Ermenegildo Zegna SpA, the Italian maker of $2,645 wool suits, warned of a possible slowdown in sales of luxury goods in 2012 even as it forecast revenue will grow at least 10 percent this year.
While “cautiously optimistic” about 2011, “I am more worried about 2012,” Chief Executive Officer Ermenegildo Zegna said in an interview before the Trivero, Italy-based company’s spring-summer 2012 runway show in Milan. “I see shadows in Europe, I see a question mark in the United States, a relative slowdown in China.”
Europe’s Stoxx 600 has fallen about 8 percent from this year’s high on Feb. 17 as a slowdown in U.S. job creation suggests the economic recovery is faltering and speculation grows that Greece will fail to repay all of its debt. Prada SpA, the Italian maker of Church’s shoes, last week sold shares near the low end of its target in 2011’s biggest Hong Kong initial public offering, amid a global stock-market slump.
Spending on high-end apparel, accessories and other goods may rise 8 percent this year to 185 billion euros ($264.7 billion), excluding currency swings, Bain & Co. predicted in May. Luxury sales in mainland China, which doesn’t include Hong Kong, Macau or Taiwan, may surge 25 percent to 11.5 billion euros on the same basis, keeping it the fastest-growing market, according to the consultant.
“It’s going to be hard to continue growing 30 percent as we have been growing for the past five years” in China, Zegna said. Still, the company “remains confident” about its prospects in the country, he said.
Worldwide revenue in Zegna’s own stores has risen 20 percent so far this year, meaning growth of at least 10 percent is likely for 2011, the CEO said. Zegna posted sales of 963 million euros in 2010 and earnings before interest, tax, depreciation and amortization of 140 million euros.
The suitmaker plans to open 20 stores this year, including in Paris next week and in Rome in November, as it reduces its dependence on wholesale, Zegna said. While the company has focused on increasing its retail footprint in China in the past two years, expansion in 2011 will be “more balanced across the world,” he said.
Zegna will introduce made-to-order knitwear in its main stores in September and is also adding private salons in some stores for its top clients. “I see an incredible opportunity still in personalized service,” he said.
In December, Zegna opened an e-commerce site in partnership with Yoox SpA. The aim is for the virtual store to account for at least 5 percent of Zegna’s retail sales “in a number of years,” the CEO said.
The company is focused on internal growth rather than acquisitions and on men’s wear, Zegna said, also ruling out a share sale.
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