In the fourth quarter, Zegna Group generated revenues of 407 million euros, a 0.5 percent decrease, bringing total revenues for FY 2022 to 1,493 million euros, up 15.5 percent.
At cFX, revenues grew 11 percent and declined 2.9 percent in FY 2022 and in the fourth quarter, respectively.
The group expects a moderate improvement in adjusted EBIT and a substantial improvement in profit for FY 2022 compared to 2021 despite significant headwinds in the GCR. Zegna targets 2 billion euros in revenues and 15 percent adjusted EBIT margin in the medium term, excluding the Tom Ford fashion business.
Commenting on the results, Ermenegildo “Gildo” Zegna, chairman and CEO of the Zegna Group, said: “I am very pleased with how we performed during 2022, in spite of the continued global economic and geopolitical challenges of the year, as well as how we continued to stand by our commitments to the environment, our employees, and our communities.”
“Despite China continuing to be affected by Covid-related restrictions throughout 2022, our growth for the year shows the soundness and success of our strategy, global reach, and flawless execution, with ongoing success in the Middle East, U.S., and Europe,” Zegna added.
Zegna’s performance across segments
The company said in a statement, excluding the GCR, which was affected by Covid-related restrictions throughout 2022, particularly from mid-March to the end of May and then again in the fourth quarter, revenues were up 42 percent for FY 2022, and up 24.7 percent for the fourth quarter.
Revenues were up 38.6 percent and up 21.1 percent at cFX in FY 2022 and fourth quarter, respectively.
The company added that growth in the fourth quarter was also affected by the end of the Tom Ford International distribution licence agreement with the fall/winter 2022 season deliveries, which had a negative impact on consolidated revenues for the fourth quarter of 2 percent year-over-year.
Revenues for the Zegna segment, which includes Zegna-branded products as well as the textile and third-party brands product lines, reached 334 million euros in the fourth quarter, a decrease of 2.2 percent, with the drop in GCR direct-to-consumer (DTC) revenues and the end of the Tom Ford International distribution licence agreement more than offsetting strong performance in other markets. Zegna segment revenues for FY 2022 were 1,177 million euros, a 13.7 percent increase.
The Thom Browne segment revenues in the fourth quarter of 76 million euros, up 11.5 percent. In FY 2022, the Thom Browne segment posted revenues of 331 million euros, up 25.3 percent year-over-year. Thom Browne saw women’s products growing slightly faster than men’s, while children’s almost doubled.
Despite Covid-related restrictions and closures affecting the DTC channel, the company further said, positive performance was sustained by strong wholesale demand, e-commerce through T-Mall in China, and the contribution of 11 net store openings in 2022, bringing the total number of directly operated stores to 63 at the end of 2022.
Zegna revenues by product line
Zegna-branded product revenues were 274 million euros for the fourth quarter, down 2.7 percent, but up double-digit year-over-year excluding GCR, benefitting from the rollout of the One Brand collection in July 2022.
Revenues for FY 2022 were 924 million euros, up 9 percent. Shoes showed strong performance throughout the year, while growth in the luxury leisurewear segment remained steady. Tailoring and made-to-measure both saw a strong rebound in 2022, especially in the U.S. and EMEA.
Thom Browne revenues of 76 million euros in the fourth quarter, up 11.4 percent, bringing FY 2022 revenues to 330 million euros, up 25.3 percent driven by wholesale demand.
Textile revenues were up 7.1 percent for the fourth quarter, reaching 38 million euros. Revenues for the year were up 33.8 percent to 137 million euros, with all the key subsidiaries experiencing healthy double-digit growth.
Third-party brands revenues reached 18 million euros in the fourth quarter, down 18.8 percent, impacted by the termination of the Tom Ford International distribution licence which ended with deliveries of the FW 2022 collection, replaced by a supply agreement. Excluding this impact, third-party brand revenues were up by strong double-digits in the fourth quarter.
Zegna expects the negative impact to be more than offset by the consolidation of the Tom Ford fashion business subject to and upon closing of the transaction with The Estée Lauder Companies, expected later this year. For FY 2022, third-party brands revenues were up 30.5 percent to reach 98 million euros, driven by higher Gucci orders and Tom Ford deliveries for SS22/FW22.
Zegna revenue performance by core geographies
Excluding the GCR, the group saw a 42 percent increase in revenues in FY 2022 driven by performance in Europe, the Middle East, and the U.S. Revenue growth was 24.7 percent in the fourth quarter, excluding the GCR.
Activities in Europe, the Middle East, and the U.S. demonstrated the strongest growth in the fourth quarter. EMEA revenues in the quarter were 140 million euros, a 22.8 percent increase, of which the Middle East and Africa (MEA) region represented 24 million euros, a 34.9 percent growth, building on the region’s robust performance in the earlier quarters of the year.
For FY 2022, EMEA revenues reached 520 million euros, up 36.8 percent year-over-year. Revenues from the Middle East and Africa (MEA) region constituted 69 million euros for the year, a 56.1 percent year-over-year growth.
North America quarterly revenues increased 26.7 percent and amounted to 82 million euros, of which the U.S. made up 77 million euros, up 26.1 percent. Revenues in North America reached 295 million euros in FY 2022, up 54.1 percent, with the U.S. up 53.5 percent to 270 million euros. Group revenues in the GCR were down 30.3 percent, reaching 131 million euros. The decrease was 16.1 percent for FY 2022, with revenues of 494 million euros for the year.
In FY 2022, DTC revenues for Zegna-branded products saw an 8.4 percent increase, reaching 773 million euros. DTC revenues for Thom Browne increased 5.1 percent to 146 million euros in FY 2022, pushed by high-double-digit performance in the U.S., EMEA, and Japan. The FY 2022 increases in DTC revenues come despite decreases of 6.2 percent and 10 percent for Zegna-branded products and Thom Browne, respectively, in 4Q 2022, as a result of the COVID-19 disruption in the GCR.
For FY 2022, wholesale revenues reached 570 million euros, up 30.7 percent, with Thom Browne wholesale revenues growing 47.7 percent for the year to 184 euros and Zegna-branded product wholesale revenues growing 12.6 percent for the year to 151 million euros. In the fourth quarter, the group saw growth across the wholesale channel, with revenues totaling 132 million euros, a 16.1 percent increase. This is attributed to wholesale growth for Thom Browne of 62.4 percent during the quarter and consistent growth of 20.7 percent for Zegna-branded products during the quarter. At the end of FY 2022, DTC revenues represented 62 percent of total sales, down from 66 percent in FY 2021, as a result of the disruptions affecting the GCR, which is mainly a retail market.