Zegna Group growth led by DTC

Dive Brief:

• Ermenegildo Zegna Group reported a 6% revenue increase to 960.1 million euros, or about $1.04 billion, in the first half of 2024, according to a Thursday press release.
• At Thom Browne, a 19.4% revenue decline for the first half was primarily driven by a 38% year-over-year wholesale drop for the period. At Tom Ford, second quarter revenues were up 30% year-over-year.
• Zegna Group DTC revenues rose 14.8% year over year for the first half, driven by its Zegna brand and its solid performance in the Americas and Europe, the Middle East and Africa.

Dive Insight:

Along with Moncler and Prada, Zegna Group remains one of a handful of luxury fashion companies that’s managed to largely escape the sector slowdown impacting several of its competitors, including Kering, LVMH and Burberry.

The success of its licensed Tom Ford Fashion business has helped counteract losses at Thom Browne. However, Zegna Group cautioned that year-over-year comparisons at Tom Ford only showed “revenues of the two months in which Tom Ford International LLC was consolidated in 2023 and 2024” due to Zegna Group’s expanded license deal following the Estée Lauder Companies’ 2023 acquisition of Tom Ford.

Meanwhile, modest growth at its Zegna segment, which includes its namesake brand as well as textiles and other business, has been driven mainly by “solid performance from the Zegna brand,” per the release.

“These results confirm that we are successfully delivering on Zegna’s evolution,” Zegna Group Chairman and CEO Ermenegildo Zegna said in the release. “At Thom Browne we are focusing on the strategic projects crucial to unlocking the brand’s long-term potential. The couture show in Paris confirmed Thom’s extraordinary talent.” 

The CEO also noted that Peter Hawkings recently stepped down as creative director of the Tom Ford brand, and that his successor would be announced in the near future.

“As we look to the next phase of the [Tom Ford] brand’s development, I am today even more optimistic about the bright future of this business,” he said in the release.

The company’s Thom Browne business decline slowed to 7.2% in the second quarter from a 30.2% decline in the first quarter. The improvement “reflected the ongoing streamlining of the wholesale business,” the company said in its release, adding that Q2 revenues were “only partially counterbalanced by improved DTC performance and by a less demanding base of comparison.” 

Strong sales in Japan were offset by a decline in China, the Americas and EMEA, which the company said “also impacted by the decision to streamline the wholesale business.” Thom Browne DTC revenues rose 8.5% in H1.

Revenues for the Tom Ford Fashion segment in H1 rose an organic 4.7% to 148.5 million euros compared to the last two months of Q2 2023, which was “driven by a good performance in DTC and the U.S.,” per the release. The company added that it’s “continuing to strengthen the team and set the foundation for its next evolution.”

“Looking ahead, I remain fully confident in the strategy we have put in place and the trajectory we are on,” Zegna said in the release. “Our Group is a custodian of three authentic brands, each with unexplored long-term growth potential. 

“We all recognize that 2024 will remain challenging, which is why we have been working on cost control initiatives across the Group,” Zegna said. “Nevertheless, we will continue to act with perseverance and firmness, combined with foresight and vision, to pursue our long-term ambitions.”