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Ermenegildo “Gildo” Zegna breezes into his Milan office, direct from a three-hour preview of Zegna’s Autumn/Winter 2024 show in the studio below. Along with a determined expression, the 60-something chairman and CEO wears top-to-toe camel — a bespoke shacket, finely draped pants and suede trainers — designed by the group’s artistic director Alessandro Sartori. Zegna offers a chocolate by Venchi (the best) but doesn’t take one himself. We get down to business.
“Verticality is power,” he declares. This is the credo that led Ermenegildo Zegna Group to its New York Stock Exchange IPO in 2021, a move that generated around $760 million in funding while allowing the family to retain a 63 per cent controlling stake.
From the sheep farm to the shop floor, Zegna has been cultivating its vertical philosophy for over a century. In 1910, Zegna’s grandfather — also Ermenegildo — founded the mountainside mill in Trivero, Province of Biella, that is the group’s point of origin. In the decades after, Zegna purchased Australian sheep farms to secure the best raw materials, and founded or purchased Italian factories that could turn the cloth the mill wove into sleeves and trousers. Then, in 1968, the founder’s sons launched ready-to-wear under the family label.
In 2022, of the group’s €1.5 billion total revenue, 62 per cent was generated by the Zegna label — making it the world’s biggest exclusively menswear brand in the luxury space. Some 84 per cent of those sales were direct-to-consumer (DTC) — a proportion Zegna aims to boost to 90 per cent in the medium term through expanded retail networks. “More retail means more control of the brand and customer proximity, which has important benefits also in terms of retail KPIs and productivity,” he explains. “We are better able to serve our clients, to have the right merchandise in the stores, and ultimately to generate higher productivity. This provides room to further invest in quality, service and brand visibility. It is a virtuous circle.”
Just as it was the first luxury fashion brand to sell in China (in 1991, a year before Louis Vuitton), Zegna was the first luxury tailoring brand to reject the conventional sartorial paradigm and — through Sartori — begin developing a new dialect of high-end menswear at the intersection with sportswear and workwear.
Sartori’s aesthetic offers a new route of ascent for male consumers whose personal tastes and habits run to the informal — not suits, not fussy — but who wish to level up their personal attire. Proprietary “Oasi” cashmere crafted into elevated workwear, plus collaborations with labels including Fear of God and Elder Statesman, have enabled this. The house’s Triple Stitch trainer, says Zegna, is an important gateway product for customer recruitment: 20 per cent of first-time customers bought a pair in 2022, and the brand said during its Capital Markets Day presentation last December that it envisions that figure doubling in the medium term. At the other end of the customer demographic, made-to-measure versions of Sartori’s designs are a category Zegna describes as: “our Formula One.”
Zegna won’t provide any spoilers before the AW24 collection is unveiled, but he says: “The fashion show is Alessandro’s research-and-development innovation lab, where he goes forward with many experiments in new combinations of garments, fabrics and colours. We get the best out of that, and put it in the stores.”
Consolidation and acquisitions
Zegna’s path has not always been as smooth as its fabrics, however. Mid-pandemic, says Zegna, he noticed with alarm that sales were flattening. “We were not adding new customers.” After a “pondering weekend” Zegna decided to radically consolidate the label’s offering in order to concentrate its energy on amplifying certain styles. Between the autumn 2020 and 2023 seasons, Zegna’s total offer has been slimmed from 10,000 SKUs to 3,500 — and its sales have increased.
Strategic M&A has been a driver of growth. Despite an ultimately unsuccessful effort to turn womenswear brand Agnona into a scaled-up sister to Zegna, the chairman had long plotted to broaden the group’s portfolio of customer-facing brands. In 2018, the group acquired 85 per cent of US label Thom Browne for approximately $500 million. “We knew this was a partnership that could work for both sides as we shared a passion for excellence and impeccable modern tailoring. It doubled revenues within three years.” By streamlining wholesale and focusing on DTC, the aim is to double it again.
In April 2023, the Zegna Group acquired Tom Ford International, the company responsible for the Tom Ford fashion business. The acquisition was part of a joint operation co-captained with Estée Lauder Companies (ELC), Tom Ford’s existing beauty partner, and Marcolin, its eyewear partner. Zegna had a relationship with Ford dating back to the designer’s formative period at Gucci — when Zegna manufactured its tailoring — that continued when Ford launched menswear under his own name in 2006. “Then in 2016 we bought 15 per cent of Tom Ford International, on the fashion side, and I entered the board and we became more close. But I had no idea of what Tom wanted to do in the future,” Zegna recalls.
When Ford decided to cash out, says Zegna, there was interest “from a good number of players more important than us. But with Estèe Lauder we won because they gave credit to our [existing] partnership and the job that we had already done.”
Amplifying Tom Ford’s growth in apparel and accessories is now a medium-term focus for the group, which has a 20-year licence agreement to produce Tom Ford fashion, with a 10-year renewal option. Zegna says his group, ELC and Marcolin are in close contact in order to enable Tom Ford’s leadership to make best use of the partner’s respective fields of expertise and market penetration. Zegna adds: “We have created something new, something extraordinary. So we are saying let’s take advantage of that. It’s a matter of trust and a matter of governance, to lay out the priorities and best support each other.”
Building Ermenegildo Zegna’s ownership of sourcing, supply chain, design, distribution and retail has been a long-term project. Recent acquisitions include the textile manufacturers Ubertino and Biagioli in 2021. Last summer, Zegna joined forces with Prada’s Patrizio Bertelli to jointly acquire a minority stake in knitwear specialist Luigi Fedeli and sons. A peripherally positive consequence of this are the learnings that come when the group’s expertise is sub-contracted by other brands. “Cashmere, wool, silk, linen, jacquard, spinning: we offer an entire portfolio of different textile high-end specialties to our brands, and also to others,” says Zegna. “For instance Ubertino works splendidly with Chanel, while Biagioli works with Hermès. When you partner, you learn.”
Zegna attributes this philosophy of partnership and dialogue as a key factor in growing the group. He regularly cites the expertise of the company’s non-executive directors, including founding Vogue China editor Angelica Cheung and former Gucci CEO Domenico De Sole. Managers from across the group meet to share ideas and learnings.
Chocolates still untouched, we have been talking for an hour. Zegna reflects, then concludes: “One thing is to talk. The other thing is to do it. You ask me about the vision, fine. But it is the discipline to get the vision done that is the most challenging thing of all. We did it with Zegna, we did it along with Thom Browne, and next we will do it with Tom Ford fashion.”
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