Zegna open to buying textile firm or brand, says CEO

Bloomberg

The Italian luxury house Ermenegildo Zegna NV is open to acquiring other textile manufacturers or a fashion brand that’s strong with younger shoppers, its chief executive officer said.
Zegna manufactures its own fabrics, knitwear and yarns, and also sells those products to other brands, such as Chanel and Brunello Cucinelli.
“We have this luxury textile platform,” Ermenegildo Zegna said in an interview. “We might add something to that.”
An acquisition would broaden the company’s ability to manufacture fabrics or fibers, for instance, and would also be less expensive than purchasing a new brand, he added. Competitors have been looking at expanding their manufacturing, too, driven by supply-chain problems during the pandemic, he said.
“There will be more vertical integration — whether it’s leather, apparel or accessories,” Zegna said.
The company would also consider acquiring a fashion company. “I would prefer a brand that’s going after the young customer and a brand that’s more digital — that’s more online than offline,” Zegna said.
Potential acquisitions aren’t likely to be immediate. In 2022, Zegna said, his focus will be on growing organically, in part because of the uncertain trajectory of the pandemic. Zegna listed its shares on the New York Stock Exchange after merging earlier this year with a blank-check company led by Sergio Ermotti, the former CEO of UBS Group.
The Italian fashion house is a global leader in menswear. Zegna said during a presentation to investors that it expects to report $1.51 billion in sales in 2022, which would be an 11% increase versus what the company expects to report this year. The company isn’t as profitable as peers, however.
Zegna said in the investor presentation that it expects to generate more than half of the revenue from its apparel and accessories business in China this year, an increase from around 40% in 2019, before the pandemic struck.