Zegna posts flat sales growth as wholesale weighs on DTC growth

Ermenegildo Zegna Group announced on Thursday steady revenues for the first quarter, as strong direct-to-consumer sales offset a slump in wholesale revenues.

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The Italian group said​e total revenues fell 0.9% to €458.8 million for the first quarter ending March 31.

By brand, Zegna revenues grew 3.6% to €292.9 million, alongside a 3.8% rise in Tom Ford Fashion to ​€67.5 million.

The duo were offset by Thom Browne, which plunged 18.6% to €64.4 million. The company’s textile 
revenues were also down 10% to €29.9 million.

By channel, DTC sales grew 5.3% to €345.1 million, thanks to gains at Zegna, up 4.7%, Thom Browne, up 3.5%, and Tom Ford Fashion, which surged 10% during the three months.

However, wholesale revenues slumped 19.8% to €79.5 million during the quarter, with Thom Browne plummeting 48%, and Zegna and Tom Ford Fashion logging smaller declines at 2.6% and 8.9%, respectively.

By region, the Americas was the star performer at the Milan-based group, up 9.5% t0 €125 million, representing 27% of total revenues. The EMEA region recorded revenues of €154.1 million, down 1.6%, with solid double-digit growth at both Zegna and Tom Ford Fashion offset by the sharp decline of Thom Browne.

Revenues in the rest of APAC were €55.9 million, up 6.5%, driven by solid growth, in particular in Japan, for all three brands. The Greater China region slumped 11.6% to €123.3 million, reflecting subdued consumer sentiment affecting all three brands, said the company.

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“Despite the ongoing challenges in our sector, all our three brands have reported positive performance in the strategic direct-to-consumer channel. The Zegna brand recorded a 4% increase in revenues, driven by solid DTC performance, which has been particularly outstanding in the Americas and EMEA. Thom Browne results, while supported by a positive retail trend, continued to be impacted by our strategic decision to reduce the exposure to the wholesale channel. Tom Ford Fashion posted 4% growth in revenues, boosted by a 10% growth in DTC, demonstrating improving momentum, especially in the U.S. and Europe, further amplified by the remarkable success of the March fashion show,” said ​Ermenegildo “Gildo” Zegna, chairman and CEO of the Ermenegildo Zegna Group.

“We are encouraged by these early positive results but also mindful of the recent geopolitical and economic uncertainties. And while we have not observed significant changes in customers’ behavior across our brands, we remain vigilant, agile, and focused on our strategic priorities knowing that what truly matters is the strength of our brands and our unwavering commitment to staying close to our customers.”

The Zegna Group earnings update comes just days after luxury rival Kering posted a 14% decline in sales for the first quarter, as the French group’s largest brand Gucci continued to clock double-digit declines.