Zegna Group experiences a 8% decrease in third-quarter revenue due to Thom Browne's influence
Ermenegildo Zegna Group Reports Mixed Results for Third Quarter of 2024
The Ermenegildo Zegna Group, a luxury fashion conglomerate, has released its financial results for the third quarter of 2024, with a mix of positive and negative performances across its brands.
Tom Ford Fashion, one of the Group's key brands, experienced a 3.8% decline in revenue for the first nine months, with a third quarter revenue of 65.4 million euros. However, the brand's Direct-to-Consumer (DTC) revenue for the same period saw a 2% organic growth, reaching 136.2 million euros. The third quarter also saw a 2.5% organic DTC growth, driven by a sequential acceleration of growth in the U.S. and good performance in the combined Europe, Middle East and Africa region.
Despite this growth, the Asia-Pacific region showed a continued softer performance for Tom Ford Fashion in the third quarter of 2024. The Thom Browne brand, another significant player in the Group, saw a 21.7% year over year decline in revenue for the first nine months, and a 27.4% decrease in the third quarter. Thom Browne DTC, on the other hand, remained relatively flat for the first nine months, with solid growth in Japan and Korea offset by negative performance in other geographies, including China.
The Zegna brand, which led the company's DTC growth with a 4.4% year over year increase for the first nine months, was largely flat for the third quarter, falling about 3%.
Ermenegildo Zegna, group chairman and CEO, expressed uncertainty about the fourth quarter of 2024 and the future, particularly in the Greater China Region. However, he was reassured by the continued positive performance of the Zegna brand and the quality of talent brought into Thom Browne and Tom Ford Fashion. He also expressed optimism about the Group's preparedness to face the future with stronger brands, a clearer vision, and a strengthened management team.
The company's total revenue for the first nine months of the year grew 2% to 1.4 billion euros. The report titled "Aspirational luxury customers spend $274B a year on fashion: report" published on April 15, 2024, suggests that the luxury market is still strong, despite the challenges faced by individual brands.
Other luxury brands, such as Ferragamo and LVMH, have also experienced earnings declines. Kering and Hermès are set to report later this week. The report titled "Luxury consumers optimistic about economy, but that won't translate to spending in the near term" published on March 4, 2024, indicates that while consumers are optimistic about the economy, they may not be ready to increase their spending in the near future.
It is worth noting that Tom Ford Fashion was never acquired by Estée Lauder Companies; instead, Estée Lauder owns Tom Ford Beauty, the cosmetics segment. There is no record of Estée Lauder acquiring Tom Ford Fashion or related bookkeeping by the Ermenegildo Zegna Group for such a transaction.
As the luxury market continues to evolve, the Ermenegildo Zegna Group will undoubtedly face both challenges and opportunities. The company's resilience and adaptability will be key in navigating these changes and ensuring the continued success of its brands.
