#Retail & Brands
Ermenegildo Zegna Group reports strong first quarter 2022 revenues
- 1Q 2022 Revenues of €377.6 million, up 25.4%1 Year-over-Year
- Zegna’s One Brand Strategy Continues to Drive Growth with Thom Browne Maintaining Strong Momentum
- 2022 Outlook Confirmed with Low-teens Revenue Growth Expected and Continued Improvement to Adjusted EBIT2
Strong Overall Performance Continues & 2022 Outlook Confirmed
Zegna Group to Host Capital Markets Day on May 17, 2022
Ermenegildo “Gildo” Zegna, Chairman and CEO of the Zegna Group, said: “Over the course of 2021, the Zegna Group achieved a number of milestones. 2022 was off to a good start and is now looking more challenging due to the combination of geopolitical, economic and health related uncertainties. Both our brands are coping well in the face of these increased challenges, and we will continue to execute against our strategic objectives.”
He added: “Ours is a multi-year journey, and as we continue to monitor ongoing global developments – especially the recent COVID-19 spike in China – we remain ahead of our Plan3 and confident in the strength of our brands. While we will remain vigilant, our results and our flexibility give me confidence that we are on the right track to reaching the targets set out in our Plan3 last year and the Group’s longer-term ambitions. We are excited to welcome you at our Capital Markets Day at our home in Oasi Zegna on May 17.”
Highlights from First Quarter 2022 Revenues
Zegna’s One Brand strategy and continued focus on luxury leisurewear have allowed Zegna to continue to strengthen its position as a global leader in luxury menswear. For its First Quarter 2022, Zegna Group posted a 25.4% year-over-year increase in revenues, to €377.6 million. This strong performance was driven by a continued rebound of the Zegna segment, whose revenues increased 27.1% year-over-year to €283.5 million with robust performance in all product lines, as well as the performance of the Thom Browne segment, up 22.3% year-over-year, with revenues totaling €98.1 million, with consistent performance in both DTC and Wholesale channels.
Zegna-branded products, which include apparel, bags, shoes and leather goods, as well as licensed goods and royalties, posted revenues that were up 22.1% year-over-year to €224 million, driven in large part by the continued robust growth in two primary categories, Luxury Leisurewear and Shoes, and by the strong rebound of Made-to-Measure. Revenues of the Group’s Textile business line saw a strong increase to €30.2 million, up 64.6% year-over-year, thanks to healthy demand. The 56.8% expansion in revenues for the Third-Party Brands business line to €24.4 million reflected strong supplies to our key third-party customers. Thom Browne continues to exert significant appeal among younger consumers around the world, leading to growth across all channels, with the women’s growth rate outperforming men’s.
Growth was strong across most geographies, with North American revenues increasing 85.1% year-over-year to €61.8 million, thanks to the very strong demand for the Zegna brand’s new icons and luxury leisurewear collections in the United States, where, also thanks to the brand’s strong Retail performance, revenues were up 97.2% year-over-year. Latin America also almost doubled thanks to strong DTC revenues for the Zegna brand. The Group saw healthy sales in EMEA, up 38.9% year-over-year to €134.5 million, with very dynamic performance in the UAE. The UK and France also overperformed. APAC revenues showed mixed performance, with the Greater China Region slowing down since March due to new COVID-related restrictions, which reversed the positive performance recorded until February. The rest of APAC (excluding the Greater China Region) rebounded by 27.8% year-over-year, as many countries lifted COVID-19 restrictions.
DTC channel sales grew 23.1% year-over-year to €218.1 million, with similar performance by the Zegna-branded products business line and Thom Browne segment. The Zegna brand DTC channel revenue increase – up 23.2% to €183.9 million – was driven by a strong recovery across geographies, especially North America and Europe, mitigated by the Greater China Region since early March. Thom Browne’s strong growth in EMEA, North America and Japan was also offset by the Covid-19 related restrictions in the Greater China Region.
Revenues in the Wholesale channel grew by 31.4% year-over-year, with both brands showing solid performance and further enhanced by the rebound of the Textile and Third-Party Brands business lines. We note that our Wholesale shipments to Russia (which are currently suspended) have not historically represented a material portion of the Group’s revenues.
Fiscal Year 2022 Outlook
The start of 2022 has been marked by considerable geopolitical uncertainty, adding to the volatility already present due to the ongoing global health crisis. Assuming no further deterioration or geographic extension of the war in Ukraine, a normalization of the COVID-19 pandemic in Greater China before the summer, and no other unforeseen events, the Group is forecasting revenue growth in the low-teens, and an improvement in its Adjusted EBIT, building on the accelerated expansion achieved in 2021, when the Group delivered an Adjusted EBIT of 11.5% as a percentage of revenues, exceeding its own guidance of “around 10%.”
Capital Markets Day on May 17
The Company will host an investor day on May 17, 2022, at Oasi Zegna, where it expects to unveil its sustainability goals and provide an update on strategy and ambitions.
A copy of the presentation and the link to the (audio) webcast will be available on the Company’s website at ir.zegnagroup.com before the presentation begins on 17 May.
1 All growth rates in this release are year-over-year and are expressed at actual foreign exchange rates.
2 Adjusted EBIT is a non-IFRS financial measure. See the Non-IFRS Financial Measures section starting on page 3 of this communication for the definition of such non-IFRS measure.
3 The Zegna Group’s Plan was published at the time of the announcement of the business combination between the Company and Investindustrial Acquisition Corp. (“IIAC”). The Group’s Plan was also disclosed in the Company’s registration statement on Form F-4 filed with the SEC (File No. 333-259139), under “Certain Unaudited Zegna Prospective Financial Information”.
Non-IFRS Financial Measures
Zegna’s management monitors and evaluates operating and financial performance using several non-IFRS financial measures: among which adjusted earnings before interest and taxes (“Adjusted EBIT”). Zegna’s management believes that this non-IFRS financial measure provides useful and relevant information regarding Zegna’s financial performance and improves the ability of management and investors to assess and compare the financial performance of Zegna with that of other companies. It also provides comparable measures that facilitate management’s ability to identify operational trends, as well as make decisions regarding future spending, resource allocations and other strategic and operational decisions. While similar measures are widely used in the industry in which Zegna operates, the financial measures that Zegna uses may not be comparable to other similarly named measures used by other companies nor are they intended to be substitutes for measures of financial performance or financial position as prepared in accordance with IFRS.
Adjusted EBIT
Adjusted EBIT is defined as profit or loss before income taxes plus financial income, financial expenses, exchange losses/(gains), result from investments accounted for using the equity method, impairments of investments accounted for using the equity method, adjusted for income and costs which are significant in nature and that management considers not reflective of underlying operating activities, including, for one or all of the years presented, costs related to the Business Combination with Investindustrial Acquisition Corp, severance indemnities and provision for severance expenses, impairment of property, plant and equipment and right-of-use assets, certain costs related to lease agreements and certain other items.
