The Business of Fashion
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Italian menswear group Zegna’s third quarter total sales fell 7 percent as demand for luxury slows across key markets. Total revenue for the quarter amounted to €397 million ($429.8 million).
The biggest hit came from the Greater China region, where revenue decreased by over 22 percent from June-September.
Flagship brand Zegna reported 2.5 percent organic growth for the quarter, while sales slipped in the group’s other units.
American label Thom Browne’s quarterly sales dropped 27 percent, even more than the 20 percent sales drop in the first half of the year. Tom Ford Fashion, which changed designers this summer after just two seasons, saw its sales fall by 11 percent in the third quarter. “Tom Ford is strong in the USA, but has a long way to go in Asia,” the group’s chairman and CEO Gildo Zegna said.
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Looking ahead, “Golden Week performance was a bit ahead of our expectations,” Mr. Zegna told investors, referring to the week in early October when China celebrates various national holidays. “Next year will start in better shape.”
In EMEA and the Americas, revenues were down by 2 and 3 percent, respectively. Only the group’s APAC region, which encompasses Asian countries outside Greater China, showed positive organic revenue growth, with sales up 7.4 percent year-on-year.
Zegna Group’s sales are slowing after a period of rapid growth. An overhaul of its flagship brand to refocus on elevated casual wear resonated in the aftermath of the Covid-19 pandemic, while a New York IPO helped to fund store expansions and M&A.
The group says its seeking to underscore its heritage and target key customer clusters. At flagship brand Zegna, “pushing icons” is a proven success. Now Zegna Group is trying to create and successfully highlight more hero products for Tom Ford, where the group took over operations of the brand’s womenswear business only last year, as well as at Thom Browne.
Thom Browne is less exposed to a rocky Chinese market than other brands in the group, but the CEO is cautious on the label’s outlook as “uncertainties are still there.”
Learn more:
This Week: How Deep Will Luxury’s Downturn Go?
Following LVMH’s sales miss, Kering, Hermès and Zegna will offer further insights on how plummeting demand from China is playing out across the sector.
Editors’ Note: This story has been modified on 23 Oct. at 3p.m. B.S.T. A previous version of this story said Thom Browne’s third-quarter sales had fallen 13 percent year-on-year. That is incorrect. Sales fell 27 percent on a organic basis.
