- By Region
Ermenegildo Zegna, one of the largest men’s luxury goods groups by sales, reported a 90 per cent surge in profits in 2011 and sees buoyant growth for this year as it expands in China and the US and opens for the first time in Africa.
The family-owned group, which was in the running to buy Italian menswear brand Brioni this year before being beaten to the acquisition by PPR, also said it had acquired a 3 per cent stake, worth about €15m, in Brunello Cucinelli, a high-end Italian luxury cashmere maker.
Total revenues at Zegna, founded 102 years ago in northern Italy, rose 17 per cent to €1.13bn, with net profit rising to €115m. Earnings before interest, tax, depreciation and amortisation rose 66 per cent to €233m. It had a positive net financial position of €245m.
Gildo Zegna, chief executive, told the Financial Times he aimed for total revenues to reach €1.5bn in less than five years. Sales in the first quarter of this year rose 11 per cent at constant currency. Mr Zegna said he hoped for sales around that level for the full year.
The results from Zegna underline the continuing strength of the European luxury goods industry due to unabated demand for high-end wares from the region by consumers from China, the US and Latin America.
They also reflect the emergence of men as formidable consumers of luxury goods. Men account for 40 per cent of the global luxury market, up from 35 per cent in 1995, according to Bain, the consultants.
Sales in China, Zegna’s largest market in terms of retail sales, rose 28 per cent. Sales in the US rose 16 per cent, while Chinese, Russian and Brazilian tourists buoyed sales in Europe.
To continue to tap this demand, Zegna plans to open 50 new shops this year, adding to its total of 311 directly owned stores. A third of the new openings will be in China. The group also plans to begin a push into Africa, where stores will be opened in Morocco and Nigeria for the first time. Stores will also be opened and refurbished in the US and Europe.
Mr Zegna said he saw “a lot of room for growth”, particularly in the accessories business for men.
Regarding the investment in Cucinelli, Mr Zegna said he had no intentions towards the group except as an investment and an opportunity to “strengthen” a longstanding arrangement where Zegna sells textiles to Cucinelli.
The Benetton Group said it had acquired a 2 per cent stake in Cucinelli, which is due to list a third of its shares on the Milan stock exchange this Friday after its initial public offering was 17 times subscribed.