The Italian fashion group Ermenegildo Zegna NV had to accept a significant decline in profits in the 2024 financial year.
In particular, higher investments and value adjustments would have burdened the result, the parent company of the brands Zegna, Thom Browne and Tom Ford Fashion said on Thursday. The group of companies had already announced in January that it was able to increase its turnover by around two percent last year.
Investments and higher marketing expenses put a strain on the result
According to the numbers now submitted, the operational profit of the group was 166.9 million euros in the latest financial year. He sank by 19.8 percent compared to 2023. The result adjusted for special effects before interest and taxes (EBIT) shrank by 16.4 percent to 184.0 million euros.
The designated net profit was 90.9 million euros, which meant a decline of 33.0 percent compared to the previous year. The group was able to increase its gross margin from 64.3 to 66.6 percent, but investments in personnel, their own retail and measures for future growth and increased marketing spending pressed the result. In addition, the company had to make higher values.
The management continues to expect difficult framework conditions
Management was behavioral for the current year. In view of the persistently difficult market conditions, the company is pursuing a “careful approach”, but will be adhered to in its future projects, according to a statement.
The group also adapted its medium -term goals to the current conditions. For the 2027 financial year, sales in the range from 2.2 to 2.4 billion euros are now targeted. The EBIT, which is adjusted for special effects, is then to reach a height of 250 to 300 million euros.
The annual turnover increases by around two percent
Already in January, the group had announced that sales last year reached a height of almost 1.95 billion euros and thus increased by 2.2 percent compared to the previous year. In 2023, however, Tom Ford Fashion’s proceeds had only been taken into account from the takeover carried out at the end of April. On an organic basis – adjusted to currency effects and changes in the corporate portfolio and in the license business – sales decreased by 1.9 percent.
In the final quarter, however, the group of companies had an upward trend. Sales rose by 3.3 percent (organic +2.9 percent) to 589.2 million euros compared to the same period last year.
In the entire financial year, the Zegna division achieved an increase of 2.0 percent (organic +2.5 percent) to 1.35 billion euros. In the area of Thom Browne, however, sales decreased by 17.2 percent (organic -20.8 percent) to EUR 314.8 million. In the Tom Ford Fashion segment, the proven revenues rose by 33.5 percent to 314.5 million euros, but sales shrank by 0.7 percent on an organic basis.
Weaker demand in China burdens sales development
The sales development was slowed down last year by the weak demand in the Großchina region. There, revenues fell by 14.5 percent (organic -13.7 percent) to 509.4 million euros.
In its other markets, however, the Zegna group was able to achieve growth. In the EMEA region, which includes Europe, the Middle East and Africa, sales rose by 3.3 percent (organic +0.4 percent) to EUR 680.3 million, in America by 15.4 percent (organic +6.8 percent) to 524.8 million euros and in Asian-Pacific space outside China (organic +6,9 percent) to 229.9 million euros.
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