Zegna Group Reports Strong First Half 2022 Results
Ermenegildo Zegna N.V. (ZGN) reported a revenue of €729.0 million for H1 2022, marking a 21% increase year-on-year. Adjusted EBIT rose to €82.7 million, with an adjusted EBIT margin of 11.3%. Despite a 34.8% decline in profit to €21.0 million, the company anticipates mid-teens revenue growth and a solid improvement in adjusted EBIT for the full year. The partnership with Real Madrid aims to enhance brand visibility. The Greater China Region experienced a 14% revenue decline due to COVID-19 restrictions, although June showed recovery signs.
- Revenue increased by 21% to €729.0 million.
- Adjusted EBIT rose 24% to €82.7 million, with a margin of 11.3%.
- Launch of the One Brand strategy enhances brand recognition.
- Strong growth in the Thom Browne segment, with revenues up 30%.
- Increased cash surplus of €103.1 million.
- Profit decreased by 34.8% to €21.0 million.
- 14% revenue decline in the Greater China Region due to COVID-19 restrictions.
- Increased costs from marketing and corporate structure.
Current Trading Supports Increased Guidance: Mid-teens Revenue Growth and Solid Improvement to Adjusted EBIT1 for 2022
Continued Execution of “Our Road” Strategy Creating Global Growth for Zegna and
Zegna’s
Ermenegildo “Gildo” Zegna, Chairman & CEO, said:
As we conclude the first half of the year, I am proud of the progress that
Looking forward, our emphasis will remain on the three pillars of the Our Road strategy. First, we will continue to focus on the Zegna One Brand, which launched in July with a collection of highly recognizable iconic products. Second, we will work to achieve Thom Browne’s full potential, seeking to double revenues by expanding the number of (end) clients, and leveraging customer loyalty and the brand’s unique appeal. Third, we will further strengthen our one-of-a-kind Made in
We are already improving store productivity through investment in our people, investments in our stores and the proactive reshaping of our store footprint, the addition of new iconic products and the improvement in sell-through. We are very focused on client outreach through our omnichannel approach, and on innovative partnerships that also target younger consumers. I am particularly excited about our recently announced partnership between Zegna and football club
While our current performance is strong, including a healthy rebound in the
_______________________________
1 Adjusted EBIT is a non-IFRS financial measure. See the Non-IFRS Financial Measures section starting on page 12 of this communication for the definition of such non-IFRS measure.
2 All growth rates in this release are year-on-year unless differently specified, and are expressed at actual foreign exchange rates.
Key Financial Highlights from the first half of 2022
|
For the six months ended |
|
Increase/(Decrease) |
||||
(€ thousands, except percentages and per share data) |
2022 |
|
2021 |
|
2022 vs 2021 |
|
% |
Revenues |
728,993 |
|
603,340 |
|
125,653 |
|
20.8 % |
Profit |
21,021 |
|
32,234 |
|
(11,213) |
|
(34.8) % |
Adjusted Profit |
22,823 |
|
26,307 |
|
(3,484) |
|
(13.2) % |
Adjusted EBIT |
82,678 |
|
66,813 |
|
15,865 |
|
23.7 % |
Adjusted EBIT margin |
11.3 % |
|
11.1 % |
|
|
|
|
Diluted Earnings per Share in € |
0.06 |
|
0.14 |
|
|
|
|
Adjusted Diluted Earnings per Share in € |
0.07 |
|
0.11 |
|
|
|
|
|
|
|
|
|
|
|
|
Revenues by segment |
|
|
|
|
|
|
|
Zegna(*) |
552,966 |
|
465,899 |
|
87,067 |
|
18.7 % |
|
185,769 |
|
142,553 |
|
43,216 |
|
30.3 % |
|
|
|
|
|
|
|
|
Adjusted EBIT and Adjusted EBIT margin by segment |
|
|
|
|
|
|
|
Zegna |
51,116 |
|
38,984 |
|
12,132 |
|
31.1 % |
9.2 % |
|
8.4 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,562 |
|
27,829 |
|
3,733 |
|
13.4 % |
17.0 % |
|
19.5 % |
|
|
|
|
|
______________________________________ (*) Before inter-segment eliminations. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(€ thousands) |
At |
|
At |
|
|
|
|
Net Financial Indebtedness/(Cash Surplus) |
(103,130) |
|
(144,769) |
|
41,639 |
|
|
Select Highlights
-
Diversified global presence and broad-based strength
-
An excellent first half in a still disrupted environment with continued growth momentum for both Zegna and
Thom Browne , as US, EMEA and Rest of the World more than offset the impact of COVID-19 related measures in the GCR, showing an acceleration in 2Q 2022 with a growth rate of59% from48% in 1Q 2022 (+53% in 1H 2022)
-
An excellent first half in a still disrupted environment with continued growth momentum for both Zegna and
-
Sound profitability despite increase in costs
- Richer product content, positive pricing dynamics, higher sell-through which has increased double-digit (with the exception of GCR), scale effect, fixed cost leverage in B2B from full industrial capacity utilization, and operational and productivity improvements drove an increase in Adjusted EBIT Margin despite the anticipated step up in costs and the less favourable country mix
-
Launch of Zegna’s One Brand Strategy and progress on Our Road to iconicity
- The first collection of the Zegna mono brand was launched in stores in July. The collection was conceived to highlight our new and recognizable brand with a selection of our most iconic products
- Continued to tighten the markdowns policy, in all markets (excluding GCR affected by COVID-19-related store closures), on the road to eliminate end of season sales in 2023
-
Acceleration of store rebranding: 130 stores with the new logo since the launch of the One brand strategy in
November 2021 -
Raising our voice on Our Road to Iconicity: we announced in August that Zegna will become the official luxury travel wear partner of
Real Madrid . This is a major step in increasing global awareness of our brand and a key opportunity to reach millions ofReal Madrid fans around the world. Inspired by the partnership, specific made to measure collection items that blend the two brands’ heritages as well as Zegna’s contemporaneity aesthetic and its focus on luxury craftmanship, will be available in selected Zegna boutiques globally -
Our Road to Traceability. Oasi Cashmere roll out: the pinnacle of our knitwear offering, representing around
20% of Fall/Winter 2022 retail purchases
-
Our Road to doubling revenues within the
Thom Browne segment- Net opening of one directly operated stores (“DOS”) in the first half of 2022, with most of the new stores planned to open during the second half of the year
-
Met Gala in early May was a key milestone for the brand’s visibility -
Staged two fashion shows in the first half: at the end of April in NYC, just before the Met Gala, for FW22, and at the end of June (SS23 Men’s), returning to
Paris after over two years. These generated outstanding results in terms of attendance and coverage in global media
-
Our Road to excellence and traceability with Our Made in
Italy Textile Platform-
Strong B2B performance in the first half of 2022, with Textile revenues up
55% , and Third Party Brands up44% y-o-y - Full capacity utilization underpins profitability
-
Strong B2B performance in the first half of 2022, with Textile revenues up
-
Our Road of Responsible Growth: Sustainability Activities and Ambition
- Continued to make progress on our previously announced ESG strategy and commitments
- In July, we announced our sustainability-linked financing agreements which further embed our ESG commitments into our business and strategy
-
Targets submitted to Science Based Target initiative (SBTi) in
August 2022 -
Green mobility: at approximately
25% of the journey to reaching100% fully electric or plug-in hybrid corporate vehicles by 2025 (scope 1)
Review of First Half 2022 Financials
Revenues
For the first half of 2022,
Revenues by Segment
Zegna: The Group’s overall performance was driven by the continued strength of the Zegna segment, whose revenues increased
Revenues by Geography
Revenues increased significantly across all major geographies, despite a global environment that remains disrupted by the COVID-19 pandemic and other geopolitical factors. The only exception was the
Revenues in the
Revenues in the rest of the world amounted to
Revenues by Channel
Group sales from our directly operated retail network, including e-commerce, were
In particular, DTC revenues from Zegna-branded products were up
Importantly, in the month of June DTC revenues in GCR rebounded for both Zegna and
Wholesale trends in the first half of 2022 (+
At the end of
Revenues by Product Line
All product lines grew double-digit in the first half of 2022 compared to the same period of last year. Zegna branded products were up
Profit and Adjusted Profit
The Group’s profit for the first half of 2022 was
The improvement in the operating profit was offset by the
Adjusted Profit was
Adjusted EBIT and Adjusted EBIT Margin
The Group’s Adjusted EBIT for the first half of 2022 was
Adjusted EBIT for the Zegna segment was
For the
For additional information regarding Adjusted EBIT and Adjusted EBIT Margin, which are non-IFRS measures, see page 12.
Net Financial Indebtedness / (Cash Surplus) and Capital Expenditure
Cash Surplus was
For additional information regarding Net Financial Indebtedness / (Cash Surplus),
Fiscal Year 2022 Outlook
The first half of 2022 was marked by considerable macroeconomic and geopolitical uncertainty, adding to the volatility of the still ongoing global health crisis. While the Group remains vigilant in the face of these continued uncertainties, (i) we have been witnessing an ongoing positive performance continuing in July and August, and (ii) a strong success of the SS23 selling campaign. We are raising our guidance and now expect revenue growth in the mid-teens (prior guidance was “low-teens”) and a solid improvement (prior guidance was “improvement”) in our Adjusted EBIT, with an Adjusted EBIT margin in the range of last year’s, considering the step-up in marketing and central costs. We also expect a Cash Surplus increase in the second half of the year. This outlook assumes no further deterioration or geographic extension of the war in
Medium-term Outlook: Our Path of Responsible Growth
On
The Group expects, among other things, an increase in store productivity and continuing positive developments related to price and product mix to drive revenues, which, together with favorable operational leverage, should reflect positively on profitability. These improvements should more than offset the planned increase in marketing costs, which, together with capital expenditures (expected at
The Group will continue to pursue its strategy with confidence and determination while monitoring the significant uncertainties, including global health developments, consumer spending in GCR, and global geopolitical and macroeconomic risks.
The ESG targets announced at the Capital Markets Day in May also reaffirm the Group’s commitment to a path of responsible growth, with financial goals rooted in the Group’s values.
Conference Call
As previously announced, at
All other locations: +44 20 3936 2999
Access Code: 565995
An online archive of the broadcast will be available on the website shortly after the live call and will be available for twelve months. An online archive of the broadcast will be available on the website shortly after the live call and will be available for twelve months.
***
Next Scheduled Announcement
The next scheduled announcement will be the third quarter revenues on
***
About
Founded in 1910 in Trivero,
***
Forward Looking Statements
This communication, including the sections “Fiscal Year 2022 Outlook” and “Medium-term Outlook: Our Path of Responsible Growth”, contains forward-looking statements that are based on beliefs and assumptions and on information currently available to the Company. In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing,” “target,” “seek” or the negative or plural of these words, or other similar expressions that are predictions or indicate future events or prospects, although not all forward-looking statements contain these words. Any statements that refer to expectations, projections or other characterizations of future events or circumstances, including strategies or plans, are also forward-looking statements. These statements involve risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although the Company believes that it has a reasonable basis for each forward-looking statement contained in this communication, the Company cautions you that these statements are based on a combination of facts and factors currently known and projections of the future, which are inherently uncertain. In addition, risks and uncertainties are described in the Company’s filings with the
***
Second Quarter 2022 and First Half 2022 - Group Revenues Tables
Group Revenues by Segment
|
For the six months ended |
|
Increase/(Decrease) |
||||
(€ thousands, except percentages) |
2022 |
|
2021 |
|
2022 vs 2021 |
|
% |
Revenues |
|
|
|
|
|
|
|
Zegna segment |
552,966 |
|
465,899 |
|
87,067 |
|
18.7 % |
|
185,769 |
|
142,553 |
|
43,216 |
|
30.3 % |
Eliminations |
(9,742) |
|
(5,112) |
|
4,630 |
|
n.m. |
Total revenues |
728,993 |
|
603,340 |
|
125,653 |
|
20.8 % |
________________________________________ |
|||||||
(*) Throughout this section “n.m.” means not meaningful |
Group Revenues by Sales Channel
|
For the three months ended |
|
For the three months ended |
|
For the six months ended |
||||||||||||
(€ thousands, except percentages) |
2022 |
|
2021 |
|
Increase/ (Decrease) |
|
2022 |
|
2021 |
|
Increase/ (Decrease) |
|
2022 |
|
2021 |
|
Increase/ (Decrease) |
Direct to Consumer (DTC) - Zegna branded products |
183,909 |
|
149,228 |
|
23.2 % |
|
177,941 |
|
168,586 |
|
5.5 % |
|
361,850 |
|
317,814 |
|
13.9 % |
Direct to Consumer (DTC) - |
34,181 |
|
27,947 |
|
22.3 % |
|
31,993 |
|
32,787 |
|
(2.4) % |
|
66,174 |
|
60,734 |
|
9.0 % |
Total Direct to Customer (DTC) |
218,090 |
|
177,175 |
|
23.1 % |
|
209,934 |
|
201,373 |
|
4.3 % |
|
428,024 |
|
378,548 |
|
13.1 % |
Wholesale Zegna branded products |
40,070 |
|
34,255 |
|
17.0 % |
|
23,332 |
|
24,113 |
|
(3.2) % |
|
63,402 |
|
58,368 |
|
8.6 % |
Wholesale |
63,756 |
|
52,276 |
|
22.0 % |
|
55,236 |
|
29,209 |
|
89.1 % |
|
118,992 |
|
81,485 |
|
46.0 % |
Wholesale Third Party Brands and Textile |
54,646 |
|
33,936 |
|
61.0 % |
|
61,663 |
|
43,443 |
|
41.9 % |
|
116,309 |
|
77,379 |
|
50.3 % |
Wholesale Agnona |
25 |
|
139 |
|
(82.0) % |
|
10 |
|
184 |
|
(94.6) % |
|
35 |
|
323 |
|
(89.2) % |
Total Wholesale |
158,497 |
|
120,606 |
|
31.4 % |
|
140,241 |
|
96,949 |
|
44.7 % |
|
298,738 |
|
217,555 |
|
37.3 % |
Other |
992 |
|
3,413 |
|
(70.9) % |
|
1,239 |
|
3,824 |
|
(67.6) % |
|
2,231 |
|
7,237 |
|
(69.2) % |
Total revenues |
377,579 |
|
301,194 |
|
25.4 % |
|
351,414 |
|
302,146 |
|
16.3 % |
|
728,993 |
|
603,340 |
|
20.8 % |
________________________________________ |
|||||||||||||||||
Zegna branded products include apparel, bags, shoes and small and large leather goods, as well as licensed goods and royalties. |
Group Revenues by Geographical Area
|
For the three months ended |
|
For the three months ended |
|
For the six months ended |
||||||||||||
(€ thousands, except percentages) |
2022 |
|
2021 |
|
Increase/ (Decrease) |
|
2022 |
|
2021 |
|
Increase/ (Decrease) |
|
2022 |
|
2021 |
|
Increase/ (Decrease) |
EMEA (1) |
134,456 |
|
96,812 |
|
38.9 % |
|
126,171 |
|
85,719 |
|
47.2 % |
|
260,627 |
|
182,531 |
|
42.8 % |
of which |
64,091 |
|
48,159 |
|
33.1 % |
|
61,905 |
|
36,523 |
|
69.5 % |
|
125,996 |
|
84,682 |
|
48.8 % |
of which |
10,970 |
|
5,177 |
|
111.9 % |
|
12,574 |
|
9,118 |
|
37.9 % |
|
23,544 |
|
14,295 |
|
64.7 % |
|
61,803 |
|
33,381 |
|
85.1 % |
|
73,472 |
|
37,320 |
|
96.9 % |
|
135,275 |
|
70,701 |
|
91.3 % |
of which |
56,933 |
|
28,868 |
|
97.2 % |
|
67,358 |
|
36,206 |
|
86.0 % |
|
124,291 |
|
65,074 |
|
91.0 % |
|
5,665 |
|
2,995 |
|
89.1 % |
|
6,860 |
|
4,123 |
|
66.4 % |
|
12,525 |
|
7,118 |
|
76.0 % |
APAC (4) |
174,816 |
|
167,259 |
|
4.5 % |
|
144,009 |
|
173,616 |
|
(17.1) % |
|
318,825 |
|
340,875 |
|
(6.5) % |
of which |
141,980 |
|
141,570 |
|
0.3 % |
|
105,213 |
|
147,001 |
|
(28.4) % |
|
247,193 |
|
288,571 |
|
(14.3) % |
of which |
14,139 |
|
12,812 |
|
10.4 % |
|
16,101 |
|
11,689 |
|
37.7 % |
|
30,240 |
|
24,501 |
|
23.4 % |
Other (5) |
839 |
|
747 |
|
12.3 % |
|
902 |
|
1,368 |
|
(34.1) % |
|
1,741 |
|
2,115 |
|
(17.7) % |
Total |
377,579 |
|
301,194 |
|
25.4 % |
|
351,414 |
|
302,146 |
|
16.3 % |
|
728,993 |
|
603,340 |
|
20.8 % |
________________________________________ |
||
(1) |
EMEA includes |
|
(2) |
||
(3) |
||
(4) |
APAC includes the |
|
(5) |
Other revenues mainly include royalties and certain sales of old season products. |
Group Revenues by Product Line
|
For the three months ended |
|
For the three months ended |
|
For the six months ended |
||||||||||||
(€ thousands, except percentages) |
2022 |
|
2021 |
|
Increase/ (Decrease) |
|
2022 |
|
2021 |
|
Increase/ (Decrease) |
|
2022 |
|
2021 |
|
Increase/ (Decrease) |
Zegna branded products |
223,979 |
|
183,483 |
|
22.1 % |
|
201,273 |
|
192,699 |
|
4.4 % |
|
425,252 |
|
376,182 |
|
13.0 % |
|
97,937 |
|
80,223 |
|
22.1 % |
|
87,229 |
|
61,996 |
|
40.7 % |
|
185,166 |
|
142,219 |
|
30.2 % |
Textile |
30,244 |
|
18,378 |
|
64.6 % |
|
38,724 |
|
26,100 |
|
48.4 % |
|
68,968 |
|
44,478 |
|
55.1 % |
Third Party Brands |
24,402 |
|
15,558 |
|
56.8 % |
|
22,939 |
|
17,343 |
|
32.3 % |
|
47,341 |
|
32,901 |
|
43.9 % |
Agnona |
25 |
|
139 |
|
(82.0) % |
|
10 |
|
184 |
|
(94.6) % |
|
35 |
|
323 |
|
(89.2) % |
Other |
992 |
|
3,413 |
|
(70.9) % |
|
1,239 |
|
3,824 |
|
(67.6) % |
|
2,231 |
|
7,237 |
|
(69.2) % |
Total |
377,579 |
|
301,194 |
|
25.4 % |
|
351,414 |
|
302,146 |
|
16.3 % |
|
728,993 |
|
603,340 |
|
20.8 % |
________________________________________ |
|||||||||||||||||
Zegna branded products include apparel, bags, shoes and small and large leather goods, as well as licensed goods and royalties. |
***
Group Monobrand(1) Store Network as of
|
As of |
|
As of |
|
As of |
||||||||||||
# Stores |
ZEGNA |
|
|
|
GROUP |
|
ZEGNA |
|
|
|
GROUP |
|
ZEGNA |
|
|
|
GROUP |
EMEA |
69 |
|
10 |
|
79 |
|
69 |
|
9 |
|
78 |
|
70 |
|
7 |
|
77 |
|
51 |
|
5 |
|
56 |
|
50 |
|
5 |
|
55 |
|
39 |
|
4 |
|
43 |
APAC |
122 |
|
38 |
|
160 |
|
126 |
|
38 |
|
164 |
|
130 |
|
34 |
|
164 |
Total Direct to Customer (DTC) |
242 |
|
53 |
|
295 |
|
245 |
|
52 |
|
297 |
|
239 |
|
45 |
|
284 |
EMEA |
85 |
|
5 |
|
90 |
|
89 |
|
5 |
|
94 |
|
95 |
|
6 |
|
101 |
|
68 |
|
3 |
|
71 |
|
74 |
|
3 |
|
77 |
|
77 |
|
3 |
|
80 |
APAC |
33 |
|
30 |
|
63 |
|
32 |
|
30 |
|
62 |
|
32 |
|
28 |
|
60 |
Total Wholesale |
186 |
|
38 |
|
224 |
|
195 |
|
38 |
|
233 |
|
204 |
|
37 |
|
241 |
Total |
428 |
|
91 |
|
519 |
|
440 |
|
90 |
|
530 |
|
443 |
|
82 |
|
525 |
________________________________________ |
||
(1) |
Monobrand store count includes our DOSs (which are divided into boutiques and outlets) and our Wholesale monobrand stores (including also monobrand franchisees). | |
(2) |
***
SEMI-ANNUAL CONDENSED CONSOLIDATED STATEMENT OF PROFIT AND LOSS
for the six months ended (Unaudited) |
||||
|
|
For the six months ended |
||
(€ thousands) |
|
2022 |
|
2021 |
Revenues |
|
728,993 |
|
603,340 |
Other income |
|
6,037 |
|
5,367 |
Cost of raw materials and consumables |
|
(162,518) |
|
(161,298) |
Purchased, outsourced and other costs |
|
(187,340) |
|
(138,019) |
Personnel costs |
|
(198,534) |
|
(160,201) |
Depreciation, amortization and impairment of assets |
|
(88,204) |
|
(78,605) |
Write downs and other provisions |
|
(654) |
|
(3,174) |
Other operating costs |
|
(16,413) |
|
(15,664) |
Operating profit |
|
81,367 |
|
51,746 |
Financial income |
|
15,901 |
|
32,531 |
Financial expenses |
|
(41,965) |
|
(16,685) |
Foreign exchange losses |
|
(9,893) |
|
(2,728) |
Result from investments accounted for using the equity method |
|
2,661 |
|
(346) |
Profit before taxes |
|
48,071 |
|
64,518 |
Income taxes |
|
(27,050) |
|
(32,284) |
Profit |
|
21,021 |
|
32,234 |
Attributable to: |
|
|
|
|
Shareholders of the Parent Company |
|
14,038 |
|
28,157 |
Non-controlling interests |
|
6,983 |
|
4,077 |
|
|
|
|
|
Basic earnings per share in € |
|
0.06 |
|
0.14 |
Diluted earnings per share in € |
|
0.06 |
|
0.14 |
SEMI-ANNUAL CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at (Unaudited) |
||||
(€ thousands) |
|
At |
|
At |
Assets |
|
|
|
|
Non-current assets |
|
|
|
|
Intangible assets |
|
463,460 |
|
425,220 |
Property, plant and equipment |
|
110,201 |
|
111,474 |
Right-of-use assets |
|
378,526 |
|
370,470 |
Investments at equity method |
|
23,190 |
|
22,447 |
Deferred tax assets |
|
119,178 |
|
108,210 |
Other non-current financial assets |
|
35,293 |
|
35,372 |
Total non-current assets |
|
1,129,848 |
|
1,073,193 |
Current assets |
|
|
|
|
Inventories |
|
390,986 |
|
338,475 |
Trade receivables |
|
168,637 |
|
160,360 |
Derivative financial instruments |
|
11,135 |
|
1,786 |
Tax receivables |
|
18,956 |
|
14,966 |
Other current financial assets |
|
324,495 |
|
340,380 |
Other current assets |
|
81,239 |
|
68,773 |
Cash and cash equivalents |
|
346,883 |
|
459,791 |
Total current assets |
|
1,342,331 |
|
1,384,531 |
Total assets |
|
2,472,179 |
|
2,457,724 |
Liabilities and Equity |
|
|
|
|
Share capital |
|
5,939 |
|
5,939 |
Retained earnings |
|
490,902 |
|
498,592 |
Other reserves |
|
135,570 |
|
96,679 |
Equity attributable to shareholders of the Parent Company |
|
632,411 |
|
601,210 |
Equity attributable to non-controlling interest |
|
46,964 |
|
43,094 |
Total equity |
|
679,375 |
|
644,304 |
Non-current liabilities |
|
|
|
|
Non-current borrowings |
|
306,178 |
|
471,646 |
Other non-current financial liabilities |
|
187,361 |
|
167,387 |
Non-current lease liabilities |
|
341,224 |
|
331,409 |
Non-current provisions for risks and charges |
|
16,106 |
|
44,555 |
Employee benefits |
|
47,418 |
|
42,263 |
Deferred tax liabilities |
|
58,776 |
|
53,844 |
Total non-current liabilities |
|
957,063 |
|
1,111,104 |
Current liabilities |
|
|
|
|
Current borrowings |
|
246,470 |
|
157,292 |
Other current financial liabilities |
|
28,639 |
|
33,984 |
Current lease liabilities |
|
104,263 |
|
106,643 |
Derivative financial instruments |
|
21,483 |
|
14,138 |
Current provisions for risks and charges |
|
24,221 |
|
14,093 |
Trade payables and customer advances |
|
228,626 |
|
223,037 |
Tax liabilities |
|
36,501 |
|
28,773 |
Other current liabilities |
|
145,538 |
|
124,356 |
Total current liabilities |
|
835,741 |
|
702,316 |
Total equity and liabilities |
|
2,472,179 |
|
2,457,724 |
SEMI-ANNUAL CONDENSED CONSOLIDATED CASH FLOW STATEMENT
for the six months ended (Unaudited) |
||||
|
|
For the six months ended |
||
(€ thousands) |
|
2022 |
|
2021 |
Operating activities |
|
|
|
|
Profit |
|
21,021 |
|
32,234 |
Income taxes |
|
27,050 |
|
32,284 |
Depreciation, amortization and impairment of assets |
|
88,204 |
|
78,605 |
Financial income |
|
(15,901) |
|
(32,531) |
Financial costs |
|
41,965 |
|
16,685 |
Exchange losses |
|
9,893 |
|
2,728 |
Write downs and other provisions |
|
654 |
|
3,174 |
Provision for obsolete inventory |
|
10,856 |
|
17,096 |
Result from investments accounted for using the equity method |
|
(2,661) |
|
346 |
(Gains)/Losses arising from the sale of fixed assets |
|
(1,511) |
|
799 |
Other non-cash expenses/(income), net |
|
11,776 |
|
2,357 |
Change in inventories |
|
(51,806) |
|
(36,108) |
Change in trade receivables |
|
(3,341) |
|
(7,052) |
Change in trade payables including customer advances |
|
(2,014) |
|
(1,583) |
Change in other operating assets and liabilities |
|
(69,396) |
|
30,867 |
Interest paid |
|
(10,974) |
|
(8,293) |
Income taxes paid |
|
(25,440) |
|
(40,737) |
Net cash flows from operating activities |
|
28,375 |
|
90,871 |
Investing activities |
|
|
|
|
Payments for property plant and equipment |
|
(15,824) |
|
(16,996) |
Proceeds from disposals of property plant and equipment |
|
3,253 |
|
2,792 |
Payments for intangible assets |
|
(12,715) |
|
(7,571) |
Proceeds from disposals of non-current financial assets |
|
796 |
|
— |
Payments for purchases of non-current financial assets |
|
— |
|
(8,750) |
Proceeds from disposals of current financial assets and derivative instruments |
|
31,040 |
|
43,719 |
Payments for acquisitions of current financial assets and derivative instruments |
|
(21,204) |
|
(57,197) |
Advances for investments |
|
— |
|
(42,259) |
Business combinations, net of cash acquired |
|
— |
|
(3,024) |
Net cash flows used in investing activities |
|
(14,654) |
|
(89,286) |
Financing activities |
|
|
|
|
Proceeds from borrowings |
|
— |
|
63,531 |
Repayments of borrowings |
|
(76,687) |
|
(13,124) |
Repayment of other non-current financial liabilities |
|
(3,919) |
|
— |
Payments of lease liabilities |
|
(64,641) |
|
(49,650) |
Payments for acquisition of non-controlling interests |
|
— |
|
(30,653) |
Capital contribution |
|
10,923 |
|
— |
Sales of shares held in treasury |
|
3,390 |
|
2,946 |
Purchase of own shares |
|
— |
|
(384) |
Dividends paid to non-controlling interest |
|
(4,147) |
|
(548) |
Net cash flows used in financing activities |
|
(135,081) |
|
(27,882) |
Effects of exchange rate changes on cash and cash equivalents |
|
8,452 |
|
2,763 |
Net decrease in cash and cash equivalents |
|
(112,908) |
|
(23,534) |
Cash and cash equivalents at the beginning of the period |
|
459,791 |
|
317,291 |
Cash and cash equivalents at the end of the period included within assets held for sale |
|
— |
|
(7,820) |
Cash and cash equivalents at the end of the period |
|
346,883 |
|
285,937 |
Non-IFRS Financial Measures
Zegna’s management monitors and evaluates operating and financial performance using several non-IFRS financial measures including: adjusted earnings before interest and taxes (“Adjusted EBIT”), Adjusted EBIT Margin, Adjusted Profit, Adjusted Basic Earnings per Share and Adjusted Diluted Earnings Per Share, Net Financial Indebtedness/(Cash Surplus) and
Adjusted EBIT and Adjusted EBIT Margin
Adjusted EBIT is defined as profit or loss before income taxes plus financial income, financial expenses, exchange losses and the result from investments accounted for using the equity method, adjusted for income and costs which are significant in nature and that management considers not reflective of underlying operating activities, including, for one or all of the periods presented and as further described below, impairment of leased and owned stores, costs related to the Business Combination, a special donation to the
Zegna’s management uses Adjusted EBIT and Adjusted EBIT Margin for internal reporting to assess performance and as part of the forecasting, budgeting and decision-making processes as they provide additional transparency regarding Zegna’s underlying operating performance. Zegna’s management believes these non-IFRS measures are useful because they exclude items that management believes are not indicative of Zegna’s underlying operating performance and allow management to view operating trends, perform analytical comparisons and benchmark performance between periods and among segments. Zegna’s management also believes that Adjusted EBIT and Adjusted EBIT Margin are useful for investors and analysts to better understand how management assesses Zegna’s underlying operating performance on a consistent basis and to compare Zegna’s performance with that of other companies. Accordingly, management believes that Adjusted EBIT and Adjusted EBIT Margin provide useful information to third party stakeholders in understanding and evaluating Zegna’s operating results.
The following table presents a reconciliation of Profit to Adjusted EBIT and provides the Adjusted EBIT Margin for the six months ended
|
For the six months ended |
||
(€ thousands) |
2022 |
|
2021 |
Profit |
21,021 |
|
32,234 |
Income taxes |
27,050 |
|
32,284 |
Financial income |
(15,901) |
|
(32,531) |
Financial expenses |
41,965 |
|
16,685 |
Exchange losses |
9,893 |
|
2,728 |
Result from investments accounted for using the equity method |
(2,661) |
|
346 |
Impairment of leased and owned stores(1) |
3,309 |
|
4,261 |
Costs related to the Business Combination(2) |
1,090 |
|
— |
Special donation to the |
1,000 |
|
— |
Severance indemnities and provision for severance expenses(4) |
912 |
|
6,642 |
Proceeds to exit lease (key money)(5) |
(5,000) |
|
— |
Agnona disposal(6) |
— |
|
4,164 |
Adjusted EBIT |
82,678 |
|
66,813 |
|
|
|
|
Revenues |
728,993 |
|
603,340 |
Adjusted EBIT Margin (Adjusted EBIT / Revenues) |
11.3 % |
|
11.1 % |
(1) |
Impairments of leased and owned stores, of which |
|
(2) |
Costs related to the Business Combination of |
|
(3) |
Relates to a donation of |
|
(4) |
Relates to severance indemnities of the Zegna segment of |
|
(5) |
Relates to proceeds of |
|
(6) |
Includes |
Adjusted Profit
Adjusted Profit represents Profit adjusted for income and costs (net of tax effects) which are significant in nature and that management considers not reflective of underlying activities, including, for one or all of the periods presented and as further described below, impairment of leased and owned stores, costs related to the Business Combination, a special donation to the
Zegna’s management uses Adjusted Profit to understand and evaluate Zegna’s underlying performance. Zegna’s management believes this non-IFRS measure is useful because it excludes items that management believes are not indicative of Zegna’s underlying performance and allows management to view performance trends, perform analytical comparisons and benchmark performance between periods. Zegna’s management also believes that Adjusted Profit is useful for investors and analysts to better understand how management assesses Zegna’s underlying performance on a consistent basis and to compare Zegna’s performance with that of other companies. Accordingly, management believes that Adjusted Profit provides useful information to third party stakeholders in understanding and evaluating Zegna’s results.
The following table presents a reconciliation of Profit to Adjusted Profit for the six months ended
|
For the six months ended |
||
(€ thousands) |
2022 |
|
2021 |
Profit |
21,021 |
|
32,234 |
Impairment of leased and owned stores(1) |
3,309 |
|
4,261 |
Costs related to the Business Combination(2) |
1,090 |
|
— |
Special donation to the |
1,000 |
|
— |
Severance indemnities and provision for severance expenses(4) |
912 |
|
6,642 |
Proceeds to exit lease (key money)(5) |
(5,000) |
|
— |
Agnona disposal(6) |
— |
|
4,164 |
Gain on |
— |
|
(20,675) |
Tax effects on adjusting item(8) |
491 |
|
(319) |
Adjusted Profit |
22,823 |
|
26,307 |
(1) |
Impairments of leased and owned stores, of which |
|
(2) |
Costs related to the Business Combination of |
|
(3) |
Relates to a donation of |
|
(4) |
Relates to severance indemnities of the Zegna segment of |
|
(5) |
Relates to proceeds of |
|
(6) |
Includes |
|
(7) |
Reflects the financial income relating to options related to a gain of |
|
(8) |
Includes the tax effects of the aforementioned adjustments. |
Adjusted Basic Earnings per Share and Adjusted Diluted Earnings per Share
Adjusted Basic Earnings per Share and Adjusted Diluted Earnings per Share represent basic earnings per share and diluted earnings per share adjusted for income and costs (net of tax effects) which are significant in nature and that management considers not reflective of underlying activities, including, for one or all of the periods presented and as further described below, impairment of leased and owned stores, costs related to the Business Combination, a special donation to the
Zegna’s management uses Adjusted Basic Earnings per Share and Adjusted Diluted Earnings per Share to understand and evaluate Zegna’s underlying performance. Zegna’s management believes this non-IFRS measure is useful because it excludes items that it does not believe are indicative of its underlying performance and allows it to view operating trends, perform analytical comparisons and benchmark performance between periods. Accordingly, management believes that Adjusted Basic and Diluted Earnings per Share provides useful information to third party stakeholders in understanding and evaluating Zegna’s operating results.
For the calculation of both Adjusted Basic Earnings per Share and Adjusted Diluted Earnings per Share, the number of ordinary and potential ordinary shares outstanding for the six months ended
The following table presents a reconciliation of Profit to Adjusted Basic Earnings per Share and Adjusted Diluted Earnings per Share for the six months ended
|
For the six months ended |
||
(€ thousands) |
2022 |
|
2021 |
Profit |
21,021 |
|
32,234 |
Impairment of leased and owned stores(1) |
3,309 |
|
4,261 |
Costs related to the Business Combination(2) |
1,090 |
|
— |
Special donation to the |
1,000 |
|
— |
Severance indemnities and provision for severance expenses(4) |
912 |
|
6,642 |
Proceeds to exit lease (key money)(5) |
(5,000) |
|
— |
Agnona disposal(6) |
— |
|
4,164 |
Gain on |
— |
|
(20,675) |
Tax effects on adjusting item(8) |
491 |
|
(319) |
Adjusted Profit |
22,823 |
|
26,307 |
Impact of non-controlling interests(9) |
6,990 |
|
4,077 |
Adjusted Profit attributable to shareholders of the Parent Company |
15,833 |
|
22,230 |
Weighted average number of shares for basic earnings per share |
237,314,960 |
|
201,580,550 |
Adjusted Basic Earnings per Share in € |
0.07 |
|
0.11 |
Weighted average number of shares for diluted earnings per share |
238,930,441 |
|
202,515,100 |
Adjusted Diluted Earnings per Share in € |
0.07 |
|
0.11 |
(1) |
Impairments of leased and owned stores, of which |
|
(2) |
Costs related to the Business Combination of |
|
(3) |
Relates to a donation of |
|
(4) |
Relates to severance indemnities of the Zegna segment of |
|
(5) |
Relates to proceeds of |
|
(6) |
Includes |
|
(7) |
Reflects the financial income relating to options related to a gain of |
|
(8) |
Includes the tax effects of the aforementioned adjustments. | |
(9) |
Represents the Profit attributable to non-controlling interests plus the impact of non-controlling interests on the adjusting items. |
Net Financial Indebtedness/(Cash Surplus)
Net Financial Indebtedness/(Cash Surplus) is defined as the sum of financial borrowings (current and non-current), derivative financial instruments, loans and certain other financial liabilities (recorded within other non-current financial liabilities in the consolidated statement of financial position), net of cash and cash equivalents, derivative financial instruments and certain other current financial assets.
Zegna’s management believes that Net Financial Indebtedness/(Cash Surplus) is useful to monitor the level of net liquidity and financial resources available to Zegna. Zegna’s management believes this non-IFRS measure aids management, investors and analysts to analyze Zegna’s financial position and financial resources available, and to compare Zegna’s financial position and financial resources available with that of other companies.
The following table sets forth the calculation of Net Financial Indebtedness/(Cash Surplus) at
(€ thousands) |
At |
|
At |
Non-current borrowings |
306,178 |
|
471,646 |
Current borrowings |
246,470 |
|
157,292 |
Derivative financial instruments - Liabilities |
21,483 |
|
14,138 |
Other non-current financial liabilities (other)(i) |
35 |
|
7,976 |
Total borrowings, other financial liabilities and derivatives |
574,166 |
|
651,052 |
Cash and cash equivalents |
(346,883) |
|
(459,791) |
Derivative financial instruments - Assets |
(11,135) |
|
(1,786) |
Other current financial assets (securities and financial receivables)(ii) |
(319,278) |
|
(334,244) |
Total cash and cash equivalents, other current financial assets and derivatives |
(677,296) |
|
(795,821) |
Net Financial Indebtedness/(Cash Surplus) |
(103,130) |
|
(144,769) |
________________________________________ |
|||
(i) Includes the other component of the “Other non-current financial liabilities” line item from Zegna’s semi-annual condensed consolidated statement of financial position. |
|||
(ii) Includes the securities and financial receivables components of the “Other current financial assets” line item from Zegna’s semi-annual condensed consolidated statement of financial position. |
Zegna’s management uses
The following table sets forth the calculation of
(€ thousands) |
At |
|
At |
Current assets |
1,342,331 |
|
1,384,531 |
Current liabilities |
(835,741) |
|
(702,316) |
Working capital |
506,590 |
|
682,215 |
Less: |
|
|
|
Derivative financial instruments |
11,135 |
|
1,786 |
Tax receivables |
18,956 |
|
14,966 |
Other current financial assets |
324,495 |
|
340,380 |
Other current assets |
81,239 |
|
68,773 |
Cash and cash equivalents |
346,883 |
|
459,791 |
Current borrowings |
(246,470) |
|
(157,292) |
Current lease liabilities |
(104,263) |
|
(106,643) |
Derivative financial liabilities |
(21,483) |
|
(14,138) |
Other current financial liabilities |
(28,639) |
|
(33,984) |
Current provisions for risks and charges |
(24,221) |
|
(14,093) |
Tax liabilities |
(36,501) |
|
(28,773) |
Other current liabilities |
(145,538) |
|
(124,356) |
|
330,997 |
|
275,798 |
of which trade receivables |
168,637 |
|
160,360 |
of which inventories |
390,986 |
|
338,475 |
of which trade payables and customer advances |
(228,626) |
|
(223,037) |
***
Capital expenditure
Capital expenditure is defined as the sum of cash outflows that result in additions to property, plant and equipment and intangible assets.
The following table shows a breakdown of capital expenditure by category for each of the six months ended
|
For the six months ended |
||
(€ thousands) |
2022 |
|
2021 |
Payments for property, plant and equipment |
15,824 |
|
16,996 |
Payments for intangible assets |
12,715 |
|
7,571 |
Capital expenditure |
28,539 |
|
24,567 |
***
View source version on businesswire.com: https://www.businesswire.com/news/home/20220826005069/en/
Investor Relations
francesca.dipasquantonio@zegna.com
+39 335 5837669
Media
domenico.galluccio@zegna.com
+39 335 538 7288
briley@brunswickgroup.com / ddanelli@brunswickgroup.com / mjensen@brunswickgroup.com
+1 (917) 755-1454 / +39 348 635 1149 / +33 (0) 6 49 09 39 54
Source:
FAQ
What are Zegna's revenue figures for the first half of 2022?
How did the adjusted EBIT perform for Zegna in H1 2022?
What is the impact of the Real Madrid partnership on Zegna?
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