The luxury menswear brand and supplier of fine fabrics is on an acquisition spree
For over 100 years, Ermenegildo Zegna has dressed statesmen, industrialists, and everyone with an affinity for fine Italian menswear in garments made in its humble mill in Biella, Italy.
Its long-planned rebrand as “Zegna”, dropping the founder’s first name, coincided with the global pandemic. It also provided the family-run business with the opportunity to participate in the SPAC craze (special purpose acquisition vehicle) to raise new capital by going public on the New York Stock Exchange in 2021 under the ticker ZGN.
So what is the firm, one that has long shied away from logos and the public eye, up to ?
The Ermenegildo Zegna Group has been steadily building its own textile supply chain, most recently by buying 60 percent of Tessitura Ubertino, a leading manufacturer of high-quality women’s fabrics, based in Prativero, near Biella.
In addition to its own Lanificio Zegna, the group’s textile supply chain grew to include Lanerie Agnona (ultra rare cashmere), Tessitura di Novara (pure silk, cashmere blends), Bonotto (complexly woven cotton and wool) and Dondi (jersey). A majority stake in Filati Biagioli was jointly acquired with Prada in 2021, and a 15% stake remains with the founding family. The firm is a producer of fine cashmere yarns and expected revenues of more than 30 million euros in 2021.
These acquisitions guarantee technical know-how and the strengthening of its supply chain, while simultaneously raising its position within the industry as a supplier of luxurious and technically advanced fabrics to other brands.
Its acquisition spree didn’t stop with textile manufacturers. After the multiyear-long joint venture with Ferragamo, dubbed ZeFer, Zegna brought capabilities in-house. While the joint venture produced shoes for Zegna, and, in turn, Zegna manufactured tailored garments for Ferragamo. Zegna decided to take over the JV facility in Parma to vertically integrate the production of its own dress shoes and iconic Tripple Stich sneakers.
In 2018, Zegna finalized the acquisition of a controlling stake in Pelle Tessuta, which specializes in the weaving of leather.
It also bought a majority stake in Cappellificio Cervo, a historic men’s hat brand based in Biella, in 2018. This enabled a hugely successful range of cashmere baseball caps alongside the pop cultural rise of “quiet luxury” promoted by TV shows such as HBO’s Succession or Apple’s The Morning Show.
While the aforementioned Lanerie Agnona includes the brand Agnona, it is not the only brand Zegna has added to its portfolio. In 2018 it acquired an 85% stake in American luxury menswear brand Thom Browne, valued at $500M US Dollar and approximately $150M in revenue.
That same year it invested, together with Reliance Industry’s retail division, in Indian luxury formal wear brand Raghavendra Rathore Jodhpur.
In late 2022, Zegna acquired the license for all Tom Ford men’s and women’s fashion as well as accessories and underwear, fine jewelry, childrenswear, textile, and home design products from Estée Lauder Companies (ELC). ELC had previously acquired Tom Ford from its namesake founder for $2.8 billion USD. The 20-year licensing deal allows for an automatic renewal for further 10 years, subject to certain minimum performance conditions. Meaning that after manufacturing Tom Ford suits and knitwear since the brand’s inception, Zegna now controls the entire range of Tom Ford products except for the beauty and cosmetics line, which remains with ELC.
In January 2023, Zegna disclosed a small stake in Vancouver-based outdoor brand Norda Run. The investment includes the option plan to gradually grow its investment in Norda Run over the next nine years.
What’s next for the Italian giant ?
The increasing speed of acquisitions reflects a coherent new strategy. Becoming the leading luxury fabrics brand. This is done by growing demand for its products through its namesake brand, adding smaller brands to its portfolio whose customers still appreciate the finest yarns, and securing IP and access to deliver cutting-edge natural materials to other fashion firms.
Flush with cash, a rejuvenated brand identity, and better control over its supply chain, Zegna cemented its position as the leading supplier and producer of the world’s finest garments. This isn’t the private equity approach of LVMH, nor the holding company portfolio building of Kering. Zegna pursues its business activities laser-focused on its core strength, producing the finest and most innovative luxury fabrics, and how it sells more of them to more customers and businesses.
