our execution, supported by our successful merchandising and CRM. Our integrated supply chain benefits all three of our brands and drives ZEGNA’s leadership in Made-to-Measure and product customization. We are focused on further enhancing our Made-to-Measure and personalization offering with the introduction and ongoing rollout of ZEGNA X, which is empowering our style advisors to further serve our customers using the latest technology.”
After the earnings report was released, as of the close on January 31st, Eastern Time, Zegna Group’s stock price rose by 6.09% to $12.19 per share, with a current market value of approximately $3.051 billion.
Regionally, Ermenegildo “Gildo” Zegna said: “While we have seen broad-based strength, I am particularly pleased by the continued growth in EMEA and the very positive performance in the US, which was driven by strong double-digit ZEGNA sales via the retail channel. These strengths, coupled with the rebound in the Greater China Region, are testaments to the soundness of our long-term strategy. Our performance across all our key geographies reflects the plans we set out at our second Capital Markets Day at the NYSE in December 2023 and charts a path forward to reach our medium-term goals even in an environment that remains challenging, with the invaluable contributions of our management team and all our employees across the Group and its brands”
On December 5th, the Zegna Group held its second Capital Markets Day event in New York after going public, releasing a 105-page report announcing its latest strategy and medium-term financial targets. In the latest medium-term financial targets, the Group plans to achieve an annual compound growth rate of sales of more than 10% and an approximate 20% compound annual growth rate of adjusted EBIT starting from 2023.
Performance by department:
- Zegna: The strong DTC (Direct-to-Consumer) strategy of the ZEGNA brand continues to drive sales revenue growth in this segment, far offsetting the decline in wholesale revenue due to strategic adjustments.
- Thom Browne: The growth in the fourth quarter reflects the expansion of the brand’s DTC channel and the growth of its wholesale business.
- Tom Ford Fashion: Since the merger on April 29, 2023, this division’s sales revenue was 236 million euros, of which 97 million euros were confirmed in the fourth quarter, reflecting strong performance during the holiday season.
Performance by business line:
- Zegna brand products: In 2023, the growth rate of luxury casual wear revenue exceeded the brand’s average, currently accounting for about 50% of Zegna brand product revenue. Footwear also exceeded the brand’s average growth rate, currently accounting for 13% of product line revenue, while suits and MTM (made-to-measure) continued to maintain dynamic growth. The growth of Zegna brand products reflects the brand’s appeal, and the strong attraction of luxury casual wear and shoes supports the Group’s strategy – to meet changing consumer needs while maintaining a focus on quality.
- Thom Browne brand products: This strong growth benefited from the brand’s DTC expansion strategy and focus on women’s wear, which continued to grow faster and reached 30% of Thom Browne’s total revenue in the 2023 fiscal year.
- Textiles: The double-digit growth in textile revenue was particularly supported by the Group’s textile division, Lanificio Zegna.
- Third-party brands: The revenue of the third-party brand product line was affected by the termination of the distribution license agreement with Tom Ford International.
Performance by channel:
- DTC: As of December 31, 2023, the Zegna brand net opened 14 stores, bringing the total number of stores to 253. Thom Browne DTC revenue growth mainly benefited from the transition of the Korean business from wholesale to direct sales, and as of December 31, 2023, Thom Browne brand net opened 6 stores, bringing the total number of stores to 86. Since the merger on April 29, 2023, Tom Ford Fashion contributed 136 million euros in DTC revenue.
- Wholesale: Thom Browne’s wholesale revenue reflects the transition of Korean sales points from wholesale to direct sales on July 1, 2023. In the fourth quarter, Zegna brand product sales decreased by 5.5% year-on-year, mainly due to the transition of Saks Fifth Avenue stores from wholesale to retail.
Regional performance:
- EMEA: Growth was due to strong growth in the DTC channel of the Zegna brand, but partially offset by the weak wholesale market. The European market remained active throughout the year, reflecting the enthusiasm of domestic and foreign consumers. Additionally, the performance in the UAE continued to outperform other regions.
- North America: Despite an unstable consumer environment, the US market grew significantly, proving the success of the ZEGNA One Brand strategy and execution.
- Asia-Pacific: In 2023, revenue in the Asia-Pacific region was 788 million euros, of which 596 million euros came from the Greater China area, with a year-on-year increase of 20.5%. Japan also showed significant growth of 29.9% to 85 million euros. In the fourth quarter, revenue in the Asia-Pacific region was 241 million euros, with income from Greater China reaching 176 million euros, up 35.0% year-on-year, benefiting from the execution of the ZEGNA One Brand strategy and the low base in the fourth quarter of 2022 due to the pandemic.
| Source: Official financial report
| Image Credit: Group official website
丨Reporter：Zhang Yang
| Editor: Wang Jiaqi
