The Italian fashion group Ermenegildo Zegna NV experienced a significant decline in profit in fiscal year 2024.

Higher investments and write-downs, in particular, impacted the results, the parent company of the Zegna, Thom Browne, and Tom Ford Fashion brands announced on Thursday. The group had already announced in January that it was able to increase its revenue by around two percent last year.

Investments and increased marketing expenses impact results

According to the figures now presented, the group's operating profit in the past fiscal year amounted to 166.9 million euros. This represents a decrease of 19.8 percent compared to 2023. Earnings before interest and taxes (EBIT), adjusted for special items, shrank by 16.4 percent to 184.0 million euros.

Reported net profit was 90.9 million euros, a decline of 33.0 percent year-over-year. While the group was able to increase its gross margin from 64.3 to 66.6 percent, investments in personnel, its own retail network, and measures for future growth, as well as increased marketing expenses, weighed on the result. In addition, the company had to make higher write-downs.

Management continues to anticipate challenging market conditions

Management expressed caution for the current year. In light of the continuing difficult market conditions, the company is pursuing a "cautious approach" but will adhere to its future projects, according to a statement.

The group also adjusted its medium-term targets to the current conditions. For the 2027 fiscal year, revenue in the range of 2.2 to 2.4 billion euros is now targeted. Adjusted EBIT is expected to reach 250 to 300 million euros.

Annual revenue increases by around two percent

The group had already announced in January that revenue reached just under 1.95 billion euros last year, an increase of 2.2 percent compared to the previous year. However, in 2023, revenue from Tom Ford Fashion was only included in the balance sheet from the acquisition date at the end of April. On an organic basis – adjusted for currency effects as well as changes in the group portfolio and licensing business – revenue declined by 1.9 percent.

In the final quarter, however, the group was able to report an upward trend. Revenue increased by 3.3 percent (organically +2.9 percent) to 589.2 million euros compared to the same period of the previous year.

For the full fiscal year, the Zegna division achieved an increase of 2.0 percent (organically +2.5 percent) to 1.35 billion euros. In contrast, revenue in the Thom Browne segment declined by 17.2 percent (organically -20.8 percent) to 314.8 million euros. In the Tom Ford Fashion segment, reported revenue increased by 33.5 percent to 314.5 million euros, but on an organic basis, revenue decreased by 0.7 percent.

Weaker demand in china impacts revenue development

Revenue development was hampered last year by weak demand in Greater China. There, revenue fell by 14.5 percent (organically -13.7 percent) to 509.4 million euros.

In its other markets, however, the Zegna Group was able to achieve growth. In the EMEA region, which comprises Europe, the Middle East, and Africa, revenue increased by 3.3 percent (organically +0.4 percent) to 680.3 million euros, in the Americas by 15.4 percent (organically +6.8 percent) to 524.8 million euros, and in the Asia-Pacific region outside of China by 19.4 percent (organically +6.9 percent) to 229.9 million euros.

This article was translated to English using an AI tool.