The future of Zegna

«We have revolutionized menswear, while maintaining our roots. However, without this transformation, today we would not have the results of a legendary year». Gildo Zegna exclusively spoke to MFF about the future of the Group founded 111 years ago by his grandfather Ermenegildo. «The new generations are already in the company and are working well,» the ceo of the Trivero-based Group pointed out. The financial statements for Ermenegildo Zegna's first year as a Wall Street public company (see MFF of December 21, 2021) were filed with sales up by 27% year-on-year to 1.29 billion euros and a surprising contribution from the Thom Browne brand (+47%). The adjusted EBIT exceeded the guidance at 149 million euros with an 11.5% margin, higher than the estimated 10%.

The entrepreneur does not hide his pride for the landing on the stock exchange after years in which he had excluded it and now the Group is a reality that controls the Zegna brand, US brand Thom Browne and what has been chosen to call Luxury textile laboratory platform, which brings together all the world-class acquisitions made in recent years.

Where does the growth of this important year for you come from?
We have made a great transformation in our product, which the market has rewarded. The suit is not dead for us, but we are turning it upside down in its forms with a different lifestyle. Jersey and knitwear, along with Triple Stitch sneakers, are among the drivers of our development.

Russia is now under embargo. What impact will this have?
As a market it weighed relatively little, but it was an area we were betting on for the future. We are respecting the embargo, but we do not have any direct stores in the country, we operated through franchising. For now, however, everything is blocked, both in terms of shipments and orders.

Are you worried about the recent lockdown in China?
We are closely monitoring the situation and I remain positive. In my career I have learned that this market, which generates 26% of our total revenues, is able to react quickly and I am confident that the situation will unblock in no time.

From your point of view, are there any countries that could be the China of the future?
Certainly the Arab Emirates are the new China. They have another dimension, undoubtedly, but they are growing in an important way and, in fact, it is an area we are closely following. There are also good prospects for Saudi Arabia and Southeast Asia.

What was the key market for 2021?
The US is the geographic area where we had the biggest percentage increase. The summer season is really running at both the retail and wholesale levels because our rebranding has sparked new interest from both existing and new customers. Then in the new continent we have two markets that for some are marginal, but for us are important, namely Brazil and Mexico. All the Americas in general, including Canada, are having a good start to the season.

And what about Europe?
Overall, Europe is doing well. In particular we see a good recovery in England, despite Brexit.

Many luxury brands are raising their prices. What about you?
We raised the season’s prices because costs increased, but we did not have any repercussions on sales. This means that people like what we are doing and that the Zegna brand is also strengthening in a new field. This is a matter of fact. We are witnessing a gradual recovery in outerwear thanks to made-to-measure and to the more informal segment, as we are selling more deconstructed jackets than suits.

After such a brilliant year, are you already considering new acquisitions?
I think it is too early today to say what we will do, because with the ongoing geopolitical crisis we have a lot to do to make our strategy accelerate. It is more likely that something will happen, if anything, in the textile area, also because now is the time to help small companies, which need support today. If we will have the opportunity to save or relaunch some companies, we will do it.

You have been visionaries in the luxury sector for 111 years. How do you see the metaverse, which everyone is talking about?
We are studying it, but we did not make any decisions about it yet.

What about the new generations?
We have three young people in the company. My two sons, Edoardo (Chief Marketing and Digital and Sustainability Officer, ed.) and Angelo (Head of Retail and Merchandiser USA, ed.), together with my nephew Francesco (Trabaldo Togna, son of his sister Elisabetta, Europe Retail Director, ed.). While approving the board, Edoardo, who deals with marketing and digital, was among those who presented and did his part excellently. Angelo deals with US retail and has certainly done a good job, as shown by the figures. Francesco deals with European retail. All three of them are on the ball.

Zegna, EBIT to exceed estimates at 11.5%

With the listing on the New York Stock Exchange (NYSE) and a decisive post-pandemic recovery, 2021 closed as a solid year for Ermenegildo Zegna. The historic Piedmont-based luxury company, controlling the brands Zegna and Thom Browne, and the first Italian fashion house listed on the NYSE last December through a SPAC with Investindustrial Acquisition Corp. managed by Andrea Bonomi, closed the last financial year with an adjusted EBIT of 149 million euros, with a ratio to revenues of 11.5%. A result exceeding "by about 10%" the guidance previously announced by the management. The Group's overall performance exceeded the plan shared last year prior to the start of trading, with revenues increasing by 27% year-on-year amounting to a total of around 1.29 billion euros. The turnover was driven by a rebound of the Zegna brand, whose revenues increased by 23% year-on-year to 1.03 billion euros. The other main driver was Thom Browne's remarkable 47% increase to 264 million euros. 0.67 euros was the per share loss, while the adjusted diluted earnings per share was 0.33 euros. Cash surplus amounted to 145 million euros as of December 31, 2021, with 139 million euros deriving from the business combination, compared with net debt of 7 million euros as of December 31, 2020. (All rights reserved)