#Retail & Brands
Ermenegildo Zegna Group unveils updated group strategy following Tom Ford Fashion acquisition, and strong medium term financial outlook
• Group hosts second Capital Markets Day at the New York Stock Exchange and announces medium term financial outlook.
• Group aims for compounded average annual growth1 of revenues over 10% and of Adjusted EBIT of around 20%, and a strong Cash Surplus.
• Group sees positive momentum across brands and shares the business strategy for Tom Ford Fashion, where it expects revenues to grow at a compounded average rate1 of over 10% in the medium term.
Ermenegildo “Gildo” Zegna, Chairman and CEO of the Zegna Group, said: “Almost two years ago, we stood in this same historic place to ring the Opening Bell and begin our life as a public company as the very first Italian luxury fashion company to be listed on the New York Stock Exchange. It was a proud moment for me, for my family, and for the entire Group – the culmination of a personal dream, and the starting point of an exciting new phase for the Group and of Our Road To Tomorrow.
Several months later, at our first Capital Markets Day held at Oasi Zegna in May 2022, we shared our medium-term financial outlook. I am pleased to say that today we are ahead of the plans we presented back then.”
He added: “Our financial performance today paints a very clear picture: we are a stronger, more thriving company than ever before – we achieved these results while strengthening our brands, and this despite the challenging geopolitical and macroeconomic conditions over the past two years.
Our goals – strategic and financial – have always been rooted in our values. Earlier this year we have added another incredible name to our portfolio: TOM FORD FASHION, which has become the third pillar of the Group. Our results so far demonstrate our ability to execute on the ZEGNA and Thom Browne strategies. This is why, as we start to execute on TOM FORD FASHION, I am confident in our ability to deliver on the objectives we are sharing today for the Group as part of our business strategy, building on the strong portfolio of our three complementary luxury brands and on the different stages in their growth cycles.”
As part of the update being provided today, the Group has set the following strategic goals and financial outlook:
• At the Group level, beginning in FY 2023, the goal is to deliver over 10% compounded annual revenues growth (“CAGR”) in the medium term, with Adjusted EBIT CAGR of around 20%. This will generate significant cash surplus even while taking into consideration higher, targeted investments in marketing and capital expenditure to enhance brand desirability and drive growth.
• ZEGNA expects further store productivity increases and market share gains globally, building on the strong results achieved through the successful implementation of the ZEGNA One Brand strategy and a product offering that meets the continued strong consumer demand for quiet luxury. Store productivity at ZEGNA is expected to grow by almost 50% in 2023 from the 2021 baseline, ahead of our May 2022 medium term guidance. It is projected to further increase at a ca. 10% CAGR in the medium term compared with 2023.
• Thom Browne, building on its 20 year anniversary, expects a high teens compounded average growth in DTC revenues in the next years, with a streamlined wholesale distribution.
• Tom Ford Fashion expects to grow its revenues by over 10% compounded annual growth rate in the medium term2, capitalizing on the potential of the brand, whose strength today is much larger than its business, and by leveraging Group synergies to fuel its growth.
Capital Markets Day Live Stream
A live stream of the event and a copy of the presentation will be made available at ir.zegnagroup.com on Tuesday, December 5, 2023, at 8am EST / 2pm CET. An online archive of the broadcast will be available on the website after the live call and will be available for twelve months.
Non-IFRS Financial Measures
Zegna's management monitors and evaluates operating and financial performance using several non-IFRS financial measures, among which adjusted earnings before interest and taxes ("Adjusted EBIT") and Net Financial Indebtedness/Cash Surplus. Zegna's management believes that these non-IFRS financial measures provide useful and relevant information regarding Zegna's financial performance and improve the ability of management and investors to assess and compare the financial performance of Zegna with that of other companies. They also provide comparable measures that facilitate management's ability to identify operational trends, as well as make decisions regarding future spending, resource allocations and other strategic and operational decisions. While similar measures are widely used in the industry in which Zegna operates, the financial measures that Zegna uses may not be comparable to other similarly named measures used by other companies nor are they intended to be substitutes for measures of financial performance or financial position as prepared in accordance with IFRS.
Adjusted EBIT
Adjusted EBIT is defined as profit or loss before income taxes plus financial income, financial expenses, exchange losses/(gains), result from investments accounted for using the equity method, impairments of investments accounted for using the equity method, adjusted for income and costs which are significant in nature and that management considers not reflective of underlying operating activities.
Zegna’s management uses Adjusted EBIT for internal reporting to assess performance and as part of the forecasting, budgeting and decision-making processes as it provides additional transparency regarding Zegna’s underlying operating performance. Zegna’s management believes this non-IFRS financial measure is useful because it excludes items that management believes are not indicative of Zegna’s underlying operating performance and allows management to view operating trends, perform analytical comparisons and benchmark performance between periods and among segments. Zegna’s management also believes that Adjusted EBIT is useful for investors and analysts to better understand how management assesses Zegna’s underlying operating performance on a consistent basis and to compare Zegna’s performance with that of other companies. Accordingly, management believes that Adjusted EBIT provides useful information to third party stakeholders in understanding and evaluating Zegna’s operating results.
Net Financial Indebtedness/Cash Surplus
Net Financial Indebtedness/(Cash Surplus) is defined as the sum of financial borrowings (current and non-current), derivative financial instrument liabilities, loans and certain other financial liabilities (recorded within other non-current financial liabilities in the consolidated statement of financial position), net of cash and cash equivalents, derivative financial instrument assets, securities and financial receivables (recorded within other current financial assets in the consolidated statement of financial position).
Zegna’s management believes that Net Financial Indebtedness/(Cash Surplus) is useful to monitor the level of net liquidity and financial resources available to Zegna. Zegna’s management believes this non-IFRS financial measure aids management, investors and analysts to analyze Zegna’s financial position and financial resources available, and to compare Zegna’s financial position and financial resources available with that of other companies.
Capital Expenditure
Capital expenditure is defined as the sum of cash outflows that result in additions to property, plant and equipment and intangible assets.
Next Scheduled Announcement
The next scheduled announcement will be the full year 2023 preliminary revenues on January 31, 2024. To receive email alerts of the timing of future financial news releases, as well as future announcements, please register at https://ir.zegnagroup.com.
