Zegna sales decline year-on-year or new brand strategy will be launched

According to the world clothing and footwear network, the Italian luxury goods group Ermenegildo Zegna Zegna recently announced the core financial data for the fiscal year 2016. Due to excessive cost and bad debt processing and weak sales performance in major markets, Ermenegildo Zegna's data does not make people satisfaction. The group plans to launch a new brand strategy in 2017 and restructure the company structure to promote a rebound in the Chinese and European markets.

Zegna's core financial data for FY2016 is as follows:

Net profit fell from 55 million euros to 20 million euros, a year-on-year decrease of 55.5%

EBITDA (earnings before interest, taxes, depreciation and amortization) fell from 146 million euros to 125 million euros, a year-on-year decrease of 14.3%

Sales fell from 1.26 billion euros to 1.15 billion euros, down 7% year-on-year

Net cash balance increased by 42% year-on-year to 233 million euros

Export sales accounted for more than 90% of the Group's total sales. From a regional perspective, Canada, Mexico, Dubai and Japan have maintained stable performance. China is still Zegna's largest market, accounting for one-third of total sales. The United States is second, and Russia's sales have increased.

CEO Gildo Zegna said: "China and Europe rebounded better than expected, but the US did not meet our expectations. In the past two quarters, due to the strong US dollar, the tourism industry did not perform well, the US market retail and wholesale sales are Struggling."

When asked why China did not achieve rapid development, Gildo Zegna believes that because Chinese people consume too little locally, they said they have adjusted China's preferential policies to meet the needs of local consumers in 2016. In the last quarter, the performance of the Chinese market has improved.

The group is working hard to implement the new strategy, the biggest highlight is the return of creative director Alessandro Sartori and the establishment of some new positions. Alessandro Sartori joined Zegna in 1989 and has been in charge of design for eight years. The CEO commented on the designer: “Sartori is the designer who best represents Zegna. The group's new positions include the first brand manager, digital and marketing executives, omni-channel executives and retail experience leaders.

In order to strengthen the manufacturing strength, Zegna acquired the controlling stake in Italian high-end fabric manufacturer Bonotto. Founded in 1912 by Luigi Bonotto, Bonotto SpA is currently managed by the descendants of the founders, the fourth generation of the Bonotto family, Lorenzo Bonotto and Giovanni Bonotto, and has successfully achieved global growth.

Zegna completed its industrial restructuring in 2015 and increased its investment in the supply chain. To strengthen the clothing sector, a state-of-the-art production center was set up in San Pietro Mosezzo, near Novara. Prior to this, the Group specialised in the production of casual wear, outerwear, leather garments and accessories at Parma's three production centres. In addition, it also has a production base specializing in the production of knitted products in Verrone near Biella. There is a history in the small town of Trivero. A long textile mill.

Zegna continues to expand its retail network in 2016. After opening in Macau, Dubai and London, there are currently 513 stores, of which 287 are directly operated. About one-fifth of the remaining 226 stores are travel retail outlets. Zegna's travel retail business is gaining momentum and is expected to achieve double-digit growth in 2017.

In 2017, the Group will continue to invest in social welfare, including the benefit of local communities, scientific research, environmental protection and the maintenance and development of the Zegna Oasi Nature Reserve Park. The group will continue to offer the Ermenegildo Zegna Founder Scholarship of €1 million to provide talented university graduates with opportunities to pursue higher education or important research projects abroad, with the requirement that they return to work in Italy after completing their studies.

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