last friday, Ermenegildo Zegna Group, the parent company of Zegna and Thom Browneand operator i Tom Fordfashion business, reported first quarter earnings results. It was the first fiscal quarter without Ermenegildo “Gildo” Zegna, the third-generation leader of the family business, in the CEO seat. Revenues rose steadily overall, but the Middle East saw a double-digit decline between the ongoing conflict in Iran. The company’s new CEO, Gianluca Tagliabuewas honest with analysts: April continued the negative trend and “we still have a big question mark” on how the region will develop in the coming months.
Tagliabue, who spent a decade as CFO and COO of Zegna, was appointed to fill the large shoes left by Mr. Zegna, who led the company as CEO for more than 20 years and now serves as executive chairman. As part of that transition, he also named his sons, Edoardo and Angelo Zegnaco-CEO of the Zegna brand.
Days before the earnings report, Mr. Zegna was asked about the Middle East at a business event in Washington, D.C. He reiterated his patience and long-term vision, saying he believed the region “will come back,” while emphasizing the company’s continued strength in the U.S. and untapped markets such as Japan and Korea. “Be true to your values and stay on track,” he summed up his leadership principle to an audience.
Mr Zegna, who turned 70 last September, is named after his grandfather, who founded the family business in 1910 as a woolen mill in northern Italy. He is particularly proud of the company’s deep historical roots and vertically integrated supply chain, which means it owns every step of production, from raw textile to finished garments to retail.
However, quarterly scrutiny by US public markets is a relatively new experience for a century-old Italian family business. While luxury conglomerates like LVMH and Kering are publicly traded in Europe, Zegna is the only European luxury group listed in the U.S. With a market capitalization of $3.25 billion, Mr. Zegna humbly calls his company “a grain in the sand” among those on the New York Stock Exchange, while also seeing the listing as putting the family business “in the championship league,” he told the Observer.
Mr. Zegna said the idea of going public had come up often among family members. In most cases the answer was no. That changed during COVID, when luxury spending rose along with it a wave of SPAC IPOs. Zegna received an investment offer from Andrea Bonomia major trader in Italian and European private equity, and went public in December 2021 through a SPAC created by Bonomi, Investindustrial Acquisition Corp, headed by UBS CEO, Sergio Ermotti. The Zegna family retained a controlling stake of nearly 66 percent in the merged company to ensure it continued to make important decisions.
“Looking back, (going public) has improved stability and given us a different sense of scale,” Mr. Zegna. “It was a move to grow — more disciplined, more scaled, more independent — while putting the family in a position to move forward with the new generations. It came naturally for the times we were in.”
He emphasized that Zegna is not run by the quarter. “The important thing is to make accurate promises. Don’t overpromise. And once you promise something, stick to it. These rules are not that different from when we were a private company,” he said.
Consumer sentiment in the luxury sector has taken a sharp turn in recent years. LVMH, the industry powerhouse, reported a 6 percent drop in revenue for the first quarter. Zegna is partially insulated from the slowdown thanks to the growth of the quiet luxury trend. “We are one of the few brands that are true examples of quiet luxury. Quiet luxury is very much associated with Italy,” Zegna said, noting that many French ready-to-wear luxury brands are also made in Italy.
That doesn’t mean the company can just sit back and take advantage of the fashion cycle. Mr. Zegna, wearing a casual jacket and Zegna sneakers during the interview, often spoke of younger consumers (around age 30). He said Zegna’s average U.S. customer is now about 10 years younger than before COVID, and that younger customers continue to drive business in China, a market roughly the same size as the U.S. for the company.
These changes reflect the company’s efforts to modernize its product lines, introducing more casual, contemporary designs such as corduroy pants, off-the-shoulder jackets and sneakers. Shoes are now its most popular category, Mr. Zegna said.
In many ways, the brand’s appeal lies in that balance between heritage and evolution. Mr. Zegna often says that “Zegna is expensive, but not expensive,” because a piece can last for decades. “You come and visit our factory and our mill in the mountains and you understand why we are expensive.”
He said he still owns Zegna coats that belonged to his grandfather, and they remain “as modern and fresh as ever.”
