MILAN — “My family has been running the company for over a century, and we will be around for at least that long,” said Gildo Zegna, chairman and CEO of the Ermenegildo Zegna Group. “We have always run it with a long-term vision and that will not change. Our goal is to create a much stronger, more global and more diversified luxury company.”
The chief executive outlined his ambitions for the group on Thursday when he commented on unaudited first-half earnings during a conference call with analysts. In the six months ended June 30, revenue rose 6.3 percent to 960.1 million euros, compared with 903.1 million euros in the same period last year, boosted by strong business in the US and Europe, the Middle East and Africa, and brisk direct-to-consumer sales. In organic terms, revenue fell 2.7 percent. In the second quarter, group revenue rose 4.7 percent to 497 million euros.
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As expected, analysts asked Zegna about the future of Tom Ford Fashion following the sudden departure of creative director Peter Hawkings on Monday. While Zegna declined to give reasons for the departure, he said the aim is to “make the brand more global, doubling down on womenswear and daywear and fully building out its leather goods proposition.”
For that reason, the successor will need to be a designer with strong expertise and know-how in those categories, he added, without revealing the names of potential candidates. He said his belief in the potential to strengthen those businesses was a key reason he decided to acquire Ford’s fashion business as part of the 2022 Estée Lauder Cos. deal that valued the beauty and fashion brand at $2.8 billion.
One analyst asked whether there was a risk of alienating the brand’s loyal customers given that Hawkings, who was handpicked by Ford himself, had worked with the namesake designer for 25 years, but Zegna dismissed such concerns. He thanked Hawkings for the work done in the early stages of launching Tom Ford Fashion and expressed confidence in the brand’s CEO, Lelio Gavazza, and his “solid lead. I’m confident we’ll deliver over the long term.”
He said the brand opened a new store in Taormina, Italy, “which is performing above expectations,” and that it also just opened a new location in Rome, one in the Hangzhou Tower and a flagship at Beijing China World.
Looking ahead, he said he was “fully confident in the strategy we have put in place and the path we are on. Our group is a custodian of three authentic brands, each with untapped long-term growth potential. We all recognise that 2024 will remain challenging, which is why we have been working on cost management initiatives across the group.” That said, he added that it was critical to continue investing in the brands, with the aim of “understanding where there is positive volatility and being there, and defending ourselves when there is negative volatility.”
In the first half, revenues at the Zegna brand, designed by artistic director Alessandro Sartori, rose 4.6 percent to €566.1 million, driven by continued robust growth in the US and EMEA. Organic performance in Greater China remained in line with Q1 2024: negative single digits.
However, Zegna said it was “more positive than negative on China for 2025” and praised the “extremely positive experience with Villa Zegna” in Shanghai in May, named after the group’s eponymous founder’s house in the Piedmont Alps, which was recreated in China “to explain the authentic heritage of Zegna, interact with customers and foster emotional connections with the brand.”
He said this activation “reaffirmed the brand’s strength in China and its recognition as a leading timeless luxury menswear brand.”
He revealed that the group will move Villa Zegna to New York to tell the story of his grandfather, who traveled to the city on a linear ocean voyage in 1938 “to meet the best American tailors who were making Zegna fabrics famous throughout the US.”
Chief Financial Officer Gianluca Tagliabue said the majority of demand in China comes from local customers and only 10 percent of Chinese clusters buy Zegna Group products outside China.
In the first half, Thom Browne brand revenues declined 19.4 percent to €166.7 million, reflecting the continued streamlining of wholesale operations and only partly offset by improved DTC performance. The brand continued to post strong results in Japan, offset by declines in Greater China CR, EMEA and the Americas.
Zegna said that with the brand’s CEO, Rodrigo Bazan, “we are taking strong action, starting from the deep wholesale rationalization to a thorough overhaul of the organization. When you grow fast, sometimes you don’t have a balanced organization.” He said they are working “on improving the skills of the sales force, improving our merchandising offer, particularly in China, and strengthening management in key roles.” He added that doing business in Korea is “fantastic” for Thom Browne, while there is “work to be done in Japan.”
Because Tom Ford International LLC and its subsidiaries were consolidated on April 29, 2023, the Group has only reported organic performance, comparing revenues from the two months in which the brand was consolidated, in 2023 and 2024.
In the first half, Tom Ford Fashion segment revenues amounted to EUR 148.5 million, an organic growth of 4.7 percent, driven by strong performances in DTC and the US.
Total sales in the Europe, Middle East and Africa region amounted to EUR 336.6 million, up 4.3 percent. This represents 35 percent of the total. Sales were boosted by strong sales of the Zegna brand, which offset a decline in the wholesale market at Thom Browne.
Sales in North and South America amounted to 246 million euros, up 29.4 percent and accounting for 26 percent of Group sales. Zegna posted double-digit growth and Tom Ford Fashion performed solidly.
The Greater China region posted sales of €266.3 million, down 13.2 percent and accounting for 28 percent of Group sales. The region was impacted by still weak consumer confidence, with Zegna still outperforming in the region.
Revenues in the rest of Asia Pacific increased 33.8 percent to EUR 110 million, driven by strong double-digit organic performance in the Japan market, offset by performance in the other markets in the region.
Asked about current trading, Tagliabue said retail sales in June and July were “in line with the respective quarterly averages,” and that there was “no major shift” except perhaps “more softness in Hong Kong and Macao.”
In the first half, DTC revenues rose 14.8 percent to €669.6 million. Zegna’s DTC revenues drove the group’s performance, up 4.5 percent to €486.5 million, driven by solid performances in the Americas and EMEA.
At the end of June, Zegna had 279 directly operated stores. Gildo Zegna underlined an increasing shift from wholesale to retail for the group’s brands by ticking off a number of openings planned for the second half of the year for the Zegna brand: in Monte Carlo in September; in New York’s Meatpacking District; at Harry Rosen; in Wuhan; at Ala Moana in December; in Riyadh and one concession in Lane Crawford.
Thom Browne DTC revenue rose 8.5 percent to €90 million. Excluding the impact of the acquisition of Thom Browne’s South Korean operations (previously reported in the wholesale channel), DTC revenue fell 12.8 percent organically, dented by a challenging Greater China. At the end of June, Thom Browne had 102 directly operated stores, including 13 new small concession stores at Nordstrom and one store at Beijing WF Central. In the second half, the brand will open on Melrose Avenue in Los Angeles and in Palm Beach, Florida, Holt Renfrew and Nordstrom, Zegna said.
Tom Ford Fashion’s DTC revenues rose to €93.1 million from €34.7 million with 56 DOS at the end of June, including two net openings in the second quarter. In addition to Taormina and Rome, new stores are opening in Singapore at Paragon, a concession at Harrods, at the Four Seasons in Madrid and in Saint Moritz.
The group’s wholesale turnover fell 7.5 percent to EUR 211.7 million in the first half of the year, compared with EUR 228.9 million last year.
Zegna’s wholesale turnover rose by 5.2 percent to EUR 79.5 million, mainly due to different delivery times.
Thom Browne’s wholesale sales fell 38.1 percent to €76.7 million, reflecting a decision to streamline the brand’s wholesale operations.
Tom Ford Fashion’s wholesale turnover rose from €29.2 million to €55.4 million.
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