Zegna Group Reports Surge in Q3 Sales Driven by Positive Response to Tom Ford Spring 2024 Collection
Key Takeaways:
- Ermenegildo Zegna Group sees significant Q3 sales growth, primarily driven by the Tom Ford Spring 2024 collection.
- Sales have witnessed robust growth across all regions, with both the Zegna and Thom Browne brands contributing significantly.
- Stellar first-half financial results indicate the group expects Q4 to outperform Q3.
- The group aims for annual revenues to surpass 2 billion euros by 2025, targeting an operating profit of at least 15% of these revenues.
- Tom Ford Fashion, after its acquisition by Estée Lauder Companies Inc., has started making notable impressions post its debut show in Milan.
- Preliminary Q3 revenues reached 431.1 million euros, up 20.8% from 2022.
- The Greater China region saw modest growth, but Zegna remains optimistic about future strategies in the area.
- Zegna segment sales rose 12.7%, Thom Browne segment by 8.5%, and Tom Ford Fashion recorded 74.6 million euros in sales.
- The group now boasts 635 stores, a significant increase from 503 last year, with the inclusion of 121 Tom Ford Fashion outlets.
- Commitment to enhancing the direct-to-consumer channel is evident with new store openings and boutique revamps.
- Zegna Group is poised for a strategic marketing push in 2024, ensuring a strong presence in the luxury fashion market.
Ermenegildo Zegna Group experienced robust growth in Q3 sales, buoyed by the successful reception of the Tom Ford Spring 2024 collection. Noteworthy advances in sales across all regions and commendable performances by the Zegna and Thom Browne brands underpinned this upward trajectory.
A combination of robust sales in July and August and stellar first-half financial results, which included a net profit that more than doubled, has prompted management to anticipate even better results for Q4 in comparison to Q3. Despite not revealing new guidance figures, the company communicated that the positive results align with both their full-year 2023 and midterm forecasts. The group’s ambitious objective is to achieve annual revenues surpassing 2 billion euros, targeting an adjusted operating profit amounting to a minimum of 15% of revenues by 2025.
Interestingly, this projection doesn’t consider the Tom Ford Fashion segment due to its timeline. This is pertinent since the Estée Lauder Companies Inc. purchased the American designer’s firm in a whopping $2.8 billion transaction last November. It’s worth noting that following the inaugural show by Peter Hawkings in Milan on September 21, the Tom Ford Fashion brand is making waves.
In Q3, the group’s preliminary revenues reached 431.1 million euros, marking a 20.8% surge from 356.9 million euros in 2022. The global performance of its brands was lauded, with sales in Europe, the Middle East, and Africa propelling organic growth. Notably, Japan experienced a 30.9% leap, attributed to a resurgence in tourism expenditure. Despite a modest 3.5% growth in the Greater China region, the group remains optimistic about its approach there, with plans to bolster its presence.
Breakdowns indicate a 12.7% increase in Zegna segment sales, totaling 297.8 million euros. Thom Browne saw an 8.5% rise, bringing in 73.64 million euros, while Tom Ford Fashion recorded sales of 74.6 million euros. Direct-to-consumer sales grew by 12.9% and wholesale by 8.1%. As of the end of September, the group boasts 635 stores, a jump from the previous 503, largely due to the inclusion of 121 Tom Ford Fashion outlets.
Commitments to enhancing the direct-to-consumer channel are evident. Zegna Group has inaugurated stores in cities like Saint Moritz and Copenhagen and has revamped boutiques in locations such as Beverly Hills and Florence. By 2025, the group is set on achieving a 50% increase in store productivity.
With plans to ramp up marketing expenses into 2024, the group is poised for a strong strategic push. In addressing potential financial concerns, the group’s hedging strategy has been highlighted as being capable of mitigating risks. However, a disclaimer was released, emphasizing that the group’s medium-term goals are contingent upon a stable global geopolitical, health, and macroeconomic landscape, devoid of any unpredictable disruptions.
