Zegna warns of China slowdown
Italian menswear brand Ermenegildo Zegna is expecting slower growth in China after Bain & Company forecast the Chinese luxury goods market will drop by three to four per cent.
This year’s growth rate forecast has been lowered from 20-30 per cent of previous years to between 10 and 15 per cent.
“We have to be ready for a bumpy ride,” said CEO Gildo Zegna.
The warning comes after Claudia D’Arpizio of Bain & Company lowered its forecast for luxury goods in China to 15-18 per cent from 18-22 per cent predicted in May.
The Chinese market is now starting to mature, hence the slowdown in growth of sales, especially in the luxury goods market, says Armando Branchini of Milan-based luxury goods and retail consultancy InterCorporate.
About one third of the 50 new stores Zegna is opening this year in China, underlining its importance as a market. China accounted for 28 per cent of Zegna’s consolidated revenues of €1.13 billion last year.
Zegna was among the first luxury brands to enter and invest in China when it launched its first store in Beijing in 1991.
In an effort to offset the slowdown in China, Zegna is now focusing on new markets including those in Nigeria, Mongolia and Morocco where it already has stores and new markets such as Angola, Mozambique and Kenya where it plans to open stores in two years.
“So far the stores in these places are doing ok. You have to put your foot in to test the water,” says CEO Zegna.
Founded in 1910, Ermenegildo Zegna is managed today by the fourth generation of the Zegna family.