by MILAN – “My family has run the company for over a hundred years, and we’ve been here for at least as long,” said Gildo Zegna, chairman and chief executive officer of the Ermenegildo Zegna Group. “We are always running a long-term vision and that will not change. Our aim is to create a much stronger, more global and more diversified luxury business.”
Indeed, the executive on Thursday mapped out his ambitions for the group while commenting on its unaudited first-half revenue during a conference call with analysts. In the six months ended June 30, sales rose 6.3 percent to 960.1 million euros compared to 903.1 million euros in the same period last year, boosted by strong business in the US and the Europe, Middle East and Africa region, and to exactly fast. sales to consumers. In organic terms, sales were down 2.7 percent. In the second quarter, group revenue rose 4.7 percent to 497 million euros.
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As expected, analysts asked Zegna about the future of Tom Ford Fashion following the sudden departure of creative director Peter Hawkings on Monday. Refusing to give reasons for the move, Zegna said the aim was to “make the brand more global, reducing women’s leisure and daytime, and to completely increase its offer of leather goods.”
For that reason, the successor must be a designer with strong expertise and know-how in those categories, he said, without revealing the name of any potential candidates. He said his belief in the potential strengthening of those businesses was a key reason for taking on Ford fashion as part of the Estée Lauder Cos. deal in 2022, which valued the beauty and fashion brand at $2.8 billion.
One analyst questioned whether there was a risk of alienating loyal customers of the brand given that Hawkings, handpicked by Ford himself, had worked with the designer for 25 years, but Zegna dismissed those concerns . He thanked Hawkings for the work done in the first phase of the launch of Tom Ford Fashion and expressed confidence in the CEO of the brand, Lelio Gavazza, and for his “strong lead. I am very optimistic that we will deliver in the long term.”
He said the brand opened a new store in Taormina, Italy, “which is performing ahead of expectations,” and also opened a new unit in Rome, one at the Hangzhou Tower, and a flagship in Beijing China World.
Looking ahead, he said he is “absolutely confident in the strategy we have implemented and the way we are going. Our group is the custodian of three authentic brands, each with unexplored long-term growth potential. We all recognize that 2024 will remain a challenge, which is why we are working on cost control initiatives across the group.” That said, he said it was vital to continue investing in the brands, with the aim of “understanding where there is positive volatility and being there, and protecting ourselves when there is negative volatility.”
In the first half, sales of the Zegna brand, designed by artistic director Alessandro Sartori, rose 4.6 percent to 566.1 million euros due to continued strong growth in the United States and the EMEA. Organic performance in the Greater China region remained in line with the first quarter of 2024: negative single digits.
However, Zegna said he was “more positive than negative about China for 2025,” and referred to the “really positive experience with Villa Zegna” in May in Shanghai, named after the home of the group’s founder. in the Piedmont Alps, recreated in China “to explain Zegna’s authentic heritage, interacting with customers and fostering emotional connections with the brand.”
He said that “this activation confirmed, once again, that the brand is strong in China, and is seen as a timeless luxury menswear brand.”
He revealed that the Villa Zegna group will move to New York to follow the story of his grandfather, who traveled to the city by sea in 1938, “to meet the best American tailors who made the Zegna fabrics known throughout of the US”
Chief financial officer Gianluca Tagliabue said that most of the demand in China comes from local customers and that only 10 percent of the Chinese cluster is at Zegna group product stores outside China.
In the first half, the income of the Thom Browne brand decreased by 19.4 percent to 166.7 million euros, reflecting the continued streamlining of its wholesale business, only partially offset by an improvement in the performance of DTC. The brand continued to record strong results in Japan, which were offset by declines in Greater China CR, EMEA and the Americas.
Zegna, together with the CEO of the brand Rodrigo Bazan, said that “we are taking strong action, starting from the deep wholesale rationalization to a thorough review of the organization. When you grow fast, sometimes you might not have a balanced organization.” He said they are working “on improving the skills of the sales team, and improving our marketing offer especially in China, and on strengthening management in key roles.” He added that business in Korea is “great” for Thom Browne, although there is “work to be done in Japan.”
Since the consolidation of Tom Ford International LLC and its subsidiaries on April 29, 2023, the group has only shown the organic performance, which compares the income of the two months in which the brand was consolidated in 2023 and 2024.
In the first half, revenue from the Tom Ford Fashion segment was 148.5 million euros, organic growth of 4.7 percent driven by good performance in DTC and the US.
As a group, sales in the Europe, Middle East and Africa region registered revenues of 336.6 million euros, up 4.3 percent, accounting for 35 percent of the total, boosted by strong business of the Zegna brand, offsetting a wholesale slowdown at Thom Browne. .
Revenue in America amounted to 246 million euros, climbing 29.4 percent and representing 26 percent of group sales, with double-digit growth from Zegna and a strong performance from Tom Ford Fashion.
The Greater China region recorded revenue of 266.3 million euros, a decrease of 13.2 percent and accounted for 28 percent of group sales, which was affected by consumer confidence that was still biased, with Zegna still performing better in the region.
Revenue in the rest of Asia-Pacific increased by 33.8 percent to 110 million euros, driven by the strong double-digit organic performance in the Japanese market offset by the performance of the other markets in the region.
When asked about current trade, Tagliabue said that retail sales in June and July were “in line with the average for the respective quarters,” and that there was “no big change,” except maybe “softer in Hong Kong and Macau.”
In the first half, DTC’s revenue increased by 14.8 percent to 669.6 million euros. Zegna’s revenue from DTC drove the group’s performance, increasing by 4.5 percent to 486.5 million euros due to the solid performance of the Americas and EMEA.
At the end of June, Zegna counted 279 directly operated stores. Highlighting an increased shift from wholesale to retail for the group’s brands, Gildo Zegna ticked off a number of openings that had been booked for the second half of the year for the Zegna brand in Monte Carlo in September; in the New York Meatpacking District; by Harry Rosen; in Wuhan; at Ala Moana in December; in Riyadh, and one concession at Crawford Lane.
Thom Browne DTC revenue increased by 8.5 percent to 90 million euros. Excluding the effect of the acquisition of the Thom Browne business in South Korea (previously accounted for in the wholesale channel), organic DTC revenue declined 12.8 percent, leaving the challenging Greater China region at risk. At the end of June, Thom Browne counted 102 directly operated stores, including 13 new small concession stores at Nordstrom and one store in Beijing WF Central. In the second half, the brand will open on Melrose Avenue in Los Angeles and in Palm Beach, Fla., Holt Renfrew and Nordstrom, Zegna said.
DTC Tom Ford Fashion revenue jumped to 93.1 million euros, from 34.7 million euros with 56 DOS at the end of June, including two net openings in the second quarter. In addition to Taormina and Rome, new stores will open in Singapore at Paragon, a concession at Harrods, at the Four Seasons in Madrid and Saint Moritz.
In the first half, group wholesale revenue decreased by 7.5 percent to 211.7 million euros compared to 228.9 million euros last year.
Zegna’s wholesale revenue rose 5.2 percent to 79.5 million euros, driven mainly by different timing in deliveries.
Thom Browne’s wholesale revenue fell 38.1 percent to 76.7 million euros reflecting the decision to streamline the brand’s wholesale business.
Tom Ford Fashion’s wholesale revenue increased to 55.4 million euros from 29.2 million euros.
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