#Retail & Brands
Ermenegildo Zegna Group unveils medium-term financial ambitions and sustainability strategy
- In the Medium-term Group Aims for Annual Revenues of Over €2 billion and Adjusted EBIT1 of at Least 15% of Revenues
- ESG Strategy to be Overseen by Zegna Group’s Board and Tied to Executive Bonuses
With regards to medium-term financial goals, the Group is aiming for revenues to exceed €2 billion and for Adjusted EBIT1 as a % of revenues to reach at least 15%. The Group expects an increase in store productivity and continuing positive development of the price/mix to be key drivers of the top line, reflecting positively on profitability together with favourable operational leverage. These improvements should more than offset the strengthening of its marketing investments which, together with Capital Expenditure2 today at about 5% of Group revenues, are planned to support the Zegna rebranding and the overall growth strategy.
Keeping with its historical focus on sustainability and care for the world, the Company will also lay out a new ESG strategy, with further commitments on materials traceability, on climate change, and equal employment opportunities, among other topics. Zegna Group’s ESG commitments will be overseen by the Board of Directors, and, starting this year, long-term equity incentive plans granted to eligible executives will be linked to achieving these targets.
Ermenegildo “Gildo” Zegna, Chairman and CEO of the Zegna Group, said: “I am very much looking forward to welcoming our investors and financial analysts to Oasi Zegna today. This special place embodies our roots, values, and culture and is an integral part of our past and future. It is also the cradle of our century-long commitment to caring for the natural world around us, our people, and our communities. The ESG targets announced today reaffirm our commitment to a path of responsible growth and take us boldly to the future. We have rooted our financial goals in our values, which makes me confident in our ability to deliver against the ambitions set out in our business strategy.”
Some of the ESG-focused commitments being presented today include the following:
- By early 2023, the Group will appoint a DE&I Officer & Governance to manage the deployment of its DE&I Strategy.
- In 2022, the Group will complete the submission of GHG emissions reduction targets in line with the Science-Based Targets initiative (SBTi).
- By 2024, the Group will be using an innovative and open digital platform to allow suppliers to share their energy sources, water, chemical, emissions data as well as product certifications, covering at least 30% of its supply volume.
- By 2024, the Group aims to have 100% of its electricity in Europe and the US from renewable sources, extending to all the Group’s operations by 2027 (scope 2).
- By 2026, over 50% of the Top Priority raw materials used in Zegna Group products will be traceable to their point of origin, exceeding 95% by 2030.
- Exporting Oasi Zegna to the world: The Group will plant 10 thousand trees, mini Zegna Forests, in every city where Zegna Group opens or relocates Zegna boutiques, starting from 2023.
A copy of the presentation and the link to the audio webcast will be made available at ir.zegnagroup.com before the presentation begins at 11am CET/5am ET.
Non-IFRS Financial Measures
Zegna’s management monitors and evaluates operating and financial performance using several non-IFRS financial measures, among which adjusted earnings before interest and taxes (“Adjusted EBIT”) and Capital Expenditure. Zegna’s management believes that these non-IFRS financial measures provide useful and relevant information regarding Zegna’s financial performance and improve the ability of management and investors to assess and compare the financial performance of Zegna with that 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.
Adjusted EBIT
Adjusted EBIT is defined as profit or loss before income taxes plus financial income, financial expenses, exchange losses/(gains), result from investments accounted for using the equity method, impairments of 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 years presented, costs related to the Business Combination with Investindustrial Acquisition Corp, severance indemnities and provision for severance expenses, impairment of property, plant and equipment and right-of-use assets, certain costs related to lease agreements and certain other items.
Capital Expenditure
Capital expenditure is defined as the sum of cash outflows that result in additions to property, plant and equipment and intangible assets.
