Zegna Group Reports Q1 Sales Growth, Amid Challenges in Thom Browne and Global Markets

The Ermenegildo Zegna Group experienced varied financial results in the first quarter of 2024, with overall sales rising by 8.1 percent to 463.2 million euros, up from 428.3 million euros in the same period last year. This increase was primarily driven by a strong performance in the Americas and a successful direct-to-consumer business, which contrasts with a decrease in Thom Browne’s sales due to strategic reductions in wholesale distribution.

Zegna Group Hits New York Stock Exchange
Gildo Zegna

Zegna’s Chairman and CEO, Gildo Zegna, remarked on the quarter’s results during an analyst call, stating, “Closing the first quarter of 2024 with double-digit revenue growth on a constant currency basis is reassuring given the challenges that the sector is facing. Our growth in the Americas — also in double digits — and the ongoing successful delivery of our Zegna One Brand strategy give me additional assurance that we are moving in the right direction.”

The quarter also saw a 29.6 percent decline in sales for Thom Browne, totaling 79.2 million euros. This was largely due to a strategic choice to cut wholesale accounts to maintain the brand’s exclusivity and enhance its direct-to-consumer model. “A difficult decision,” as Zegna described, but one that aligns with long-term brand protection and growth strategies. Despite these challenges, the Zegna brand itself saw a modest 4 percent increase in revenue, driven by strong sales in footwear and leisurewear.

Thom Browne FW24

Zegna also addressed the geographic disparities in performance. While the Americas and Japan showed strong growth, the Greater China region faced a slight decline. Zegna pointed out that “China is going through a normalization phase,” following an intense post-pandemic recovery, affecting overall performance in the region.

During the quarter, the company also focused on enhancing client experiences and deepening customer relationships, which Zegna believes are crucial for long-term value creation across all brands. This is reflected in the successful integration of the Tom Ford Fashion business, which contributed significantly to the direct-to-consumer revenue stream, totaling 328 million euros for the quarter, an increase of 20.4 percent from the previous year.

Moreover, Zegna touched upon the upcoming strategic shifts, including converting several wholesale accounts to concessions and continuing to expand its store network, especially in the United States. These moves are expected to bolster Zegna’s position in key markets and enhance its customer-centric strategy.

The company’s textile segment, however, saw a slight downturn with revenues dipping 1.7 percent to 33.2 million euros, indicating softer demand in the luxury goods sector.

As the group navigates these mixed results, Zegna remains optimistic about the future, emphasizing a “long-term view facing the short-term challenges.” With strategic adjustments and a focus on high-end customer service and personalization, Zegna aims to strengthen its market position and continue its growth trajectory in the coming quarters.

Finally, the group announced its commitment to distributing dividends, planning to return around 30 million euros to shareholders, underscoring its confidence in the financial health and future prospects of the company.