Ermenegildo Zegna FY15 net profit declines 36.6 percent

Ermenegildo Zegna Group has reported a 36.6 percent decline in its profits for the last year on the back of low demand in Greater China coupled with investments in retail expansion in growth markets such as Japan and UAE. The company said that its net profit to December 31, 2015 decreased to 45 million euros (51 million dollars) against 71 million euros (80.7 million dollars) reported in 2014.

EBITDA declined 21 percent to 146 million euros (166 million dollars) compared to 185 million euros (210 million dollars), last year. Revenues, however witnessed a 4 percent rise to 1.26 billion euros (1.43 billion dollars).

Retail developments during 2015

Zegna, last year inked a joint venture with the Dubai-based Al Tayer Group to expand its footprint in the Middle East market. The joint venture partnership handed over rights to operate all Zegna stores in UAE to Al Tayer, which were earlier looked after by UAE Trading.

The company also developed a new manufacturing center in San Pietro Mosezzo, near Novara, to establish strong supply chain for its clothing business. It already has three other separate manufacturing centers for casual garments, outerwear and leather apparel, and accessories in Parma, Italy. Also an exclusive center for knitwear production was set up in Verrone, Italy.

Zegna also brought Alessandro Sartori on board as the new Artistic Director. Sartori will shoulder the responsibility of all Zegna brands and will commence his new innings at the Italian men’s wear group in June 2016. Simon Holloway, on the hand, joined Zegna’s women’s brand Agnona as Creative Director last year.

Europe and Americas emerged stronger

Exports accounting for over 90 percent of total sales saw single-digit rise in Europe and positive growth in Americas, especially Canada and Mexico as well as the US. Even markets like Japan reported good demand, however, China which is the largest market for Zegna, witnessed low demand.

At the end of 2015, the company operated 523 boutiques, of which 307 are directly managed by the company. Last year, Zegna opened new boutiques in New York, at Brookfield Place; in Miami, in the Design District; in Tokyo’s Ginza area; at the Dubai-Mall of Emirates; in Johannesburg, and Melbourne. This year will see store openings in Berlin, Istanbul, Tehran and Macau as well as revamping of the existing stores.