Zegna Group more than doubles first-half profits

Ermenegildo Zegna continues to make good progress in the first half of the year. The Italian luxury menswear group, owner of Zegna and Thom Browne, has announced record results, driven by the American and European markets. While it generated sales of €903 million in the first half of the year, up 23.9%, as announced last July, its net profit for the period soared by 148% to €52.1 million and its operating profit climbed by 45% to €119.9 million.

The company, which is listed on the New York Stock Exchange and also manages the licence for Tom Ford’s ready-to-wear collections, posted a net margin of 5.8%, compared with 2.9% in the first half of 2022. The operating margin was 13.3%, up 200 basis points on the same period last year.

In its press release, the company points out that its sales costs rose by 15.4% year-on-year, to €323.2 million, due to the impact of the Tom Ford Fashion division, with an increase in sales volume and therefore in costs. Added to this were €415.8 million in selling, general and administrative expenses (+24.9%) and €47.5 million in marketing expenses (+37.4%).

The Group’s flagship brand, Zegna, headed up by Alessandro Sartori, recorded sales of €651.7 million (+17.9%) in the first six months of the year, which also includes the company’s textile sales, and an operating profit of €100.5 million (+47.8%), with a margin of 15.4% on total sales.
 
The company’s good half-year results were driven by higher sales, price repositioning and a marked improvement in productivity in direct shops, with better absorption of fixed industrial costs in the supply chain, the group stressed, adding that this helped to offset the rise in costs for personnel, marketing and advertising.
 
For its part, its American label Thom Browne achieved sales of €207.9 million over the period (+11.9%), with operating profit of €31.5 million. The label’s margin will fall from 17% in the first half of 2022 to 15.2% a year later due to the costs incurred by its retail expansion, with the opening of thirteen directly-operated shops since June 2022. Tom Ford Fashion posted sales of €64 million.
  
In the press release, CEO Gildo Zegna was particularly pleased with “the exceptional performance in the United States and in the EMEA (Europe, Middle East, Africa) region”, as well as “the significant progress made in steadily increasing profitability.” “We are particularly motivated by our growth in the US and Europe, while we are seeing a more cautious recovery in Greater China,” he notes. 
 
Between January and June 2023, Ermenegildo Zegna Group sales jumped 28.9% in North America to €174.3 million, 23.8% in EMEA to €322.6 million and 22% in Asia-Pacific, with a 24.1% increase in Greater China alone to €306.8 million.