Greater China and Wholesale Challenges Weigh on Overall Performance
Zegna Group reported a 7 percent drop in third-quarter sales, impacted by a 22 percent revenue decline in Greater China, a key luxury market. The Italian menswear company’s total revenue for the quarter amounted to €397 million ($429.8 million), reflecting broader challenges across the luxury sector.
The flagship Zegna brand saw a modest 2.5 percent organic growth, while the group’s other labels, Thom Browne and Tom Ford, experienced double-digit declines. Thom Browne’s sales dropped 13 percent, an improvement from the 20 percent decline earlier in the year. Tom Ford, which is still adjusting after a recent designer change, recorded an 11 percent fall in sales. “Tom Ford is strong in the USA but has a long way to go in Asia,” said Gildo Zegna, chairman and CEO of the Zegna Group.
Looking ahead, Zegna was optimistic about next year. “Golden Week performance was a bit ahead of our expectations,” Zegna told investors, referring to China’s national holiday period in October. “Next year will start in better shape.”
The group’s revenue decline in Greater China was significant, with sales in the region down by 22.8 percent in the third quarter, largely attributed to deteriorating consumer confidence. Despite the challenges, Zegna expressed confidence in the long-term potential of the Chinese market. “I am leaving for China tomorrow… this shows how important China remains to us and how we believe in it,” he said. He acknowledged that the first half of 2025 may remain difficult but noted “positive signs” in the market.
Meanwhile, the Americas and EMEA regions experienced smaller revenue declines of 3 and 2 percent, respectively, while other Asian markets outside of Greater China saw positive organic growth of 7.4 percent year-on-year.
In the first nine months of the year, Zegna Group’s revenue reached €1.35 billion, a slight 1.7 percent increase from the same period last year. However, on an organic basis, sales were down 4 percent for the year so far.
The group’s retail-driven direct-to-consumer (DTC) channel was a bright spot, with revenues up 10.2 percent, led by the Zegna brand, which posted a 4.4 percent increase. Zegna credited strong sales in the Middle East, Japan, and the Americas for the positive results. By contrast, wholesale revenues dropped 13.7 percent, reflecting the shift to more direct retail operations.
Thom Browne, less dependent on the Chinese market than other brands in the group, saw DTC revenues rise slightly by 0.7 percent. However, organically, sales fell 12.9 percent due to ongoing challenges in Greater China. The brand’s wholesale channel also faced setbacks, with a 39.6 percent decline due to streamlining efforts and the conversion of some wholesale locations to directly operated stores (DOS).
Tom Ford Fashion, which Zegna acquired as part of the 2022 Estée Lauder Cos. deal, reported a 3.8 percent decline in sales over the first nine months of 2024. Haider Ackermann was appointed creative director in September, replacing Peter Hawkings, with Ackermann’s first collection set to debut in February.
Despite the challenges in key markets, Zegna remained optimistic about the group’s future. “We are gaining more and more traction, stores have been renewed in China, and we are in top locations in malls,” Zegna said, noting that Villa Zegna, a brand experience initiative, will travel to Shanghai in 2024 to further strengthen ties with the region.
In the U.S., the Zegna brand performed well, with Zegna’s Triple Stitch Monte shoes and the Conte jacket seeing high demand. “Americans are in love with what we do,” Zegna noted.
As the company navigates through market uncertainties, Zegna emphasized a long-term strategy of pushing iconic products and bolstering talent within its brands, particularly at Thom Browne and Tom Ford. “We’ve been through a learning curve, setting up a platform of icons and now we speed up the execution to go when the market is ready,” he said.