MILAN (Reuters) -Italian luxury group Ermenegildo Zegna reported a 2.6% drop in second-quarter organic revenues on Wednesday as sales in its wholesale channel sank, especially for the smaller Thom Browne brand, and with weakness in the Chinese market.
Organic revenue totalled 469 million euros ($541 million) for the April-June quarter, broadly in line with an analyst consensus provided by Visible Alpha.
Sales in the period were dragged down by a 17% drop in the Greater China region.
“China remains challenging.. we should adjust to the new normal,” chairman and CEO Gildo Zegna told analysts in a conference call.
The stronger euro also impacted the revenues. The decline in the wholesale performance in part reflects a decision to shift the focus away from this part of the business.
The family-owned group said it was not worried about the 15% tariffs faced by European products in the United States.
“We were a little bit concerned when we heard about the 30% tariffs. The fact that now is settled at 15% makes us more serene and I think we are prepared,” said Gildo Zegna, adding that the group slightly increased its prices in June.
The group also announced that Sam Lobban, who had been working at department store group Nordstrom, will be Thom Browne’s new CEO as Rodrigo Bazan stepped down after nine years to “pursue other opportunities”.
Singapore’s state investment firm Temasek agreed on Tuesday to increase its stake in Ermenegildo Zegna Group to 10%.
Zegna said that the $126 million proceeds would strengthen its financial position and enable it to seize any opportunities that arise.
The group, whose shares trade in New York, has no plans to go private or to make a dual listing, the CEO told analysts. ($1 = 0.8665 euros)
(Reporting by Elisa Anzolin and Philippe Leroy Beaulieu,Editing by Keith Weir)
