China matters to luxury brands’ bottom line. China is also one of the undisputed driving forces turning around the luxury industry.
Italian menswear maker Ermenegildo Zegna Group reported stellar profits that more than tripled to EUR60 million compared with a year ago of EUR17.3 million as a result of a surge in sales in China, which is its largest market.
One of the biggest names in men’s luxury fashion, family-owned Zegna expects strong growth momentum. “Retail figures for the first quarter 2011 confirm sustained growth, at an average rate of over 20% at constant exchange rates, which puts us in a leading position in global luxury retailing despite the drop in sales in Japan,” Chief Executive Ermenegildo Zegna said.
Zegna’s sales increased by 21% to EUR963 million in 2010. Asia accounted for 46% of sales.
Emerging nations including China, Hong Kong, Russia, Brazil and India, together account for 40% of the company’s sales. But China was once again the main driving force and the company’s most important market in terms of retail sales.
Results were positive for the traditional markets such as US and Europe as well. Turkey is a particularly important market for Zegna, similar to China. The company is organizing a number of brand promoting initiatives in Turkey.
Zegna has 560 monobrand stores, of which over 300 of them are directly owned by Zegna. In China, the company opened four new stores designed by Peter Marino. To celebrate its Centennial, Zegna opened its largest global store in Asia — in Shanghai.
For the 20 new store openings scheduled for 2011, half of them will be in China and the others will be in new markets like Vietnam and South Africa as well as in India, the USA and Europe.
Zegna is also expanding in accessories which now account for 20% of sales. They have inked an agreement with Estée Lauder to produce fragrances under the Ermenegildo Zegna Group brands, as well as other new product developments.
A recently released Bain & Company study projects an 8% increase in the global luxury market in 2011 with particularly strong growth expected for the menswear category.
image credit: zegna