Italy's Ermenegildo Zegna Group's profits soar to €135.7 mn in FY23

The Group's revenues soared by 27.6 per cent to €1,904.5 million (~$2,066.29 million), with organic growth contributing 19.3 per cent. This increase is supported by outstanding results in the Zegna segment, which saw a revenue increase of 12.4 per cent year-over-year, reaching €1,322.0 million (~$1,434.30 million). The Thom Browne segment also exhibited robust growth, with revenues escalating by 14.9 per cent to €380.3 million (~$412.61 million). Additionally, the incorporation of the Tom Ford Fashion business post-acquisition added €235.5 million (~$255.51 million) to the Group's revenues.

The gross profit margin improved to 64.3 per cent, resulting in a gross profit of €1,224.3 million (~$1,328.30 million). This enhancement reflects a strategic focus on direct-to-consumer sales, an optimised product mix, and effective cost absorption. Adjusted EBIT increased to €220.2 million (~$238.91 million), the company said in a press release.

The Group's capital expenditure for FY23 was €77.9 million (~$84.52 million), focusing on expanding the direct-to-consumer store network, especially for the Zegna brand. Trade Working Capital at the end of the fiscal stood at €448.9 million (~$487.03 million), illustrating the Group's investment in supporting business growth and the integration of the Tom Ford Fashion business.

Net Financial Indebtedness was reported at €10.8 million (~$11.72 million), a shift from a Cash Surplus of €122.2 million (~$132.58 million) in FY22, reflecting strategic investments and dividends paid. However, the Group generated a positive Free Cash Flow of €71.8 million (~$77.90 million) in FY23, indicating robust financial health and operational effectiveness.

Ermenegildo "Gildo" Zegna, chairman and CEO, said: “2023 has been a milestone year for our Group. We delivered outstanding results, including more than doubling our profit from 2022 to reach €136 million. We have also fulfilled our 2023 sustainability commitments including those focused on traceability, diversity and inclusion, and in renewable energy adoption. We are on track with the integration of the Tom Ford Fashion business, which is enriching our unique proposition in luxury glamour.

“2023 was also an important year for the Thom Browne and Zegna brands. Thom Browne celebrated its twentieth anniversary reaffirming the brand as a symbol of modern luxury tailoring. Zegna continued a well-defined journey to ensuring its place as one of the strongest brands in absolute luxury menswear. As a Group, we continued to invest in our Filiera, our in-house supply chain, which includes some of the finest and most important Italian high-end textile producers fully integrated with our unique luxury manufacturing capabilities. We recently announced the latest addition to the Filiera, a new state-of-the-art footwear and leather goods production facility in Parma, Italy, expected to be completed by the end of 2026.

“Looking ahead, I see a clear and defined path forward for our Group. In the volatile world we live in, we must continue to be increasingly responsive, flexible and authentic to who we are. The Ermenegildo Zegna Group is a guardian of brands, and while short-term results are important, our top priority must always be their overall trajectory. What we should do is well defined; there will be challenges, but we know how to tackle them and how important it is to plan for the long term.”

Reflecting confidence in the Group's financial strength and future prospects, a proposed dividend of €0.12 (~$0.13) per ordinary share was announced, marking a 20 per cent increase from FY22.

Fibre2Fashion News Desk (KD)