The Zegna Group, about eight months after the addition of Tom Ford Fashion, delivered spectacular preliminary FY23 revenues numbers on February 21. Annual revenue growth came in at 27.6 percent after a monster Q4 of 40.1 percent growth. Even if we focus on just organic growth, the numbers were big with roughly 19 percent growth for Q4 and FY23.
Growth was strong across the group’s product segments and geographies, the latter of which has been rare during this luxury earnings season. The group’s largest line, Zegna (roughly 70 percent of revenues) chipped in EUR 1.3 billion (19.5 percent organic growth), Thom Browne (20 percent of group revenue) reported EUR 380 million (up 17.8 percent), and the newly acquired Tom Ford generated EUR 236 million during April-December.
Joining the ranks of other “quiet(er)” luxury groups, such as Hermès and Brunello Cucinelli, Zegna reported double digit sales growth across all geographical regions, with growth especially strong in Asia (24 percent) and, though it only comprises 3.5 percent of revenues, Zegna took pains to break out the message that UAE grew over 30 percent.
Forward guidance was for more of the same. The medium-term outlook was for an adjusted compound EBIT growth rate of about 20 percent.
The markets have been pleased with Zegna this year with its share price rising around 25 percent as of intraday trading today, putting it above the 15 percent simple growth rate of the FSW High Frequency Luxury Monitor All-Luxury Index and the roughly 6 percent price appreciation of the S&P 500. Its valuation remains pretty rich with a P/E ratio for the next estimated fiscal year of 29.2x, which is well below the stratospheric levels of Brunello Cuccinelli (63.5x) and Hermès (51.3x), but well above industry giant LVMH (25.6x).