- 2022 profit of €65.3 million1 and Adjusted EBIT2 of €157.7
million demonstrate robust overall performance despite
COVID-19-related impacts in the Greater China Region during the
second and fourth quarters.
- Cash Surplus2 was €122.2 million at December 31,
2022.
- Double-digit revenue growth expected for the first quarter
of 2023. FY2023 results expected to be on the trajectory to achieve
€2 billion revenue and 15% Adjusted EBIT Margin2 by 2025 (excluding
TOM FORD FASHION).
- Proposed dividend of €0.10 per share3, up 11%
year-over-year.
Ermenegildo Zegna N.V. (NYSE:ZGN) (“Zegna Group,” the “Group,”
“Zegna,”, or the “Company”), owner of the ZEGNA and Thom Browne
brands, today announced profit of €65.3 million for the year ended
December 31, 2022. Adjusted EBIT for the period was €157.7 million,
up 6% year-over-year and in line with the “moderate improvement”
guidance the Group communicated on January 25, 2023, with an
Adjusted EBIT Margin of 10.6%. The Group’s revenues for 2022 were
€1,492.8 million, up 15.5% year-over-year4. Excluding the Greater
China Region (“GCR”), which was affected by COVID-19-related
restrictions throughout 2022, particularly from mid-March to the
end of May and then again in the fourth quarter, 2022 revenues were
up 42% year-over-year.
Ermenegildo “Gildo” Zegna, Chairman and CEO of the Zegna Group,
said: “Our robust performance in 2022 reflects the strong momentum
and desirability of our brands as well as the soundness and success
of our strategy and execution.”
“Last year, we embarked on a journey of rebranding our namesake
label, as we unveiled the ZEGNA One Brand. We are still at the
beginning of this journey, having just launched the second season
and a number of new initiatives. 2023 is off to an encouraging
start, with solid double-digit performance in the Group’s retail
network, and I am optimistic that the reopening of the Greater
China Region following COVID-19-related restrictions, together with
the positive response to our collections we are seeing from our
customers worldwide, will continue to drive the growth of our
global business. However, it is important to acknowledge that
current financial uncertainties and an ever-changing global
environment have the potential to affect consumer attitudes and
buying patterns. We remain focused on executing our strategy to
further strengthen our market-leading position and our Made in
Italy manufacturing platform, while managing opportunities and
challenges on Our Road to achieving our medium-term ambitions. We
will do all of this without compromising our values and our
dedication to quality, innovation, the environment, and our
people.”
“Furthermore,” he continued, “in November 2022, we announced the
TOM FORD FASHION business transaction alongside The Estée Lauder
Companies. Subject to and following the completion of that
transaction we will acquire the TOM FORD FASHION operations and
operate the TOM FORD FASHION business under a long-term license
from The Estée Lauder Companies. I look forward to sharing more
details about our plans for this exceptional brand once the
transaction closes, likely in the second quarter of this year.”
_______________________________
1 Profit refers to profit of the Group (including profit
attributable to non-controlling interests). 2 Adjusted
Profit/(Loss), Adjusted EBIT, Adjusted EBIT Margin, Net Financial
Indebtedness/(Cash Surplus), Adjusted Diluted Earnings per Share
and Trade Working Capital are non-IFRS financial measures. See the
Non-IFRS Financial Measures section starting on page 13 of this
press release for the definition of such non-IFRS measures and a
reconciliation of such non-IFRS measures to the most directly
comparable IFRS measures. 3 Declaration of the proposed dividend is
subject to the finalization and adoption by the Board of Directors
of the annual statutory accounts of the Company, provided that the
distribution is permitted under Dutch law, and also subject to the
approval of the proposed distribution by Zegna’s 2023 annual
general meeting (currently expected to be held on June 27, 2023). 4
Throughout this press release, growth rates refer to year-over-year
growth on a current currency basis, unless otherwise indicated.
Key Financial Highlights for the year
ended December 31, 2022
For the years ended December
31,
Increase/(Decrease)
(€ thousands, except percentages and per
share data)
2022
2021
2020
2022 vs 2021
%
% at constant currency
2021 vs 2020
%
% at constant currency
Revenues
1,492,840
1,292,402
1,014,733
200,438
15.5%
11.0%
277,669
27.4%
27.3%
Profit/(Loss)
65,279
(127,661)
(46,540)
192,940
n.m.(1)
(81,121)
n.m.
Adjusted Profit/(Loss)
73,629
75,322
(4,752)
(1,693)
(2.2%)
80,074
n.m.
Adjusted EBIT
157,729
149,115
20,013
8,614
5.8%
129,102
n.m.
Adjusted EBIT Margin
10.6%
11.5%
2.0%
Diluted Earnings per Share in €
0.21
(0.67)
(0.25)
Adjusted Diluted Earnings per Share in
€
0.25
0.33
(0.04)
Revenues by segment
Zegna(2)
1,176,706
1,035,175
843,318
141,531
13.7%
9.3%
191,857
22.8%
22.8%
Thom Browne(2)
330,891
264,066
179,794
66,825
25.3%
20.6%
84,272
46.9%
46.6%
Adjusted EBIT and Adjusted EBIT Margin by
segment
Zegna
141,513
131,929
(7,243)
9,584
7.3%
139,172
n.m.
12.0%
12.7%
(0.9%)
Thom Browne
48,077
38,097
28,994
9,980
26.2%
9,103
31.4%
14.5%
14.4%
16.1%
Corporate
(31,861)
(20,911)
(1,738)
(10,950)
(52.4%)
(19,173)
n.m.
(2.1%)
(1.6%)
(0.2%)
________________________________________
(1)
Throughout this section “n.m.”
means not meaningful
(2)
Before inter-segment
eliminations.
At December 31,
(€ thousands)
2022
2021
Change
Net Financial Indebtedness/(Cash
Surplus)
(122,153)
(144,769)
22,616
Adjusted Profit/(Loss), Adjusted EBIT, Adjusted EBIT Margin,
Adjusted Diluted Earnings per Share, Net Financial
Indebtedness/(Cash Surplus), and revenues on a constant currency
basis are non-IFRS financial measures. See the Non-IFRS Financial
Measures section starting on page 13 of this press release for the
definition of such non-IFRS financial measures and a reconciliation
of such non-IFRS financial measures to the most directly comparable
IFRS measures.
Selected 2022 Highlights
- Continued Profitability Despite Challenging Global
Environment and COVID-19-Related Disruptions in GCR
The soundness of the Group’s strategy, the desirability of its
ZEGNA and Thom Browne brands, and the success of its Made in Italy
Luxury Textile Laboratory led to sound profitability for the Group
in 2022. Both the Zegna segment (which includes the Zegna branded
products, Textile, and Third-Party Brands product lines) and the
Thom Browne segment showed solid year-over-year growth.
Our transition to the ZEGNA One Brand, officially launched in
July 2022, is proving successful, with increased demand for the
brand’s iconic products – especially luxury leisurewear and
footwear – and a solid rebound in the brand’s formalwear business.
We have taken a number of steps to accelerate our road to iconicity
and top luxury positioning, including a focused product offering
with enhanced intrinsic quality content and the rebranding of most
of our stores. We have also accelerated the adoption of our
Clienteling Zegna to Consumer app (now renamed Zegna X), through
which we generated 35% of our boutiques’ revenues in 2022. This is
all in addition to a number of collaborations and campaigns which
support the amplification of the ZEGNA brand message.
- Thom Browne on Track for Sustained Growth
Despite significant disruptions during 2022, particularly in the
GCR, Thom Browne continued its solid expansion, adding 11 (net)
directly operated stores and strengthening the client value
management program. Thom Browne’s 2022 fashion shows in New York
and Paris received very positive media coverage and reviews across
traditional and social media, as well as from VIPs and celebrities,
reinforcing the cultural relevance of the Thom Browne brand on the
global fashion scene and beyond, while also supporting brand
awareness.
The Japanese market in particular performed very well last year
and represents a solid base to accelerate growth in 2023. Thom
Browne will further capitalize its crucial DTC network with the
full integration of the South Korean market during the second half
of 2023 and is well positioned to fully capitalize on the GCR
reopening this year following COVID-19-related restrictions.
- Progress on Our Sustainability and ESG Commitments
In May of 2022 the Group announced 27 ESG commitments that
continue to build upon its legacy of caring for people and the
environment. Since then, it has made progress on a number of these.
Some of the key milestones achieved during 2022 include:
- Putting in place comprehensive DE&I and talent management
strategies, as well as appointing a DE&I Officer.
- Strengthening the Group’s governance through the introduction
of long-term equity incentive plans for eligible executives linked
to achieving the stated commitments. In addition, the Board of
Directors now has oversight of the Group’s ESG strategy.
- Preparing for the launch of Accademia dei Mestieri, the Group’s
vocational training project, with professional training activities
already started in 2022.
- Submitting the Group’s net-zero targets to the Science-Based
Target initiative (SBTi).
- Making important progress on the Road to Traceability with the
launch of the Oasi Cashmere collection, with a commitment that all
cashmere used in the collection will be fully traceable by 2024, as
certified by the Sustainable Fibre Alliance.
- Spearheading, along with other industry leaders and
organizations, projects including the Re.Crea Consortium to manage
products at end-of-life, in partnership with Camera Nazionale della
Moda Italiana and other Italian luxury brands, and The Fashion
Pact-led Collective Virtual Power Purchase Agreement (CVPPA)
initiative to accelerate the adoption of renewable
electricity.
Review of FY 2022
Financials
Revenues
As previously communicated on January 25, 2023, for the year
ended December 31, 2022, the Zegna Group reported revenues of
€1,492.8 million, up 16% year-over-year. Revenues of the Zegna
segment were up 14% year-over-year to €1,176.7 million and revenues
of the Thom Browne segment were up 25% year-over-year to €330.9
million. Full details of the Group’s revenues can be found in our
Annual Report on Form 20-F for the year ended December 31, 2022,
filed today with the SEC, and in the press release issued on
January 25, 2023.
Profit/(Loss) and Adjusted Profit/(Loss)
Profit for 2022 was €65.3 million, compared to a loss of €127.7
million in 2021. The change is primarily attributable to costs
incurred in 2021 in connection with the Business Combination with
Investindustrial Acquisition Corp, which was completed in December
2021. Profit for 2022 was impacted by higher net financial charges
and higher taxes. Income taxes for the year ended December 31,
2022, amounted to €35.8 million, compared to €30.7 million for the
year ended December 31, 2021, and the effective tax rate for the
year ended December 31, 2022, was 35.4%.
Adjusted Profit/(Loss) was €73.6 million in 2022, down 2% from
€75.3 million in 2021, primarily attributable to the performance of
the Group's securities holdings driven by the financial markets,
substantially offset by (i) higher Adjusted EBIT of €8.6 million
(see below for further details) and (ii) a lower effective tax rate
(including the tax effects on adjusting items).
For additional information regarding Adjusted Profit/(Loss),
which is a non-IFRS financial measure, please see page 13.
Adjusted EBIT and Adjusted EBIT Margin
The Group’s Adjusted EBIT was €157.7 million in 2022, up 6% from
€149.1 million in 2021. Adjusted EBIT Margin for the year was
10.6%, down 90 bps from 11.5% in 2021. This was primarily the
result of the step-up in marketing costs for both the ZEGNA and
Thom Browne brands (previously announced at our Capital Markets Day
in May 2022), higher costs of €11.0 million relating to certain
central corporate functions and driven by the Company becoming a
public company in December 2021, incremental compliance-related
costs under both the Zegna and Thom Browne segments, and the
negative impact of COVID-19-related disruptions in the GCR,
especially in the second and fourth quarters, resulting in store
closures and lower traffic. This was partly offset by improvements
in the business in other geographies. For additional information
regarding Adjusted EBIT and Adjusted EBIT Margin, which are
non-IFRS financial measures, see page 13.
Results by Segment
Zegna Segment: Adjusted EBIT for the Zegna segment (which
now excludes corporate costs previously allocated to the segment)
was €141.5 million in 2022, up 7% year-over-year, with an Adjusted
EBIT Margin of 12.0%, compared to €131.9 million and 12.7%,
respectively, in 2021. This was mainly driven by price
increase/repositioning as part of the ZEGNA One Brand strategy. The
positive drivers were partially offset by the less favorable
country mix and an increase in operating expenses, higher
advertising and marketing costs on rebranding activities, higher
personnel and compliance-related costs, and higher depreciation and
amortization.
Thom Browne Segment: Adjusted EBIT for the Thom Browne
segment was €48.1 million in 2022, up 26% year-over-year, with an
Adjusted EBIT Margin of 14.5%, compared to €38.1 million and 14.4%,
respectively, in 2021. The increase came from scale benefits and
was partially offset by growth-related expenses, including costs
for expanding the DTC store network (with the addition of 11 (net)
directly operated stores compared to the end of December 2021),
higher marketing costs reflecting the new communication strategy,
and investments to improve central administrative functions and
processes.
Corporate
Starting with the year ended December 31, 2022, costs for
certain central corporate functions that are not directly
attributable to individual segments, and which were previously
allocated to the Zegna Segment, are presented separately as
Corporate. These central corporate costs, which have increased
significantly following the Company’s public listing in December
2021, primarily relate to the compensation of the Zegna Board of
Directors and costs for functions that are managed centrally on
behalf of the entire Group, including group general counsel,
central finance, internal audit, investor relations, insurance
coverage for directors and officers, compliance, and certain other
centralized activities, including those related to being a public
company, for which the costs are not allocated to the segments.
Corporate costs were €31.9 million, or 2.1% of revenues, in 2022,
compared to €20.9 million – 1.6% of revenues – in 2021. Corporate
costs increased by €11.0 million compared to 2021 mainly due to
higher costs linked to the creation and strengthening of several
central functions as a consequence of the Company’s listing on the
New York Stock Exchange in December 2021. Other listing-related
costs directly attributable to the Zegna and Thom Browne segments
have been directly allocated to the relevant segment.
Net Financial Indebtedness/(Cash Surplus), Trade Working
Capital and Capital Expenditure
The Group’s Cash Surplus was €122.2 million at December 31,
2022, down 16% from €144.8 million as of December 31, 2021. The
€22.6 million decline is the result of, among other factors, €26.0
million in dividends paid; €73.3 million in Capital Expenditure,
mostly on the store network; €41.3 million increase in Trade
Working Capital; and approximately €33 million in non-recurring
real estate settlements. Trade Working Capital was stable as a
percentage of revenues at 21.2% as of December 31, 2022, compared
with 21.3% as of December 31, 2021.
Inventories reached €410.9 million as of December 31, 2022, up
21% from €338.5 million as of December 31, 2021. The increase
reflects the Group’s decision to secure the supply chain and ensure
the availability of “Essential” ZEGNA One Brand products, as well
as higher finished products held as a result of the disruption in
the GCR during the fourth quarter.
For additional information regarding Net Financial
Indebtedness/(Cash Surplus) and Trade Working Capital, which are
non-IFRS financial measures, see page 13.
Dividend and AGM
Subject to the finalization and adoption of the annual statutory
accounts of the Company, provided that the distribution is
permitted under Dutch law, and also subject to the approval of the
proposed distribution by Zegna’s 2023 annual general meeting
(currently expected to be held on June 27, 2023), the Company
intends to make a dividend distribution to the holders of Ordinary
Shares of €0.10 per share, corresponding to a total dividend
distribution to shareholders of approximately €25 million.
Outlook
On May 17, 2022, at its first Capital Markets Day, the Group
announced its financial goals for the medium term, which management
defines as the end of fiscal year 2025. By that time, the Group is
aiming for annual revenues to exceed €2 billion and for Adjusted
EBIT Margin to reach at least 15%, excluding the TOM FORD FASHION
business. The Group expects 2023 results to show that it is on this
trajectory. The Group’s medium-term targets assume no further
future escalation of the war in Ukraine, no significant
macroeconomic or financial markets deterioration, no further
disruption linked to the COVID-19 pandemic in the GCR or elsewhere,
and no other unforeseen events.
Annual Report on Form
20-F
Our annual report on Form 20-F, including the consolidated
financial statements for the fiscal year ended December 31, 2022,
can be downloaded from the Company’s website (www.zegnagroup.com)
under the section Investors / Financials / SEC Filings, or from the
SEC’s website (www.sec.gov). Shareholders may request a hard copy
of complete audited consolidated financial statements contained in
the Form 20-F, free of charge, through the contacts below.
***
Conference Call
As previously announced, today at 8:30 a.m. ET (2:30 p.m. CET),
the Company will host a webcast and conference call. A live webcast
of the conference call will also be available on the Company’s
website at ir.zegnagroup.com. To participate in the call, please
dial:
Italy (Local): +39 06 9450 1060 United Kingdom (Local): +44 20
3936 2999 United States (Local): +1 646 787 9445 All other
locations: +44 (0) 3936 2999 Participant Access code: 475883
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 on April 20, 2023 in
connection with the release of the Group’s 1Q 2023 revenues. There
will be no conference call. To receive email alerts of the timing
of future financial news releases, as well as future announcements,
please register at https://ir.zegnagroup.com.
***
About Ermenegildo Zegna Group
Founded in 1910 in Trivero, Italy, the Ermenegildo Zegna Group
(NYSE: ZGN) is a leading global luxury group. The Group owns the
world-renowned brands ZEGNA and Thom Browne. The Group also
manufactures and distributes the highest quality fabrics and
textiles through its Luxury Textile Laboratory Platform. At the
Group’s core is a uniquely vertically integrated supply chain that
brings together the best of Italian fine craftsmanship.
Responsibility towards people, community and the natural world has
been at the heart of the Ermenegildo Zegna Group’s belief since its
founding by the Zegna family over 100 years ago. Ensuring the
highest quality of products without compromising the quality of
life for future generations is a commitment carried from the
Group’s home in Italy to its operations around the world. Today the
Group operates in approximately 80 countries around the world
through 500 ZEGNA and Thom Browne stores, of which 302 are directly
operated by the Group as of December 31, 2022 (239 ZEGNA stores and
63 Thom Browne stores). At the end of 2022, Ermenegildo Zegna Group
had more than 6,000 employees and revenues of approximately €1.5
billion.
***
Forward Looking Statements
This communication, including the section “Outlook”, 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 SEC.
These filings may identify and address other important risks and
uncertainties that could cause actual events and results to differ
materially from those contained in the forward-looking statements.
Most of these factors are outside the Company’s control and are
difficult to predict. In light of the significant uncertainties in
these forward-looking statements, you should not regard these
statements as a representation or warranty by the Company and its
directors, officers or employees or any other person that the
Company will achieve its objectives and plans in any specified time
frame, or at all. The forward-looking statements in this
communication represent the views of Zegna as of the date of this
communication. Subsequent events and developments may cause that
view to change. However, while Zegna may elect to update these
forward-looking statements at some point in the future, the Company
disclaims any obligation to update or revise publicly
forward-looking statements. You should, therefore, not rely on
these forward-looking statements as representing the views of the
Company as of any date subsequent to the date of this
communication.
***
FY 2022 - Group Revenues
Tables
Group Revenues by
Segment
For the years ended December
31,
Increase/(Decrease)
(€ thousands, except percentages)
2022
2021
2020
2022 vs 2021
%
% at constant currency
2021 vs 2020
%
% at constant currency
Zegna Segment
1,176,706
1,035,175
843,318
141,531
13.7%
9.3%
191,857
22.8%
22.8%
Thom Browne Segment
330,891
264,066
179,794
66,825
25.3%
20.6%
84,272
46.9%
46.6%
Eliminations
(14,757)
(6,839)
(8,379)
(7,918)
n.m.
n.m.
1,540
n.m.
n.m.
Total revenues
1,492,840
1,292,402
1,014,733
200,438
15.5%
11.0%
277,669
27.4%
27.3%
Group Revenues by Sales
Channel
For the years ended December
31,
Increase/(Decrease)
(€ thousands, except percentages)
2022
2021
2020
2022 vs 2021
%
% at constant currency
2021 vs 2020
%
% at constant currency
Direct to Consumer (DTC) - Zegna branded
products
772,505
712,862
527,972
59,643
8.4%
2.9%
184,890
35.0%
34.3%
Direct to Consumer (DTC) - Thom Browne
branded products
145,702
138,567
85,268
7,135
5.1%
(1.5%)
53,299
62.5%
61.3%
Total Direct to Customer (DTC)
918,207
851,429
613,240
66,778
7.8%
2.2%
238,189
38.8%
38.0%
Wholesale Zegna branded products
151,437
134,449
108,506
16,988
12.6%
10.6%
25,943
23.9%
25.9%
Wholesale Thom Browne branded products
184,312
124,830
94,222
59,482
47.7%
46.6%
30,608
32.5%
32.8%
Wholesale Third Party Brands and
Textile
234,561
177,201
169,888
57,360
32.4%
32.2%
7,313
4.3%
5.1%
Total Wholesale
570,310
436,480
372,616
133,830
30.7%
29.4%
63,864
17.1%
18.2%
Other
4,323
4,493
28,877
(170)
(3.8%)
(7.5%)
(24,384)
(84.4%)
(84.4%)
Total revenues
1,492,840
1,292,402
1,014,733
200,438
15.5%
11.0%
277,669
27.4%
27.3%
________________________________________
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 years ended December
31,
Increase/(Decrease)
(€ thousands, except percentages)
2022
2021
2020
2022 vs 2021
%
% at constant currency
2021 vs 2020
%
% at constant currency
EMEA (1)
520,226
380,325
315,879
139,901
36.8%
36.2%
64,446
20.4%
20.8%
of which Italy
224,342
158,722
121,202
65,620
41.3%
41.8%
37,520
31.0%
30.8%
of which UK
53,970
37,682
32,985
16,288
43.2%
42.2%
4,697
14.2%
14.0%
of which MEA (2)
69,046
44,236
24,268
24,810
56.1%
49.6%
19,968
82.3%
92.0%
North America (3)
294,686
191,283
131,049
103,403
54.1%
43.2%
60,234
46.0%
50.9%
of which United States
270,312
176,059
114,818
94,253
53.5%
42.1%
61,241
53.3%
59.4%
Latin America (4)
29,889
19,971
12,915
9,918
49.7%
33.4%
7,056
54.6%
57.4%
APAC (5)
644,802
696,344
551,650
(51,542)
(7.4%)
(11.6%)
144,694
26.2%
25.0%
of which Greater China Region
494,110
588,876
438,193
(94,766)
(16.1%)
(20.6%)
150,683
34.4%
31.8%
of which Japan
65,445
55,479
61,523
9,966
18.0%
23.7%
(6,044)
(9.8%)
(5.6%)
Other (6)
3,237
4,479
3,240
(1,242)
n.m.
n.m.
1,239
38.2%
40.1%
Total revenues
1,492,840
1,292,402
1,014,733
200,438
15.5%
11.0%
277,669
27.4%
27.3%
________________________________________
(1)
EMEA includes Europe, the Middle
East and Africa.
(2)
MEA includes the Middle East,
Africa and Turkey.
(3)
North America includes the United
States of America and Canada.
(4)
Latin America includes Mexico,
Brazil and other Central and South American countries.
(5)
APAC includes the Greater China
Region, Japan, South Korea, Thailand, Malaysia, Vietnam, Indonesia,
Philippines, Australia, New Zealand, India and other Southeast
Asian countries.
(6)
Other revenues mainly include
royalties.
Group Revenues by Product
Line
For the years ended December
31,
Increase/(Decrease)
(€ thousands, except percentages)
2022
2021
2020
2022 vs 2021
%
% at constant currency
2021 vs 2020
%
% at constant currency
Zegna branded products
923,942
847,311
636,478
76,631
9.0%
4.1%
210,833
33.1%
32.9%
Thom Browne
330,014
263,397
179,490
66,617
25.3%
20.6%
83,907
46.7%
46.4%
Textile
136,769
102,244
87,615
34,525
33.8%
35.4%
14,629
16.7%
17.0%
Third Party Brands
97,792
74,957
82,273
22,835
30.5%
27.9%
(7,316)
(8.9%)
(7.5%)
Other
4,323
4,493
28,877
(170)
(3.8%)
(7.5%)
(24,384)
(84.4%)
(84.4%)
Total revenues
1,492,840
1,292,402
1,014,733
200,438
15.5%
11.0%
277,669
27.4%
27.3%
________________________________________
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 at December 31, 2022 and
2021
At December 31,
2022
2021
# Stores
Zegna
Thom Browne
Group
Zegna
Thom Browne
Group
EMEA (2)
65
10
75
69
9
78
Americas (3)
53
7
60
50
5
55
APAC
121
46
167
126
38
164
Total Direct to Customer (DTC)
239
63
302
245
52
297
EMEA (2)
57
6
63
89
5
94
Americas (3)
64
4
68
74
3
77
APAC
35
32
67
32
30
62
Total Wholesale
156
42
198
195
38
233
Total
395
105
500
440
90
530
________________________________________
(1)
Monobrand store count includes our DOSs (which are divided
into boutiques and outlets) and our Wholesale monobrand stores
(including also monobrand franchisees).
(2)
Does not include any stores in Russia as of December 31,
2022 (14 Wholesale stores in EMEA as of December 31, 2021).
Although some stores may still be operating as of December 31,
2022, they have not been supplied by Zegna since February 2022 and
have therefore been excluded from Zegna's store count.
(3)
Americas include North America and Latin America.
***
Ermenegildo Zegna N.V.
CONSOLIDATED STATEMENT OF
PROFIT AND LOSS
for the years ended December
31, 2022, 2021 and 2020
For the years ended December
31,
(€ thousands, except per share data)
2022
2021
2020
Revenues
1,492,840
1,292,402
1,014,733
Other income
13,949
8,260
5,373
Cost of raw materials and consumables
(311,320)
(309,609)
(250,569)
Purchased, outsourced and other costs
(437,928)
(353,629)
(286,926)
Personnel costs
(395,087)
(367,762)
(282,659)
Depreciation, amortization and impairment
of assets
(173,521)
(163,367)
(185,930)
Write downs and other provisions
(14)
(19,487)
(6,178)
Other operating costs
(41,142)
(180,836)
(30,399)
Operating Profit/(Loss)
147,777
(94,028)
(22,555)
Financial income
13,320
45,889
34,352
Financial expenses
(54,346)
(43,823)
(48,072)
Foreign exchange (losses)/gains
(7,869)
(7,791)
13,455
Result from investments accounted for
using the equity method
2,199
2,794
(4,205)
Impairments of investments accounted for
using the equity method
—
—
(4,532)
Profit/(Loss) before taxes
101,081
(96,959)
(31,557)
Income taxes
(35,802)
(30,702)
(14,983)
Profit/(Loss)
65,279
(127,661)
(46,540)
Attributable to:
Shareholders of the Parent Company
51,482
(136,001)
(50,577)
Non-controlling interests
13,797
8,340
4,037
Basic earnings per share in Euro
0.22
(0.67)
(0.25)
Diluted earnings per share in Euro
0.21
(0.67)
(0.25)
Ermenegildo Zegna N.V.
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
at December 31, 2022 and
2021
At December 31,
(€ thousands)
2022
2021
Assets
Non-current assets
Intangible assets
455,908
425,220
Property, plant and equipment
126,139
111,474
Right-of-use assets
375,508
370,470
Investments accounted for using the equity
method
22,648
22,447
Deferred tax assets
124,627
108,210
Other non-current financial assets
36,240
35,372
Total non-current assets
1,141,070
1,073,193
Current assets
Inventories
410,851
338,475
Trade receivables
177,213
160,360
Derivative financial instruments
22,454
1,786
Tax receivables
15,350
14,966
Other current financial assets
320,894
340,380
Other current assets
84,574
68,773
Cash and cash equivalents
254,321
459,791
Total current assets
1,285,657
1,384,531
Total assets
2,426,727
2,457,724
Liabilities and Equity
Share capital
5,939
5,939
Retained earnings
528,320
498,592
Other reserves
144,690
96,679
Equity attributable to shareholders of
the Parent Company
678,949
601,210
Equity attributable to non-controlling
interests
53,372
43,094
Total equity
732,321
644,304
Non-current liabilities
Non-current borrowings
184,880
471,646
Other non-current financial
liabilities
178,793
167,387
Non-current lease liabilities
332,050
331,409
Non-current provisions for risks and
charges
19,581
44,555
Employee benefits
51,584
42,263
Deferred tax liabilities
60,534
53,844
Total non-current liabilities
827,422
1,111,104
Current liabilities
Current borrowings
286,175
157,292
Other current financial liabilities
37,258
33,984
Current lease liabilities
111,457
106,643
Derivative financial instruments
2,362
14,138
Current provisions for risks and
charges
13,969
14,093
Trade payables and customer advances
270,936
223,037
Tax liabilities
25,999
28,773
Other current liabilities
118,828
124,356
Total current liabilities
866,984
702,316
Total equity and liabilities
2,426,727
2,457,724
Ermenegildo Zegna N.V.
CONSOLIDATED CASH FLOW
STATEMENT
for the years ended December
31, 2022, 2021 and 2020
For the years ended December
31,
(€ thousands)
2022
2021
2020
Operating activities
Profit/(Loss)
65,279
(127,661)
(46,540)
Income taxes
35,802
30,702
14,983
Depreciation, amortization and impairment
of assets
173,521
163,367
185,930
Financial income
(13,320)
(45,889)
(34,352)
Financial expenses
54,346
43,823
48,072
Foreign exchange losses/(gains)
7,869
7,791
(13,455)
Write downs and other provisions
14
19,487
6,178
Write downs of the provision for obsolete
inventory
28,561
29,600
37,735
Result from investments accounted for
using the equity method
(2,199)
(2,794)
4,205
Impairments of investments accounted for
using the equity method
—
—
4,532
(Gains)/Losses arising from the disposal
of fixed assets
(1,124)
1,153
1,091
Other non-cash expenses/(income), net
23,063
230,812
(27,698)
Change in inventories
(103,112)
(27,554)
(39,486)
Change in trade receivables
(15,623)
(12,294)
35,675
Change in trade payables including
customer advances
43,511
31,426
(38,485)
Change in current and non-current
provisions for risks and charges
(29,102)
(5,498)
(4,633)
Change in employee benefits
(8,676)
(13,456)
(2,360)
Change in other operating assets and
liabilities
(38,216)
38,927
(3,038)
Interest paid
(24,938)
(17,487)
(21,023)
Income taxes paid
(49,258)
(63,300)
(36,425)
Net cash flows from operating
activities
146,398
281,155
70,906
Investing activities
Payments for property plant and
equipment
(49,114)
(79,699)
(27,630)
Proceeds from disposals of property plant
and equipment
—
3,791
1,125
Payments for intangible assets
(24,185)
(14,627)
(11,524)
Proceeds from disposals of non-current
financial assets
2,585
1,536
45,979
Payments for purchases of non-current
financial assets
(111)
(4,431)
—
Proceeds from disposals of current
financial assets and derivative instruments
46,487
92,021
253,201
Payments for acquisitions of current
financial assets and derivative instruments
(32,412)
(76,058)
(166,334)
Business combinations, net of cash
acquired
(585)
(4,224)
(2,245)
Acquisition of investments accounted for
using the equity method
—
(313)
—
Net cash flows (used in)/from investing
activities
(57,335)
(82,004)
92,572
Financing activities
Proceeds from borrowings
—
123,570
265,352
Repayments of borrowings
(159,719)
(160,210)
(221,029)
Repayments of other non-current financial
liabilities
(3,919)
(4,287)
—
Payments of lease liabilities
(121,633)
(100,611)
(90,699)
Proceeds from capital contribution from
Monterubello
10,923
—
—
Sale of shares held in treasury
3,390
6,343
—
Purchase of own shares
—
(384)
(945)
Dividends to owners of the parent
(21,852)
(102)
—
Dividends paid to non-controlling
interests
(4,187)
(548)
(1,731)
Purchase of own shares from
Monterubello
—
(455,000)
—
Proceeds from issuance of ordinary shares
upon Business Combination
—
310,739
—
Proceeds from issuance of ordinary shares
to PIPE Investors
—
331,385
—
Payments of transaction costs related to
the Business Combination
—
(48,475)
—
Cash distributed as part of the
Disposition
—
(26,272)
—
Payments for acquisition of
non-controlling interests
—
(40,253)
—
Net cash flows used in financing
activities
(296,997)
(64,105)
(49,052)
Effects of exchange rate changes on cash
and cash equivalents
2,464
7,454
(7,761)
Net (decrease)/increase in cash and
cash equivalents
(205,470)
142,500
106,665
Cash and cash equivalents at the
beginning of the year
459,791
317,291
210,626
Cash and cash equivalents at the end of
the year
254,321
459,791
317,291
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 earnings before interest,
taxes, depreciation and amortization (“Adjusted EBITDA”), Adjusted
Profit/(Loss), Adjusted Basic Earnings per Share and Adjusted
Diluted Earnings per Share, Net Financial Indebtedness/(Cash
Surplus), Trade Working Capital and revenues on a constant currency
basis. Zegna’s management believes that these non-IFRS financial
measures provide useful and relevant information regarding Zegna’s
financial performance and financial condition, and improve the
ability of management and investors to assess and compare the
financial performance and financial position of Zegna with those of
other companies. They also provide comparable measures that
facilitate management’s ability to identify operational trends, as
well as make decisions regarding future spending, resource
allocations and other strategic and operational decisions. While
similar measures are widely used in the industry in which Zegna
operates, the financial measures that Zegna uses may not be
comparable to other similarly named measures used by other
companies nor are they intended to be substitutes for measures of
financial performance or financial position as prepared in
accordance with IFRS. An explanation of the relevance of each of
the non-IFRS financial measures, a reconciliation of the non-IFRS
financial measures to the most directly comparable measures
calculated and presented in accordance with IFRS and a discussion
of their limitations are set out below.
Adjusted EBIT and Adjusted EBIT Margin
Adjusted EBIT is defined as profit or loss before income taxes
plus financial income, financial expenses, foreign exchange
losses/(gains) 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, legal costs
for trademark disputes, transaction costs related to acquisitions,
severance indemnities and provisions for severance expenses, costs
related to the Business Combination, net impairment of leased and
owned stores, a special donation to the UNHCR, net (income)/costs
related to lease agreements and certain other items.
Adjusted EBIT Margin is defined as Adjusted EBIT divided by
revenues of the applicable period.
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
financial 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/(Loss)
to Adjusted EBIT and the calculation of the Adjusted EBIT Margin
for the years ended December 31, 2022, 2021 and 2020.
For the year ended December
31,
(€ thousands, except percentages)
2022
2021
2020
Profit/(Loss)
65,279
(127,661)
(46,540)
Income taxes
35,802
30,702
14,983
Financial income
(13,320)
(45,889)
(34,352)
Financial expenses
54,346
43,823
48,072
Foreign exchange losses/(gains)
7,869
7,791
(13,455)
Result from investments accounted for
using the equity method
(2,199)
(2,794)
4,205
Impairments of investments accounted for
using the equity method
—
—
4,532
Legal costs for trademark disputes (1)
7,532
—
—
Transaction costs related to acquisitions
(2)
2,289
—
—
Severance indemnities and provisions for
severance expenses (3)
2,199
8,996
12,308
Costs related to the Business Combination
(4)
2,137
205,059
—
Net impairment of leased and owned stores
(5)
1,639
8,692
19,725
Special donation to the UNHCR (6)
1,000
—
—
Net (income)/costs related to lease
agreements (7)
(6,844)
15,512
3,000
Other (8)
—
4,884
7,535
Adjusted EBIT
157,729
149,115
20,013
Revenues
1,492,840
1,292,402
1,014,733
Adjusted EBIT Margin (Adjusted EBIT /
Revenues)
10.6 %
11.5 %
2.0 %
__________________
(1)
Relates to legal costs of €7,532
thousand incurred in 2022 by the Thom Browne Segment in connection
with a legal dispute between adidas and Thom Browne, primarily in
relation to the use of trademarks. This amount is recorded within
the line item “purchased, outsourced and other costs” in the
consolidated statement of profit and loss.
(2)
Relates to transaction costs of
€2,289 thousand incurred in 2022 in connection with acquisitions,
primarily for consultancy and legal fees related to the TFI
Acquisition. This amount is recorded within the line item
“purchased, outsourced and other costs” in the consolidated
statement of profit and loss and is related to Corporate.
(3)
Relates to severance indemnities
incurred by the Zegna Segment of €2,199 thousand, €8,996 thousand
and €12,308 thousand in 2022, 2021 and 2020, respectively, recorded
within the line item “personnel costs” in the consolidated
statement of profit and loss.
(4)
Costs related to the Business
Combination of €2,137 thousand in 2022 relate to the grant of
equity awards to management in 2021 with vesting subject to the
public listing of the Company’s shares and certain other
performance and/or service conditions. This amount is recorded
within the line item “personnel costs” in the consolidated
statement of profit and loss and relates to the Zegna Segment for
€1,101 thousand, to the Thom Browne Segment for €98 thousand and to
Corporate for €938 thousand.
Costs related to the Business
Combination in 2021 include:
(a)
€114,963 thousand relating to
share-based payments for listing services recognized as the excess
of the fair value of Zegna ordinary shares issued as part of the
Business Combination and the fair value of IIAC’s identifiable net
assets acquired. This amount is recorded within the line item
“other operating costs” in the consolidated statement of profit and
loss and is related to Corporate.
(b)
€37,906 thousand for the issuance
of 5,031,250 Zegna ordinary shares to the holders of IIAC class B
shares to be held in escrow. The release of these shares from
escrow is subject to achievement of certain targets within a
seven-year period. This amount is recorded within the line item
“other operating costs” in the consolidated statement of profit and
loss and is related to Corporate.
(c)
€34,092 thousand for transaction
costs related to the Business Combination incurred by Zegna,
including costs for bank services, legal advisors and other
consultancy fees. This amount is recorded within the line item
“purchased, outsourced and other costs” in the consolidated
statement of profit and loss and is related to Corporate.
(d)
€10,916 thousand for the Zegna
family’s grant of a one-time €1,500 gift to each employee of the
Zegna Group as result of the Company’s listing on NYSE completed on
December 20, 2021. This amount is recorded within the line item
“personnel costs” in the consolidated statement of profit and loss
and is related to the Zegna Segment for €10,120 thousand and to the
Thom Browne Segment for €796 thousand.
(e)
€5,380 thousand relating to grant
of performance share units, which each represent the right to
receive one Zegna ordinary share, to the Group’s Chief Executive
Officer, other Zegna directors, key executives with strategic
responsibilities and other employees of the Group, all subject to
certain vesting conditions. This amount is recorded within the line
item “personnel costs” in the consolidated statement of profit and
loss and is related to the Zegna Segment for €2,908 thousand, to
the Thom Browne Segment for €239 thousand and to Corporate for
€2,233 thousand.
(f)
€1,236 thousand related to the
fair value of private warrants issued, pursuant to the Business
Combination, to certain Zegna non-executive directors. This amount
is recorded within the line item “personnel costs” in the
consolidated statement of profit and loss and is related to
Corporate.
(g)
€566 thousand related to the
write-off of non-refundable prepaid premiums for directors’ and
officers’ insurance. This amount is recorded within the line item
“personnel costs” in the consolidated statement of profit and loss
and is related to Corporate.
(5)
Net impairment of leased and
owned stores includes (i) impairment of €2,369 thousand, €6,486
thousand and €15,716 thousand related to right-of-use assets, (ii)
reversals of impairment of €756 thousand and impairment of €2,167
thousand and €4,011 thousand related to property plant and
equipment and (iii) impairment of €26 thousand, and €39 thousand
and reversals of impairment of €2 thousand related to intangible
assets, for 2022, 2021 and 2020, respectively. Net impairment in
2020 includes the effects of the COVID-19 pandemic on the Group’s
operations. Impairment and reversals of impairment of leased and
owned stores are recorded within the line item “depreciation,
amortization and impairment of assets” in the consolidated
statement of profit and loss and relate entirely to the Zegna
Segment for the periods presented, with the exception of impairment
of €820 thousand relating to the Thom Browne Segment in 2022.
(6)
Relates to a donation of €1,000
thousand in 2022 to the United Nations High Commissioner for
Refugees (“UNHCR”) to support initiatives related to the
humanitarian emergency in Ukraine. This amount is recorded within
the line item “other operating costs” in the consolidated statement
of profit and loss and is related to Corporate.
(7)
Net (income)/costs related to
lease agreements relate entirely to the Zegna Segment and
include:
(a)
in 2022: (i) proceeds of €6,500
thousand received from new tenants in order for Zegna to withdraw
from existing lease agreements of commercial properties (recorded
within the line item “other income” in the consolidated statement
of profit and loss) and (ii) €950 thousand for reversals of
previously recognized provisions in respect of a legal claim
related to a lease agreement in the US (recorded within “write
downs and other provisions” in the consolidated statement of profit
and loss), partially offset by (ii) €606 thousand for losses
related to a sublease agreement in the US (recorded within “other
operating costs” in the consolidated statement of profit and
loss);
(b)
in 2021: (i) €12,192 thousand of
provisions relating to a lease agreement in the US following an
unfavorable legal claim judgment against the Group (recorded within
“write downs and other provisions” in the consolidated statement of
profit and loss), (ii) €1,492 thousand of legal expenses related to
a lease agreement in Italy (recorded within “other operating costs”
in the consolidated statement of profit and loss) and (iii) €1,829
thousand in accrued property taxes related to a lease agreement in
the UK (recorded within “write downs and other provisions” in the
consolidated statement of profit and loss);
(c)
in 2020: €3,000 thousand for
legal expenses relating to a lease agreement in the UK (recorded
within the line item “write downs and other provisions” in the
consolidated statement of profit and loss).
(8)
Other adjustments in 2021 include
€6,006 thousand related to losses incurred by Agnona subsequent to
the Group’s sale of a majority stake in Agnona in January 2021, for
which the Group was required to compensate the company in
accordance with the terms of the related sale agreement, as well as
€144 thousand relating to the write down of the Group’s remaining
30% stake in Agnona, both of which relate to Corporate (both
amounts are recorded within the line item “write downs and other
provisions” in the consolidated statement of profit and loss),
partially offset by other income generated by the Zegna Segment of
€1,266 thousand relating to the sale of rights to build or develop
airspace above a building in the United States (this amount is
recorded within the line item “other income” in the consolidated
statement of profit and loss).
Other adjustments in 2020 include
(i) donations of €4,482 thousand to charitable organizations in
Italy and abroad to support initiatives related to the COVID-19
pandemic, of which €3,175 thousand relates to Corporate and €1,307
thousand relates to the Zegna Segment (this amount is recorded
within the line item “other operating costs” in the consolidated
statement of profit and loss) and (ii) impairment on assets held
for sale of €3,053 thousand in 2020, of which €988 thousand relates
to Corporate and is recorded within the line item “write downs and
other provisions” and €2,065 thousand relates to the write down of
inventories in the Zegna Segment and is recorded within the line
item “cost of raw materials and consumables” in the consolidated
statement of profit and loss.
Adjusted EBITDA
Adjusted EBITDA is defined as profit or loss before income taxes
plus financial income, financial expenses, foreign exchange
losses/(gains), depreciation, amortization and impairment of assets
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, legal costs for trademark
disputes, transaction costs related to acquisitions, severance
indemnities and provisions for severance expenses, costs related to
the Business Combination, a special donation to the UNHCR, net
(income)/costs related to lease agreements and certain other
items.
Zegna’s management uses Adjusted EBITDA to understand and
evaluate Zegna’s underlying operating performance. Zegna’s
management believes this non-IFRS financial measure is useful
because it excludes items that management believes are not
indicative of Zegna’s underlying operating performance and allows
management to view operating trends, perform analytical comparisons
and benchmark performance between periods. Zegna’s management also
believes that Adjusted EBITDA is 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 EBITDA provides useful information to third
party stakeholders in understanding and evaluating Zegna’s
operating results.
The following table presents a reconciliation of Profit/(Loss)
to Adjusted EBITDA for the years ended December 31, 2022, 2021 and
2020.
For the year ended December
31,
(€ thousands)
2022
2021
2020
Profit/(Loss)
65,279
(127,661)
(46,540)
Income taxes
35,802
30,702
14,983
Financial income
(13,320)
(45,889)
(34,352)
Financial expenses
54,346
43,823
48,072
Foreign exchange losses/(gains)
7,869
7,791
(13,455)
Depreciation, amortization and impairment
of assets
173,521
163,367
185,930
Result from investments accounted for
using the equity method
(2,199)
(2,794)
4,205
Impairments of investments accounted for
using the equity method
—
—
4,532
Legal costs for trademark disputes (1)
7,532
—
—
Transaction costs related to acquisitions
(2)
2,289
—
—
Severance indemnities and provisions for
severance expenses (3)
2,199
8,996
12,308
Costs related to the Business Combination
(4)
2,137
205,059
—
Special donation to the UNHCR (5)
1,000
—
—
Net (income)/costs related to lease
agreements (6)
(6,844)
15,512
3,000
Other (7)
—
4,884
7,535
Adjusted EBITDA
329,611
303,790
186,218
__________________
(1)
Relates to legal costs of €7,532
thousand incurred in 2022 by the Thom Browne Segment in connection
with a legal dispute between adidas and Thom Browne, primarily in
relation to the use of trademarks. This amount is recorded within
the line item “purchased, outsourced and other costs” in the
consolidated statement of profit and loss.
(2)
Relates to transaction costs of
€2,289 thousand incurred in 2022 in connection with acquisitions,
primarily for consultancy and legal fees related to the TFI
Acquisition. This amount is recorded within the line item
“purchased, outsourced and other costs” in the consolidated
statement of profit and loss and is related to Corporate.
(3)
Relates to severance indemnities
incurred by the Zegna Segment of €2,199 thousand, €8,996 thousand
and €12,308 thousand in 2022, 2021 and 2020, respectively, recorded
within the line item “personnel costs” in the consolidated
statement of profit and loss.
(4)
Costs related to the Business
Combination of €2,137 thousand in 2022 relate to the grant of
equity awards to management in 2021 with vesting subject to the
public listing of the Company’s shares and certain other
performance and/or service conditions. This amount is recorded
within the line item “personnel costs” in the consolidated
statement of profit and loss and relates to the Zegna Segment for
€1,101 thousand, to the Thom Browne Segment for €98 thousand and to
Corporate for €938 thousand.
Costs related to the Business
Combination in 2021 include:
(a)
€114,963 thousand relating to
share-based payments for listing services recognized as the excess
of the fair value of Zegna ordinary shares issued as part of the
Business Combination and the fair value of IIAC’s identifiable net
assets acquired. This amount is recorded within the line item
“other operating costs” in the consolidated statement of profit and
loss and is related to Corporate.
(b)
€37,906 thousand for the issuance
of 5,031,250 Zegna ordinary shares to the holders of IIAC class B
shares to be held in escrow. The release of these shares from
escrow is subject to achievement of certain targets within a
seven-year period. This amount is recorded within the line item
“other operating costs” in the consolidated statement of profit and
loss and is related to Corporate.
(c)
€34,092 thousand for transaction
costs related to the Business Combination incurred by Zegna,
including costs for bank services, legal advisors and other
consultancy fees. This amount is recorded within the line item
“purchased, outsourced and other costs” in the consolidated
statement of profit and loss and is related to Corporate.
(d)
€10,916 thousand for the Zegna
family’s grant of a one-time €1,500 gift to each employee of the
Zegna Group as result of the Company’s listing on NYSE completed on
December 20, 2021. This amount is recorded within the line item
“personnel costs” in the consolidated statement of profit and loss
and is related to the Zegna Segment for €10,120 thousand and to the
Thom Browne Segment for €796 thousand.
(e)
€5,380 thousand relating to grant
of performance share units, which each represent the right to
receive one Zegna ordinary share, to the Group’s Chief Executive
Officer, other Zegna directors, key executives with strategic
responsibilities and other employees of the Group, all subject to
certain vesting conditions. This amount is recorded within the line
item “personnel costs” in the consolidated statement of profit and
loss and is related to the Zegna Segment for €2,908 thousand, to
the Thom Browne Segment for €239 thousand and to Corporate for
€2,233 thousand.
(f)
€1,236 thousand related to the
fair value of private warrants issued, pursuant to the Business
Combination, to certain Zegna non-executive directors. This amount
is recorded within the line item “personnel costs” in the
consolidated statement of profit and loss and is related to
Corporate.
(g)
€566 thousand related to the
write-off of non-refundable prepaid premiums for directors’ and
officers’ insurance. This amount is recorded within the line item
“personnel costs” in the consolidated statement of profit and loss
and is related to Corporate.
(5)
Relates to a donation of €1,000
thousand in 2022 to the United Nations High Commissioner for
Refugees (UNHCR) to support initiatives related to the humanitarian
emergency in Ukraine. This amount is recorded within the line item
“other operating costs” in the consolidated statement of profit and
loss and is related to Corporate.
(6)
Net (income)/costs related to
lease agreements relate entirely to the Zegna Segment and
include:
(a)
in 2022: (i) proceeds of €6,500
thousand received from new tenants in order for Zegna to withdraw
from existing lease agreements of commercial properties (recorded
within the line item “other income” in the consolidated statement
of profit and loss) and (ii) €950 thousand for reversals of
previously recognized provisions in respect of a legal claim
related to a lease agreement in the US (recorded within “write
downs and other provisions” in the consolidated statement of profit
and loss), partially offset by (ii) €606 thousand for losses
related to a sublease agreement in the US (recorded within “other
operating costs” in the consolidated statement of profit and
loss);
(b)
in 2021: (i) €12,192 thousand of
provisions relating to a lease agreement in the US following an
unfavorable legal claim judgment against the Group (recorded within
“write downs and other provisions” in the consolidated statement of
profit and loss), (ii) €1,492 thousand of legal expenses related to
a lease agreement in Italy (recorded within “other operating costs”
in the consolidated statement of profit and loss) and (iii) €1,829
thousand in accrued property taxes related to a lease agreement in
the UK (recorded within “write downs and other provisions” in the
consolidated statement of profit and loss);
(c)
in 2020: €3,000 thousand for
legal expenses relating to a lease agreement in the UK (recorded
within the line item “write downs and other provisions” in the
consolidated statement of profit and loss).
(7)
Other adjustments in 2021 include
€6,006 thousand related to losses incurred by Agnona subsequent to
the Group’s sale of a majority stake in Agnona in January 2021, for
which the Group was required to compensate the company in
accordance with the terms of the related sale agreement, as well as
€144 thousand relating to the write down of the Group’s remaining
30% stake in Agnona, both of which relate to Corporate (both
amounts are recorded within the line item “write downs and other
provisions” in the consolidated statement of profit and loss),
partially offset by other income generated by the Zegna Segment of
€1,266 thousand relating to the sale of rights to build or develop
airspace above a building in the United States (this amount is
recorded within the line item “other income” in the consolidated
statement of profit and loss).
Other adjustments in 2020 include
(i) donations of €4,482 thousand to charitable organizations in
Italy and abroad to support initiatives related to the COVID-19
pandemic, of which €3,175 thousand relates to Corporate and €1,307
thousand relates to the Zegna Segment (this amount is recorded
within the line item “other operating costs” in the consolidated
statement of profit and loss) and (ii) impairment on assets held
for sale of €3,053 thousand in 2020, of which €988 thousand relates
to Corporate and is recorded within the line item “write downs and
other provisions” and €2,065 thousand relates to the write down of
inventories in the Zegna Segment and is recorded within the line
item “cost of raw materials and consumables” in the consolidated
statement of profit and loss.
Adjusted Profit/(Loss)
Adjusted Profit/(Loss) is defined as Profit/(Loss) adjusted for
income and costs (net of related 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, legal costs for trademark
disputes, transaction costs related to acquisitions, severance
indemnities and provisions for severance expenses, costs related to
the Business Combination, net impairment of leased and owned
stores, a special donation to the UNHCR, net (income)/costs related
to lease agreements, gains on the Thom Browne option realized in
connection with the exercise of the option and certain other items,
as well as the tax effects of the adjusting items (calculated based
on the applicable tax rates of the jurisdictions to which the
adjustments relate).
Zegna’s management uses Adjusted Profit/(Loss) to understand and
evaluate Zegna’s underlying performance. Zegna’s management
believes this non-IFRS financial 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/(Loss) 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/(Loss) provides useful information to
third party stakeholders in understanding and evaluating Zegna’s
results.
The following table presents a reconciliation of Profit/(Loss)
to Adjusted Profit/(Loss) for the years ended December 31, 2022,
2021, and 2020.
For the year ended December
31,
(€ thousands)
2022
2021
2020
Profit/(Loss)
65,279
(127,661)
(46,540)
Legal costs for trademark disputes (1)
7,532
—
—
Transaction costs related to acquisitions
(2)
2,289
—
—
Severance indemnities and provisions for
severance expenses (3)
2,199
8,996
12,308
Costs related to the Business Combination
(4)
2,137
205,332
—
Net impairment of leased and owned stores
(5)
1,639
8,692
19,725
Special donation to the UNHCR (6)
1,000
—
—
Net (income)/costs related to lease
agreements (7)
(6,844)
15,512
3,000
Gain on Thom Browne option (8)
—
(20,675)
—
Impairment of investments accounted for
using the equity method (9)
—
—
4,532
Other (10)
—
4,884
7,535
Tax effects on adjusting items (11)
(1,602)
(19,758)
(5,312)
Adjusted Profit/(Loss)
73,629
75,322
(4,752)
__________________
(1)
Relates to legal costs of €7,532
thousand incurred in 2022 by the Thom Browne Segment in connection
with a legal dispute between adidas and Thom Browne, primarily in
relation to the use of trademarks. This amount is recorded within
the line item “purchased, outsourced and other costs” in the
consolidated statement of profit and loss.
(2)
Relates to transaction costs of
€2,289 thousand incurred in 2022 in connection with acquisitions,
primarily for consultancy and legal fees related to the TFI
Acquisition. This amount is recorded within the line item
“purchased, outsourced and other costs” in the consolidated
statement of profit and loss and is related to Corporate.
(3)
Relates to severance indemnities
incurred by the Zegna Segment of €2,199 thousand, €8,996 thousand
and €12,308 thousand in 2022, 2021 and 2020, respectively, recorded
within the line item “personnel costs” in the consolidated
statement of profit and loss.
(4)
Costs related to the Business
Combination of €2,137 thousand in 2022 relate to the grant of
equity awards to management in 2021 with vesting subject to the
public listing of the Company’s shares and certain other
performance and/or service conditions. This amount is recorded
within the line item “personnel costs” in the consolidated
statement of profit and loss and relates to the Zegna Segment for
€1,101 thousand, to the Thom Browne Segment for €98 thousand and to
Corporate for €938 thousand.
Costs related to the Business
Combination in 2021 include:
(a)
€114,963 thousand relating to
share-based payments for listing services recognized as the excess
of the fair value of Zegna ordinary shares issued as part of the
Business Combination and the fair value of IIAC’s identifiable net
assets acquired. This amount is recorded within the line item
“other operating costs” in the consolidated statement of profit and
loss and is related to Corporate.
(b)
€37,906 thousand for the issuance
of 5,031,250 Zegna ordinary shares to the holders of IIAC class B
shares to be held in escrow. The release of these shares from
escrow is subject to achievement of certain targets within a
seven-year period. This amount is recorded within the line item
“other operating costs” in the consolidated statement of profit and
loss and is related to Corporate.
(c)
€34,092 thousand for transaction
costs related to the Business Combination incurred by Zegna,
including costs for bank services, legal advisors and other
consultancy fees. This amount is recorded within the line item
“purchased, outsourced and other costs” in the consolidated
statement of profit and loss and is related to Corporate.
(d)
€10,916 thousand for the Zegna
family’s grant of a one-time €1,500 gift to each employee of the
Zegna Group as result of the Company’s listing on NYSE completed on
December 20, 2021. This amount is recorded within the line item
“personnel costs” in the consolidated statement of profit and loss
and is related to the Zegna Segment for €10,120 thousand and to the
Thom Browne Segment for €796 thousand.
(e)
€5,380 thousand relating to grant
of performance share units, which each represent the right to
receive one Zegna ordinary share, to the Group’s Chief Executive
Officer, other Zegna directors, key executives with strategic
responsibilities and other employees of the Group, all subject to
certain vesting conditions. This amount is recorded within the line
item “personnel costs” in the consolidated statement of profit and
loss and is related to the Zegna Segment for €2,908 thousand, to
the Thom Browne Segment for €239 thousand and to Corporate for
€2,233 thousand.
(f)
€1,236 thousand related to the
fair value of private warrants issued, pursuant to the Business
Combination, to certain Zegna non-executive directors. This amount
is recorded within the line item “personnel costs” in the
consolidated statement of profit and loss and is related to
Corporate.
(g)
€566 thousand related to the
write-off of non-refundable prepaid premiums for directors’ and
officers’ insurance. This amount is recorded within the line item
“personnel costs” in the consolidated statement of profit and loss
and is related to Corporate.
(h)
€273 thousand related to the deal
contingent option entered in November 2021. The amount was recorded
within the line item “foreign exchange gains/(losses)” in the
consolidated statement of profit and loss.
(5)
Net impairment of leased and
owned stores includes (i) impairment of €2,369 thousand, €6,486
thousand and €15,716 thousand related to right-of-use assets, (ii)
reversals of impairment of €756 thousand and impairment of €2,167
thousand and €4,011 thousand related to property plant and
equipment and (iii) impairment of €26 thousand, and €39 thousand
and reversals of impairment of €2 thousand related to intangible
assets, for 2022, 2021 and 2020, respectively. Net impairment in
2020 includes the effects of the COVID-19 pandemic on the Group’s
operations. Impairment and reversals of impairment of leased and
owned stores are recorded within the line item “depreciation,
amortization and impairment of assets” in the consolidated
statement of profit and loss and relate entirely to the Zegna
Segment for the periods presented, with the exception of impairment
of €820 thousand relating to the Thom Browne Segment in 2022.
(6)
Relates to a donation of €1,000
thousand in 2022 to the United Nations High Commissioner for
Refugees (UNHCR) to support initiatives related to the humanitarian
emergency in Ukraine. This amount is recorded within the line item
“other operating costs” in the consolidated statement of profit and
loss and is related to Corporate.
(7)
Net (income)/costs related to
lease agreements relate entirely to the Zegna Segment and
include:
(a)
in 2022: (i) proceeds of €6,500
thousand received from new tenants in order for Zegna to withdraw
from existing lease agreements of commercial properties (recorded
within the line item “other income” in the consolidated statement
of profit and loss) and (ii) €950 thousand for reversals of
previously recognized provisions in respect of a legal claim
related to a lease agreement in the US (recorded within “write
downs and other provisions” in the consolidated statement of profit
and loss), partially offset by (ii) €606 thousand for losses
related to a sublease agreement in the US (recorded within “other
operating costs” in the consolidated statement of profit and
loss);
(b)
in 2021: (i) €12,192 thousand of
provisions relating to a lease agreement in the US following an
unfavorable legal claim judgment against the Group (recorded within
“write downs and other provisions” in the consolidated statement of
profit and loss), (ii) €1,492 thousand of legal expenses related to
a lease agreement in Italy (recorded within “other operating costs”
in the consolidated statement of profit and loss) and (iii) €1,829
thousand in accrued property taxes related to a lease agreement in
the UK (recorded within “write downs and other provisions” in the
consolidated statement of profit and loss);
(c)
in 2020: €3,000 thousand for
legal expenses relating to a lease agreement in the UK (recorded
within the line item “write downs and other provisions” in the
consolidated statement of profit and loss).
(8)
Relates to a gain of €20,675
thousand recognized by the Thom Browne Segment following the
exercise of a written option on non-controlling interests and the
purchase of an additional 5% of the Thom Browne Group on June 1,
2021. This amount is recorded within the line item “financial
income” in the consolidated statement of profit and loss.
(9)
Relates to an impairment of
€4,532 thousand in the Group’s investment in TFI, which was
recognized following a reported net loss by TFI that management
considered as an indication of impairment.
(10)
Other adjustments in 2021 include
€6,006 thousand related to losses incurred by Agnona subsequent to
the Group’s sale of a majority stake in Agnona in January 2021, for
which the Group was required to compensate the company in
accordance with the terms of the related sale agreement, as well as
€144 thousand relating to the write down of the Group’s remaining
30% stake in Agnona, both of which relate to Corporate (both
amounts are recorded within the line item “write downs and other
provisions” in the consolidated statement of profit and loss),
partially offset by other income generated by the Zegna Segment of
€1,266 thousand relating to the sale of rights to build or develop
airspace above a building in the United States (this amount is
recorded within the line item “other income” in the consolidated
statement of profit and loss).
Other adjustments in 2020 include
(i) donations of €4,482 thousand to charitable organizations in
Italy and abroad to support initiatives related to the COVID-19
pandemic, of which €3,175 thousand relates to Corporate and €1,307
thousand relates to the Zegna Segment (this amount is recorded
within the line item “other operating costs” in the consolidated
statement of profit and loss) and (ii) impairment on assets held
for sale of €3,053 thousand in 2020, of which €988 thousand relates
to Corporate and is recorded within the line item “write downs and
other provisions” and €2,065 thousand relates to the write down of
inventories in the Zegna Segment and is recorded within the line
item “cost of raw materials and consumables” in the consolidated
statement of profit and loss.
(11)
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 are defined as basic earnings per share and diluted
earnings per share adjusted for income and costs (net of related
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,
legal costs for trademark disputes, transaction costs related to
acquisitions, severance indemnities and provisions for severance
expenses, costs related to the Business Combination, net
impairments of leased and owned stores, a special donation to the
UNHCR, net (income)/costs related to lease agreements, gains on the
Thom Browne option realized in connection with the exercise of the
option and certain other items, as well as the tax effects of the
adjusting items (calculated based on the applicable tax rates of
the jurisdictions to which the adjustments relate) and excluding
the impact of non-controlling interests on the adjusting items.
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 financial 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.
The following table presents a reconciliation of Profit/(Loss)
to Adjusted Basic Earnings per Share and Adjusted Diluted Earnings
per Share for the years ended December 31, 2022, 2021 and 2020.
For the year ended December
31,
(€ thousands, except per share data)
2022
2021
2020
Profit/(Loss)
65,279
(127,661)
(46,540)
Legal costs for trademark disputes (1)
7,532
—
—
Transaction costs related to acquisitions
(2)
2,289
—
—
Severance indemnities and provisions for
severance expenses (3)
2,199
8,996
12,308
Costs related to the Business Combination
(4)
2,137
205,332
—
Net impairment of leased and owned stores
(5)
1,639
8,692
19,725
Special donation to the UNHCR (6)
1,000
—
—
Net (income)/costs related to lease
agreements (7)
(6,844)
15,512
3,000
Gain on Thom Browne option (8)
—
(20,675)
—
Impairment of investments accounted for
using the equity method (9)
—
—
4,532
Other (10)
—
4,884
7,535
Tax effects on adjusting items (11)
(1,602)
(19,758)
(5,312)
Adjusted Profit/(Loss)
73,629
75,322
(4,752)
Impact of non-controlling interests
(12)
14,460
8,669
4,063
Adjusted Profit/(Loss) attributable to
shareholders of the Parent Company
59,169
66,653
(8,815)
Weighted average number of shares for
basic earnings per share
237,545,736
203,499,933
201,489,100
Adjusted Basic Earnings per
Share
0.25
0.33
(0.04)
Weighted average number of shares for
diluted earnings per share
240,647,513
204,917,880
201,489,100
Adjusted Diluted Earnings per
Share
0.25
0.33
(0.04)
__________________
(1)
Relates to legal costs of €7,532
thousand incurred in 2022 by the Thom Browne Segment in connection
with a legal dispute between adidas and Thom Browne, primarily in
relation to the use of trademarks. This amount is recorded within
the line item “purchased, outsourced and other costs” in the
consolidated statement of profit and loss.
(2)
Relates to transaction costs of
€2,289 thousand incurred in 2022 in connection with acquisitions,
primarily for consultancy and legal fees related to the TFI
Acquisition. This amount is recorded within the line item
“purchased, outsourced and other costs” in the consolidated
statement of profit and loss and is related to Corporate.
(3)
Relates to severance indemnities
incurred by the Zegna Segment of €2,199 thousand, €8,996 thousand
and €12,308 thousand in 2022, 2021 and 2020, respectively, recorded
within the line item “personnel costs” in the consolidated
statement of profit and loss.
(4)
Costs related to the Business
Combination of €2,137 thousand in 2022 relate to the grant of
equity awards to management in 2021 with vesting subject to the
public listing of the Company’s shares and certain other
performance and/or service conditions. This amount is recorded
within the line item “personnel costs” in the consolidated
statement of profit and loss and relates to the Zegna Segment for
€1,101 thousand, to the Thom Browne Segment for €98 thousand and to
Corporate for €938 thousand.
Costs related to the Business
Combination in 2021 include:
(a)
€114,963 thousand relating to
share-based payments for listing services recognized as the excess
of the fair value of Zegna ordinary shares issued as part of the
Business Combination and the fair value of IIAC’s identifiable net
assets acquired. This amount is recorded within the line item
“other operating costs” in the consolidated statement of profit and
loss and is related to Corporate.
(b)
€37,906 thousand for the issuance
of 5,031,250 Zegna ordinary shares to the holders of IIAC class B
shares to be held in escrow. The release of these shares from
escrow is subject to achievement of certain targets within a
seven-year period. This amount is recorded within the line item
“other operating costs” in the consolidated statement of profit and
loss and is related to Corporate.
(c)
€34,092 thousand for transaction
costs related to the Business Combination incurred by Zegna,
including costs for bank services, legal advisors and other
consultancy fees. This amount is recorded within the line item
“purchased, outsourced and other costs” in the consolidated
statement of profit and loss and is related to Corporate.
(d)
€10,916 thousand for the Zegna
family’s grant of a one-time €1,500 gift to each employee of the
Zegna Group as result of the Company’s listing on NYSE completed on
December 20, 2021. This amount is recorded within the line item
“personnel costs” in the consolidated statement of profit and loss
and is related to the Zegna Segment for €10,120 thousand and to the
Thom Browne Segment for €796 thousand.
(e)
€5,380 thousand relating to grant
of performance share units, which each represent the right to
receive one Zegna ordinary share, to the Group’s Chief Executive
Officer, other Zegna directors, key executives with strategic
responsibilities and other employees of the Group, all subject to
certain vesting conditions. This amount is recorded within the line
item “personnel costs” in the consolidated statement of profit and
loss and is related to the Zegna Segment for €2,908 thousand, to
the Thom Browne Segment for €239 thousand and to Corporate for
€2,233 thousand.
(f)
€1,236 thousand related to the
fair value of private warrants issued, pursuant to the Business
Combination, to certain Zegna non-executive directors. This amount
is recorded within the line item “personnel costs” in the
consolidated statement of profit and loss and is related to
Corporate.
(g)
€566 thousand related to the
write-off of non-refundable prepaid premiums for directors’ and
officers’ insurance. This amount is recorded within the line item
“personnel costs” in the consolidated statement of profit and loss
and is related to Corporate.
(h)
€273 thousand related to the deal
contingent option entered in November 2021. The amount was recorded
within the line item “foreign exchange gains/(losses)” in the
consolidated statement of profit and loss.
(5)
Net impairment of leased and
owned stores includes (i) impairment of €2,369 thousand, €6,486
thousand and €15,716 thousand related to right-of-use assets, (ii)
reversals of impairment of €756 thousand and impairment of €2,167
thousand and €4,011 thousand related to property plant and
equipment and (iii) impairment of €26 thousand, and €39 thousand
and reversals of impairment of €2 thousand related to intangible
assets, for 2022, 2021 and 2020, respectively. Net impairment in
2020 includes the effects of the COVID-19 pandemic on the Group’s
operations. Impairment and reversals of impairment of leased and
owned stores are recorded within the line item “depreciation,
amortization and impairment of assets” in the consolidated
statement of profit and loss and relate entirely to the Zegna
Segment for the periods presented, with the exception of impairment
of €820 thousand relating to the Thom Browne Segment in 2022.
(6)
Relates to a donation of €1,000
thousand in 2022 to the United Nations High Commissioner for
Refugees (UNHCR) to support initiatives related to the humanitarian
emergency in Ukraine. This amount is recorded within the line item
“other operating costs” in the consolidated statement of profit and
loss and is related to Corporate.
(7)
Net (income)/costs related to
lease agreements relate entirely to the Zegna Segment and
include:
(a)
in 2022: (i) proceeds of €6,500
thousand received from new tenants in order for Zegna to withdraw
from existing lease agreements of commercial properties (recorded
within the line item “other income” in the consolidated statement
of profit and loss) and (ii) €950 thousand for reversals of
previously recognized provisions in respect of a legal claim
related to a lease agreement in the US (recorded within “write
downs and other provisions” in the consolidated statement of profit
and loss), partially offset by (ii) €606 thousand for losses
related to a sublease agreement in the US (recorded within “other
operating costs” in the consolidated statement of profit and
loss);
(b)
in 2021: (i) €12,192 thousand of
provisions relating to a lease agreement in the US following an
unfavorable legal claim judgment against the Group (recorded within
“write downs and other provisions” in the consolidated statement of
profit and loss), (ii) €1,492 thousand of legal expenses related to
a lease agreement in Italy (recorded within “other operating costs”
in the consolidated statement of profit and loss) and (iii) €1,829
thousand in accrued property taxes related to a lease agreement in
the UK (recorded within “write downs and other provisions” in the
consolidated statement of profit and loss);
(c)
in 2020: €3,000 thousand for
legal expenses relating to a lease agreement in the UK (recorded
within the line item “write downs and other provisions” in the
consolidated statement of profit and loss).
(8)
Relates to a gain of €20,675
thousand recognized by the Thom Browne Segment following the
exercise of a written option on non-controlling interests and the
purchase of an additional 5% of the Thom Browne Group on June 1,
2021. This amount is recorded within the line item “financial
income” in the consolidated statement of profit and loss.
(9)
Relates to an impairment of
€4,532 thousand in the Group’s investment in TFI, which was
recognized following a reported net loss by TFI that management
considered as an indication of impairment.
(10)
Other adjustments in 2021 include
€6,006 thousand related to losses incurred by Agnona subsequent to
the Group’s sale of a majority stake in Agnona in January 2021, for
which the Group was required to compensate the company in
accordance with the terms of the related sale agreement, as well as
€144 thousand relating to the write down of the Group’s remaining
30% stake in Agnona, both of which relate to Corporate (both
amounts are recorded within the line item “write downs and other
provisions” in the consolidated statement of profit and loss),
partially offset by other income generated by the Zegna Segment of
€1,266 thousand relating to the sale of rights to build or develop
airspace above a building in the United States (this amount is
recorded within the line item “other income” in the consolidated
statement of profit and loss).
Other adjustments in 2020 include
(i) donations of €4,482 thousand to charitable organizations in
Italy and abroad to support initiatives related to the COVID-19
pandemic, of which €3,175 thousand relates to Corporate and €1,307
thousand relates to the Zegna Segment (this amount is recorded
within the line item “other operating costs” in the consolidated
statement of profit and loss) and (ii) impairment on assets held
for sale of €3,053 thousand in 2020, of which €988 thousand relates
to Corporate and is recorded within the line item “write downs and
other provisions” and €2,065 thousand relates to the write down of
inventories in the Zegna Segment and is recorded within the line
item “cost of raw materials and consumables” in the consolidated
statement of profit and loss.
(11)
Includes the tax effects of the
aforementioned adjustments.
(12)
Represents the Profit/(Loss) for
the year 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 instrument liabilities, 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 instrument
assets, securities and financial receivables (recorded within other
current financial assets in the consolidated statement of financial
position).
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 financial 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 December 31, 2022 and 2021.
At December 31,
(€ thousands)
2022
2021
Non-current borrowings
184,880
471,646
Current borrowings
286,175
157,292
Derivative financial instruments —
Liabilities
2,362
14,138
Other non-current financial
liabilities(1)
—
7,976
Total borrowings, other financial
liabilities and derivatives
473,417
651,052
Cash and cash equivalents
(254,321)
(459,791)
Derivative financial instruments —
Assets
(22,454)
(1,786)
Other current financial assets(2)
(318,795)
(334,244)
Total cash and cash equivalents, other
current financial assets and derivatives
(595,570)
(795,821)
Net Financial Indebtedness/(Cash
Surplus)
(122,153)
(144,769)
__________________
(1)
Primarily relates to loans from a
related party that were outstanding at December 31, 2021 and fully
repaid in the first half of 2022.
(2)
Includes (i) the Group’s
investments in securities amounting to €316,595 thousand and
€334,244 thousand at December 31, 2022 and 2021, respectively, and
(ii) at December 31, 2022 only a financial receivable from an
associated company of €2,200 thousand.
Trade Working Capital
Trade Working Capital is defined as current assets less current
liabilities adjusted for derivative assets and liabilities, tax
receivables and liabilities, cash and cash equivalents, borrowings,
lease liabilities, and certain other current assets and
liabilities.
Zegna’s management uses Trade Working Capital to understand and
evaluate Zegna’s liquidity generation/absorption. Zegna’s
management believes this non-IFRS financial measure is important
supplemental information for investors in evaluating liquidity in
that it provides insight into the availability of net current
resources to fund our ongoing operations. Trade Working Capital is
a measure used by management in internal evaluations of cash
availability and operational performance.
The following table sets forth the calculation of Trade Working
Capital at December 31, 2022 and 2021.
At December 31,
(€ thousands)
2022
2021
Current assets
1,285,657
1,384,531
Current liabilities
(866,984)
(702,316)
Working capital
418,673
682,215
Less:
Derivative financial instruments -
Assets
22,454
1,786
Tax receivables
15,350
14,966
Other current financial assets
320,894
340,380
Other current assets
84,574
68,773
Cash and cash equivalents
254,321
459,791
Current borrowings
(286,175)
(157,292)
Current lease liabilities
(111,457)
(106,643)
Derivative financial instruments -
Liabilities
(2,362)
(14,138)
Other current financial liabilities
(37,258)
(33,984)
Current provisions for risks and
charges
(13,969)
(14,093)
Tax liabilities
(25,999)
(28,773)
Other current liabilities
(118,828)
(124,356)
Trade Working Capital
317,128
275,798
of which trade receivables
177,213
160,360
of which inventories
410,851
338,475
of which trade payables and customer
advances
(270,936)
(223,037)
Trade Working Capital increased by €41,330 thousand from
€275,798 thousand at December 31, 2021 to €317,128 thousand at
December 31, 2022, related to (i) higher inventories of €72,376
thousand and (ii) higher trade receivables of €16,853 thousand,
partially offset by (iii) an increase in trade payables and
customer advances of €47,899 thousand. All increases are driven by
the overall increase in operations to support the growth in sales
and production volumes. The increase in inventories also reflects
the Group’s decision to maintain higher levels of raw materials in
order to mitigate the risk of any supply chain disruptions, as well
as higher finished products driven by the new Essentials
collections in line with the Zegna’s One Brand strategy, as well as
higher finished products held in the Greater China Region as a
result of temporary store closures in the fourth quarter of 2022 as
a consequence of COVID-19-related restrictions.
Constant Currency Information
In addition to presenting our revenues on a current currency
basis, we also present certain revenue information on a constant
currency basis, which excludes the effects of foreign currency
translation from our subsidiaries with functional currencies
different from the Euro. We use revenues on a constant currency
basis to analyze how our underlying revenues have changed between
periods independent of the effects of foreign currency
translation.
We calculate constant currency revenues by applying the current
period average foreign currency exchange rates to translate prior
period revenues of foreign subsidiaries expressed in local
functional currencies different than the Euro.
Revenues on a constant currency basis are not a substitute for
revenues on a current currency basis or any GAAP-related measures,
however we believe that revenues excluding the impact of foreign
currency translation provide additional useful information to
management and to investors in analyzing and evaluating our
revenues and operating performance.
***
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 the years ended December 31, 2022, 2021 and 2020:
For the years ended December
31,
(€ thousands)
2022
2021
2020
Payments for property, plant and
equipment
49,114
79,699
27,630
Payments for intangible assets
24,185
14,627
11,524
Capital expenditure
73,299
94,326
39,154
***
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version on businesswire.com: https://www.businesswire.com/news/home/20230406005128/en/
Investor Relations/Group Communications/Media Francesca
Di Pasquantonio francesca.dipasquantonio@zegna.com +39 335 5837669
Clementina Tito clementina.tito@zegna.com Media Brunswick
Group Brendan Riley / Daria Danelli / Marie Jensen
briley@brunswickgroup.com / ddanelli@brunswickgroup.com /
mjensen@brunswickgroup.com +1 (917) 755-1454 / +39 348 635 1149 /
+33 (0) 6 49 09 39 54 Community Marco Rubino +39 335 6509552
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