With retail growth expected to slow in China, many major
fashion companies and luxury houses are adjusting their profit forecasts.
Italian fashion house Ermenegildo Zegna has lowered its expectations of 30 per cent growth to slightly above 10 per cent. Zegna's chief executive officer Mr Gildo Zegna told the FT the Chinese market will grow more slowly than it has over the past decade. “The growth of 20 to 30 per cent we have seen in China can’t continue,” he says. “That doesn’t mean the market will stop growing, but it means we have to adjust to 10 to 15 per cent growth there. I wish every country we are in grew like that.”
Burberry in September also stated it was expecting tougher times ahead.
While in general the luxury fashion and accessory houses have remained largely untarnished by the global economic crisis, Zegna stated: “Crisis is a word we have to keep in mind at all times and learn to live with it. My job is to do the best we can in the crisis, make the most of 2012 and then be ready for 2013. Don’t ask me about next year, it will be tougher than this one.”
According to the FT, revenues at Zegna rose 17 per cent at constant currency rates last year to 1.13 billion euro, with China growing 28 per cent. Asian tourists shopping in Europe helped ensure a modest advance in revenue on the continent. Group sales advanced 21 per cent in 2010.
To underline the importance of China for Zegna, which exports 90 per cent of what it produces, its CEO notes that Macau generates more revenue than Las Vegas. About a third of the 50 stores it is opening in 2012 will be in China.