MILAN — January 31, 2024 — Ermenegildo Zegna N.V. (Zegna Group), owner of the ZEGNA and Thom Browne brands and exclusive licensee for the Tom Ford Fashion business, today announced preliminary unaudited revenues of 1.9 billion euros for the full year 2023, up 27.6 percent year-over-year and up 29.7 percent year-over-year on a constant currency basis, with an organic growth rate of 19.3 percent. Revenues for the fourth quarter of 2023 were 570 million euros, up 40.1 percent year-over-year and up 42.9 percent year-over-year on a constant currency basis, with an organic growth rate of 19.6 percent.
Ermenegildo “Gildo” Zegna, Chairman and CEO of the Zegna Group, said: “I am very proud of the Group’s success over the past year, which is demonstrated by our strong and continued revenues growth. The significant increase in our revenues in 2023, and especially from our network of directly operated stores, is a clear indication that demand for our brands remains healthy, and that we are successfully executing our strategy to increase their desirability and solidify their position as leaders in the luxury market. The continuing improvement in the ZEGNA brand productivity, in particular, is a testament to the strength of our execution, supported by our successful merchandising and CRM. Our integrated supply chain benefits all three of our brands and drives ZEGNA’s leadership in Made-to-Measure and product customization. We are focused on further enhancing our Made-to-Measure and personalization offering with the introduction and ongoing rollout of ZEGNA X, which is empowering our style advisors to further serve our customers using the latest technology.”
“While we have seen broad-based strength, I am particularly pleased by the continued growth in EMEA and the very positive performance in the US, which was driven by strong double-digit ZEGNA sales via the retail channel. These strengths, coupled with the rebound in the Greater China Region, are testaments to the soundness of our long-term strategy. Our performance across all our key geographies reflects the plans we set out at our second Capital Markets Day at the NYSE in December 2023 and charts a path forward to reach our medium- term goals even in an environment that remains challenging, with the invaluable contributions of our management team and all our employees across the Group and its brands.”
Recent Highlights
- ZEGNA Renews Eyewear Partnership with Marcolin — On January 30, 2024, ZEGNA announced the renewal of its licensing agreement with Marcolin to produce of ZEGNA-branded eyewear, which will now continue through the end of 2030. The renewal continues the strong partnership built between the companies since it was launched in 2015.
- ZEGNA 2024 Milan Men’s Fashion Week Show — On January 15, 2024, ZEGNA transformed a large industrial space into an “Oasi of Cashmere” for its Fall 2024 Men’s fashion show in Milan. The presentation showcased new designs from artistic director Alessandro Sartori for the brand’s Oasi Cashmere collection, focusing on elements that can be combined in many ways to reflect each customer’s sense of style. The collection was incredibly well received and praised for the way in which it brought high-quality raw materials to life.
- ZEGNA Begins Direct Operations of its Business in Korea — Pursuant to the agreement announced on October 24, 2023 between ZEGNA and its South Korean franchise partner, as of January 1, 2024, the Group began directly operating the ZEGNA Business in South Korea. This involved the conversion of the 16 ZEGNA stores in the region to direct-to-consumer points of sale.
- ZEGNA Signs New License Agreement for Fragrances and Cosmetics — On November 6, 2023, ZEGNA announced a long-term license agreement with Give Back Beauty for the creation, production, marketing and distribution of fragrances and cosmetics products under the ZEGNA brand worldwide.
- Upcoming TOM FORD FASHION and Thom Browne Fashion Shows — Thom Browne’s FW24 Fashion Show in set to take place in New York on February 14, 2024, and the TOM FORD FASHION FW24 Fashion Show will take place in Milan on February 22, 2024.
Review of Preliminary Unaudited Revenues for the Full Year 2023 and the Fourth Quarter of 2023
For the full year 2023, Zegna Group generated revenues of €1,905 million, an increase of 27.6% year-over-year. On a constant currency basis, revenues grew by 29.7% year-over-year, with an organic growth rate of 19.3%. In the fourth quarter of 2023, the Group generated revenues of €570 million, an increase of 40.1% year-over-year. On a constant currency basis, revenues grew by 42.9%, with an organic growth rate of 19.6% for the period. Revenues growth in the fourth quarter of 2023 accelerated from the 20.8% year-over-year growth reported in the third quarter of 2023 (on a constant currency basis, revenues growth was 25.0% in the third quarter, with an organic growth rate of 11.3% for the same period).
Revenues by Segment
Zegna Segment4: For the full year 2023, revenues for the Zegna segment amounted to €1,322 million, up 12.4% year-over-year and 13.8% year-over-year on a constant currency basis, with an organic growth rate of 19.5%. Revenues for the fourth quarter of 2023 were €385 million, up 15.2% year-over-year and up 17.0% on a constant currency basis, with an organic growth rate of 18.2%. The ZEGNA brand’s strong direct-to-consumer (“DTC”) strategy continued to drive revenues for the segment, more than offsetting lower wholesale revenues that resulted from the planned change to a new drop-based merchandising strategy, whereby some Spring/Summer 2024 deliveries were purposely shifted from 4Q 2023 to 1Q 2024.
Thom Browne Segment: For the full year 2023, revenues for the Thom Browne segment amounted to €380 million, up 14.9% year-over- year and up 18.3% year-over-year on a constant currency basis, with an organic growth rate of 17.8% for the year. Revenues for the fourth quarter came in at €99 million, up 30.2% year-over-year and 35.0% on a constant currency basis, with an organic growth rate of 24.6%. The fourth quarter growth reflected the expansion in the brand’s direct-to-consumer channel, as well as strong wholesale deliveries compared to the low base of 4Q 2022, which was due to a different timing of shipments during the course of 2022, when compared to 2023.
Tom Ford Fashion Segment4: Revenues for the Tom Ford Fashion segment since its consolidation on April 29, 2023, came in at €236 million, of which €97 million was recognized in the fourth quarter of the year, reflecting strong performance during the holiday season.
Inter segment eliminations grew from -€15 million in FY 2022 to -€33 million in FY 2023 mainly as a result of the acquisition of TFI since Tom Ford products revenues, previously recorded in Third Party Brands, are recorded as intercompany starting from April 29, 2023.
Revenues by Product Line
Zegna-Branded Products: For the full year 2023, revenues for Zegna-branded products were €1,109 million, up 20.1% year-over-year and up 22.3% on a constant currency basis, with an organic growth rate of 22.3%. Revenues for 4Q 2023 were €326 million, up 18.8% year-over-year and up 20.9% on a constant currency and organic growth basis. In 2023, luxury leisurewear revenues grew at a faster rate than the brand’s average and now constitute approximately 50% of Zegna-branded product revenues. Footwear also outperformed the brand’s average growth rate and now make up 13% of product line revenues, while formalwear and MTM also continued to see dynamic growth. The growth in Zegna-branded products reflects the desirability of the brand and the strong appeal of luxury leisurewear and shoes supports the Group’s strategy to meet changing consumer needs, while maintaining focus on quality.
Thom Browne: For the full year 2023, revenues for the Thom Browne product line were €378 million, up 14.7% year-over-year and up 18.0% on a constant currency basis, with an organic growth rate of 17.5%. Revenues for 4Q 2023 came in at €98 million, up 29.9% year- over-year and up 34.8% on a constant currency basis, with an organic growth rate of 24.3%. The strong growth came on the back of the brand’s DTC expansion strategy, as well as from the focus on womenswear, which continues to grow at a faster pace and reached 30% of the total Thom Browne’s revenues in FY 2023.
Tom Ford Fashion: For the full year 2023, revenues for the Tom Ford Fashion product line, calculated as of its consolidation on April 29, 2023, came in at €236 million. Revenues for 4Q 2023 came in at €97 million.
Textile: For the full year 2023, revenues for the Group’s Textile product line amounted to €151 million, up 10.4% year-over-year and up 9.4% on a constant currency basis, with an organic growth rate of 9.5%. 4Q 2023 revenues were €42 million, up 13.1% year-over-year and up 12.0% on a constant currency basis, with an organic growth rate of 12.1%. The double-digit growth in Textile revenues was supported in particular by Lanificio Zegna.
Third-Party Brands: For the full year 2023, revenues for the Third-Party Brands product line were €25 million, down 74.1% year-over- year and down 74.2% on a constant currency basis, with an organic growth rate of -17.4%. 4Q 2023 revenues came in at €5 million, down 70.6% year-over-year and down 69.9% on a constant currency basis, with an organic growth rate of -33.5%. The revenues of the Third- Party Brands product line was impacted by the end of the distribution licensing agreement for Tom Ford International5.
Revenues by Channel
Direct-to-Consumer (DTC): DTC revenues for the full year 2023 amounted to €1,265 million, up 37.8% year-over-year and up 42.1% on a constant currency basis, with an organic growth rate of 24.5%. DTC revenues made up 66.4% of Group revenues in FY 2023, up from 61.5% in FY 2022. Of that, €945 million came in from Zegna-branded products, up 22.4% year-over-year and up 25.4% on a constant currency basis and organic growth. This reflects strong double-digit growth across all markets thanks to significant productivity gains in all the quarters of the year, and the contribution of 14 net DTC openings to reach a total of 253 DTC monobrand stores as of December 31, 2023. Revenues from Thom Browne DTC amounted to €183 million, up 25.9% year-over-year and up 34.1% on a constant currency basis, with an organic growth rate of 19.7%, reflecting, among other factors, the shift of the South Korean business from wholesale to DTC and an additional six net new openings to reach a total of 86 DTC monobrand stores as of December 31, 2023. Tom Ford Fashion contributed €136 million in DTC revenues since its consolidation on April 29, 2023.
For 4Q 2023, DTC revenues amounted to €400 million, up a significant 46.3% year-over-year and up 50.6% on a constant currency basis, with an organic growth rate of 24.3%. This represented an acceleration from the third quarter organic growth rate of 12.9%, mainly driven by the ZEGNA brand. Zegna-branded products contributed €284 million in DTC revenues in 4Q 2023, up 23.4% year-over-year and up 26.3% on a constant currency and organic growth basis (compared with 14.0% in 3Q 2023), sustained by strong double-digit same store sales growth in most geographies, including a nearly 40% increase in the Greater China Region. DTC revenues for Thom Browne in 4Q 2023 came in at €57 million, up 33.0% year-over-year and up 41.4% on a constant currency basis, with an organic growth rate of 13.3%. For 4Q 2023, Tom Ford Fashion DTC revenues were €58 million.
Wholesale: Wholesale revenues for the full year 2023 amounted to €635 million, up 11.3% year-over-year and up 10.7% on a constant currency basis, with an organic growth rate of 9.6%. Of that, €164 million came in from Zegna-branded products, where wholesale revenues were up 8.4% year-over-year and up 7.0% on a constant currency and organic growth basis. Thom Browne wholesale revenues reflected the conversion of the South Korean points of sales from wholesale to DTC on July 1, 2023, and came in at €195 million for the year, up 5.8% year-over-year and up 6.0% on a constant currency basis, with an organic growth rate of 15.7%. Since its consolidation on April 29, 2023, Tom Ford Fashion wholesale revenues were €99 million. Third-Party Brands and Textile contributed €176 million, down 24.8% year-over-year and down 25.5% on a constant currency basis, with an organic growth rate of 5.8%.
For 4Q 2023, Group wholesale revenues came in at €169 million, up 27.6% year-over-year and up 27.5% on a constant currency basis, with an organic growth rate of 8.9%. Zegna-branded products wholesale revenues for 4Q 2023 amounted to €42 million, down 5.5% year-over- year and down 6.5% on a constant currency and organic growth basis. The drop was mainly attributable to the conversion from wholesale into retail of the Saks Fifth Avenue New York location, and to the planned shift to a drop-based merchandising strategy, whereby a portion of planned Spring/Summer 2024 deliveries were purposely shifted from 4Q 2023 to 1Q 2024. Thom Browne wholesale revenues for 4Q 2023 came in at €41 million, up 25.8% year-over-year and up 26.5% on a constant currency basis, with an organic growth rate of 39.7%. Thom Browne’s wholesale revenues reflected the low base of 4Q 2022, which was due to a different timing of shipments during the course of 2022, when compared to 2023, while being also affected by the South Korean business being moved from wholesale to retail after its internalization. Tom Ford Fashion wholesale revenues for the quarter came in at €38 million. Third-Party Brands and Textile contributed €48 million in 4Q 2023, down 14.2% year-over-year and down 14.3% on a constant currency basis, with an organic growth rate of 4.1%.
Revenues by Geography
Revenues for both the full year and the fourth quarter of 2023 were strong across all key geographies, with double-digit growth across all regions compared to 2022. The most significant growth was reported in North America, which saw revenues grow by 41.6% year-over-year for the full year and 60.1% year-over-year for the fourth quarter, also supported by the consolidation of Tom Ford Fashion.
For the full year 2023, revenues in EMEA amounted to €659 million, up 26.6% year-over-year and up 27.7% on a constant currency basis, with an organic growth rate of 18.8%. 4Q 2023 revenues in EMEA came in at €184 million, up 30.9% year-over-year and up 32.7% on a constant currency basis, with an organic growth rate of 14.2% supported by the strong growth of the Zegna-branded products in the DTC channel slightly offset by more muted wholesale reflecting the already mentioned new merchandising strategy. Activity in Europe remained dynamic throughout the year reflecting strong activity for both domestic and foreign consumers. The UAE continued to outperform the rest of the region, recording revenues for the full year 2023 and 4Q 2023 of €69 million and €24 million, respectively, up 35.0% year-over-year for the full year and 22.4% year-over-year for the quarter. Growth on a constant currency basis was 38.2% and 26.7%, and organic growth was 30.9% and 20.2%, respectively for the full year and the fourth quarter 2023.
For the full year 2023, revenues in North America came in at €417 million, up 41.6% year-over-year and up 40.4% on a constant currency basis, with an organic growth rate of 11.4%. Revenues from the U.S. were €385 million, up 42.3% year-over-year and up 40.9% on a constant currency basis, with an organic growth rate of 10.4%. North America revenues for 4Q 2023 were €132 million, up 60.1% year- over-year and up 60.9% on a constant currency basis, with an organic growth rate of 3.2%. Of that, the U.S. contributed €125 million, up 63.4% year-over-year and up 64.4% on a constant currency basis, with an organic growth rate of 4.4%. The organic growth rate was in the high-teens for Zegna-branded products DTC, partly offset by lower wholesale in 4Q 2023, as a result of the impact of the aforementioned shift in wholesale deliveries, and the conversion from wholesale into retail of the Saks Fifth Avenue store in New York. Despite a volatile consumers backdrop, the significant growth in the U.S. – where spending on ZEGNA is almost double pre-pandemic levels – speaks to the success of the ZEGNA One Brand strategy and execution. It is also due to the resilience of the Group’s ultra-luxury offering and the continuing and growing desirability of our brands.
For the full year 2023, revenues in APAC were €788 million, up 22.2% year-over-year and up 27.3% on a constant currency basis, with an organic growth rate of 23.7%. Of that, €596 million came from the Greater China Region, up 20.5% year-over-year and up 25.7% on a constant currency basis, with an organic growth rate of 24.2%. Japan also showed significant growth, with revenues of €85 million, up 29.9% year-over-year and up 39.8% on a constant currency basis, with an organic growth rate of 28.3%. In the fourth quarter, APAC revenues were €241 million, up 39.0% year-over-year and up 44.3% on a constant currency basis, with an organic growth rate of 32.0%. 4Q 2023 revenues from the Greater China Region amounted to €176 million, up 35.0% year-over-year and up 39.3% on a constant currency basis, with an organic growth rate of 36.1%, thanks to the ZEGNA One Brand strategy execution and also as a result of the adverse impact of Covid-19-related restrictions in 4Q 2022. 4Q 2023 revenues from Japan came in at €26 million, up 27.0% year-over-year and up 39.6% on a constant currency basis, with an organic growth rate of 20.7%.
For the full year 2023, revenues in Latin America were €38 million, up 25.6% year-over-year and up 16.2% on a constant currency and organic growth basis. 4Q 2023 revenues came in at €13 million, up 29.6% year-over-year and up 20.9% on a constant currency and organic growth basis.
Outlook
At its second Capital Markets Day, held on December 5, 2023, in New York City, the Group announced its updated financial goals for the medium term. Within this time frame, the Group is aiming to deliver over 10% compounded annual revenues growth and an Adjusted EBIT CAGR of around 20%, compared to FY 2023. This is expected to generate significant cash surplus even while taking into consideration higher, targeted investments in marketing and capital expenditure to enhance brand desirability and drive growth. The Group’s medium- term targets assume no major future worsening of the global geopolitical, health, macroeconomic and financial markets situation, and no other unforeseen events.
Posted: January 31, 2024
Source: Ermenegildo Zegna Group
