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Zegna Group Reports €65M Profit Amid ‘Quiet Luxury’ Boom

Ermenegildo Zegna Group is currently seeing double-digit growth in stores after hitting €1.5 billion in sales last year. With a slowdown expected for luxury brands, chairman Gildo Zegna tells BoF the recently rebranded menswear giant is well-positioned to outperform.
'Succession' star Kieran Culkin stars in Zegna's Spring Summer 2023 campaign.
'Succession' star Kieran Culkin stars in Zegna's Spring Summer 2023 campaign. (Zegna)

“Quiet luxury” is sweeping social media and fashion discourse — and Zegna is benefiting.

Ermenegildo Zegna Group, which owns Zegna and Thom Browne (and soon Tom Ford’s fashion business), said it returned to profitability in 2022, with sales boosted by the resurgence of tailoring and strong demand at the top end of the fashion market.

Revenue rose 16 percent to €1.5 billion ($1.6 billion) last year, despite Covid-19 disruptions in China and the risk of a spending slowdown in the West in the face of high inflation and slower growth. Excluding the China market, where lockdowns and surging Covid infections weighed on results, revenues were up 42 percent, the company said.

Profits for the year hit €65 million in 2022, compared with a €128 million loss in 2021.

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Momentum has continued into 2023, with double-digit growth “well above our expectations” in stores currently, the group said, adding it is on track to surpass the €2 billion revenue mark by 2025, a target set out to investors last summer.

Understated menswear giant Zegna, the group’s flagship brand, is particularly well placed to capitalise on shifting fashion trends: dressier, less logo-driven collections dominated the runway this spring as luxury brands sought to emphasise their timeless appeal. In an uncertain economy, Zegna also seems to be seeing resilient demand for ultra-high-end propositions like €1,000 cashmere polos and €2,000 overshirts, which are aimed at solidly wealthy clients who may be more insulated from economic stress.

The luxury market is set to slow from 22 percent last year to between 3 and 8 percent this year, according to Bain, but Zegna sees room for pacey growth amid strong demand for the low-key menswear that is the brand’s bread-and-butter.

“We are fortunate to be one of the few brands doing quiet luxury,” group chairman and chief executive Gildo Zegna said in an interview with BoF. “We are men’s only and we are small compared to the big [players] in the world of luxury. So I can only see positive prospects. We just have to ask: how quickly we want to go.”

The results come as the rebrand Zegna starts to gain steam. Ahead of the group New York IPO in 2021, Zegna announced a new strategy to consolidate its lines — dropping “Ermenegildo” from tags and axing sub-label Z Zegna — as well as revamping its products and marketing to better cater to a post-pandemic luxury consumer accustomed to casualisation and comfort. The rebrand is resonating with existing customers while also bringing in new ones, Mr. Zegna said.

“We just look like a different brand,” he said. “We’re [still] luxury and high quality, but today we are more fun and more modern and more stylish.”

Demand for Zegna’s leisurewear — clothing that “feels like sportswear, but still looks like modern tailoring” — and sneaker collections are driving growth, but the return of social events and office working has also spurred a strong rebound in the brand’s formalwear business, Mr. Zegna said. With the wealthiest segment of consumers driving recent growth for luxury brands, Zegna’s made-to-measure business is “on fire,” he said, growing by double digits even compared to 2019′s record levels.

Last month, the brand posed Succession star Kieran Culkin in its latest campaign, set in a skyscraper reminiscent of the HBO show’s billionaire universe. The move underscored Zegna’s alignment with a cashmere-laden aesthetic often associated with established wealth — just as “quiet luxury” discourse was taking off on TikTok.

In November, Zegna Group announced it would acquire Tom Ford’s fashion operations, licensing the name from the American brand’s new owner Estée Lauder Companies. The transaction is expected to close in the coming weeks, Mr. Zegna said.

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