The Australian
Ermenegildo Zegna is building its lline in men’s clothes.Source: Supplied
WHILE most luxury companies continue to target Asia and India, luxury menswear designer Ermenegildo Zegna is eyeing Africa as its next important market.
The Italian brand has turned its focus towards Africa as it looks to open stores in Morocco and Nigeria this year.
In its latest profit update, Ermenegildo Zegna reported a 90 per cent surge in profits for 2011. Net profits came in at €115.1 million ($146.9m), while company revenue rose 17 per cent at €1.127 billion.
China continued to hold on to its main-market placing in terms of the group’s retail sales (up 28 per cent), while the US market remained strong with a 16 per cent rise. Sales were also up in Germany, France and Italy.
At the close of 2011, Ermenegildo Zegna had 311 fully owned stores in an expanding portfolio. The company said it would open another 50 stores this year, including a third outlet in China amid further expansion in Europe and the US.
CEO Ermenegildo Zegna said: “The objective I set myself, before the crisis that started in 2008, of topping sales of €1 billion by the time of our centennial, was achieved, with thanks to the position of strength we have gained, despite the alarming volatility that still characterises the global economy.
“Our income, financial and equity results are enabling us to take new challenges, guided by the pioneering vision that has defined our history, but also to develop new forms of co-operation to exploit the most attractive opportunities the market can offer.”
Fellow Italian menswear label Brunello Cucinelli is in the midst of an initial public offering on the Milan Stock Exchange. Strong interest from Chinese and Middle East investors saw the company close the offer a week early.
The Zegna group acquired 3 per cent of Brunello Cucinelli capital.
Coach sales jump 17pc
US luxury brand Coach showed a 17 per cent increase in sales to $US1.11bn for the third quarter of 2011.
Net income for the quarter jumped 21 per cent to $US225m, compared to $US186m in the prior corresponding period.
Coach chairman and CEO Lew Frankfort said: “We’re pleased with the very strong top and bottom-line performance we achieved in the third quarter, as well as the expansion of our operating margin.
“Our results demonstrated the brand’s resonance across channels, categories and geographies and reflected the effectiveness of our new pricing and promotional strategies in our North American factory business.
“A 33 per cent increase in our dividend reflects our financial strength and our confidence in Coach’s business outlook.”
For the nine months ended March 31, 2012, net sales were $US3.61bn, up 15 per cent from the $US3.13bn reported in the first nine months of fiscal 2011.
Coach showed growth in Q3 sales for each of its primary channels of distribution – North American store sales rose 6.7 per cent as China posted a 60 per cent spike and Japan grew by 14 per cent on a stronger yen.
Coach had 350 retail stores and 162 factory stores as of March 31, 2012. In China, five new locations were opened during the quarter, all on the mainland, bringing the total to 85.
In Japan, Coach opened three locations and closed three others, keeping the total at 184 at the end of the quarter.
In January, the company acquired the domestic retail Coach business in Taiwan, which followed the acquisition of the Singapore domestic retail business earlier in the fiscal year. At the end of the quarter, as the result of these acquisitions, the company operated six locations in Singapore and 26 in Taiwan.
“Internationally, our directly operated businesses are also growing rapidly, with China continuing to post excellent gains, remaining on course to generate at least $300 million in sales this year. As previously noted, in January we took control of our domestic retail business in Taiwan, and will be acquiring our Malaysian retail business in July. In addition, we are very pleased to announce that we have signed an agreement to take control of our domestic retail business in Korea effective in early FY13.”
Menswear continues to be a strong growth area for the luxury brand; Mr Frankfort reported that the men’s business remained on track to double to over $US400m this year.
With strong results reported and further growth expected, Coach is now accelerating the rollout of menswear within existing retail stores.
