Dive Brief:
- Ermenegildo Zegna Group unaudited revenue fell 8% year over year to 397 million euros, or about $429 million, during the third quarter, according to a Tuesday earnings release. Revenue for the first nine months of the year, however, grew 2% to 1.4 million euros.
- The company’s Thom Browne brand proved to be the biggest drag on its bottom line, falling 21.7% year over year to 220.4 million euros for the first nine months. In the third quarter, it fell 27.4% to 53.5 million euros, which the company attributed to a decision to streamline the brand’s wholesale business.
- The Zegna segment, which includes the Zegna brand, textiles and revenue related to third-party brands, remained largely flat for the first nine months, and fell about 3% for the quarter. Tom Ford Fashion was down 3.8% for the first nine months on organic performance only, and saw revenue of 65.4 million euros in the third quarter, with the company noting the brand was consolidated in April 2023 following its acquisition by Estée Lauder Companies.
Dive Insight:
Challenges in luxury continue to impact brands throughout the sector. Other companies with recent earnings declines include Ferragamo and LVMH. Kering and Hermès are set to report later this week.
“Although third quarter revenues showed a slowdown for the Group, I am reassured by the continued positive performance of the Zegna brand, boosted by the DTC channel, and also by the quality of talent we have brought into Thom Browne and Tom Ford Fashion as we work to strengthen those teams,” Ermenegildo Zegna, group chairman and CEO, said in a statement.
Group DTC revenue was up 10.2% for the first nine months, with the Zegna brand leading the company’s DTC growth with a 4.4% year over year increase for the period. Thom Browne DTC was relatively flat for the same period, and the company said the brand’s solid DTC growth in Japan and Korea was “more than offset by the negative performance in other geographies” including China.
Tom Ford Fashion, which appointed a new creative director in September, saw DTC revenue of 136.2 million euros for the first nine months of 2024, up 2% organic. The brand’s 2.5% organic DTC growth in the third quarter was “driven by a sequential acceleration of growth in the U.S.” and a good performance in the combined Europe, Middle East and Africa region, which the company said was counterbalanced by a continued softer performance in the Asia-Pacific region.
“Looking ahead to the fourth quarter of 2024 and into 2025, we continue to foresee an uncertain environment, particularly in the Greater China Region,” Zegna said. “However, I believe that our Group is fully prepared to face the future with stronger brands, a clearer vision and strengthened management team.”
