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Zegna to Open New Shoe and Leather Goods Factory in Italy

FILE PHOTO: A man walks by an Ermenegildo Zegna store, in Rome, Italy, December 20, 2021. REUTERS/Yara Nardi/File Photo
FILE PHOTO: A man walks by an Ermenegildo Zegna store, in Rome, Italy, December 20, 2021. REUTERS/Yara Nardi/File Photo
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Zegna to Open New Shoe and Leather Goods Factory in Italy

FILE PHOTO: A man walks by an Ermenegildo Zegna store, in Rome, Italy, December 20, 2021. REUTERS/Yara Nardi/File Photo
FILE PHOTO: A man walks by an Ermenegildo Zegna store, in Rome, Italy, December 20, 2021. REUTERS/Yara Nardi/File Photo

Italian fashion group Ermenegildo Zegna said on Thursday it would open a new luxury footwear and leather goods factory in northern Italy to meet the growing needs of its brands.
The 12,500 sq m facility will be located near Parma and is expected to be completed by December 2026. It should employ more than 300 people once at full capacity in 2027, the company said.
The move by the Zegna group, based in the northern Italian region of Piedmont but listed in New York, aims to promote Italian craftsmanship at a time when the luxury industry is short of artisans.
"The center will be more than just a production facility. It will play an important role as a training ground for a new generation of artisans, ensuring the ongoing viability of these important skills and working to preserve the uniqueness of 'Made in Italy'", Reuters quoted chairman and chief executive Gildo Zegna as saying.
The Italian group owns the Zegna and Thom Browne brands and operates Tom Ford Fashion through a long-term licence agreement with the Estée Lauder Companies.

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Fashion

LVMH Shares Drop after Missing Second-quarter Estimates

A man walks past a shop of fashion house Dior in Paris, France, April 15, 2024. REUTERS/Manon Cruz/File Photo Purchase Licensing Rights
A man walks past a shop of fashion house Dior in Paris, France, April 15, 2024. REUTERS/Manon Cruz/File Photo Purchase Licensing Rights
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LVMH Shares Drop after Missing Second-quarter Estimates

A man walks past a shop of fashion house Dior in Paris, France, April 15, 2024. REUTERS/Manon Cruz/File Photo Purchase Licensing Rights
A man walks past a shop of fashion house Dior in Paris, France, April 15, 2024. REUTERS/Manon Cruz/File Photo Purchase Licensing Rights

Shares in LVMH (LVMH.PA) fell as much as 6.5% in early Wednesday trade and were on track for their biggest one-day drop since October 2023 after second-quarter sales growth at the French luxury goods giant missed analysts' consensus estimate.

The world's biggest luxury group said late Tuesday its quarterly sales rose 1% year on year to 20.98 billion euros ($22.76 billion), undershooting the 21.6 billion expected on average by analysts polled by LSEG.

At 1000 GMT, LVMH's shares were down 4.5%.

The earnings miss weighed on other luxury stocks, with Hermes (HRMS.PA), down around 2% and Kering (PRTP.PA), off 3%.

Kering is scheduled to report second-quarter sales after the market close and Hermes reports on Thursday, Reuters reported.

Jittery investors are looking for evidence that the industry will pick up from a recent slowdown, as inflation-hit shoppers hold off from splashing out on designer fashion.

JPMorgan analyst Chiara Battistini cut full year profit forecasts by 2-3% for the group, citing softer trends at LVMH's fashion and leather goods division, home to Louis Vuitton and Dior.

"The soft print is likely to add to ongoing investors’ concerns on the sector more broadly in our view, confirming that even best-in-class players like LVMH cannot be immune from the challenging backdrop," said Battistini in a note to clients.

The weakness of the yen, which has prompted a flood of Chinese shoppers to Japan seeking bargains on luxury goods, added pressure to margins, another source of concern.

Equita cut 2024 sales estimates for LVMH by 3% - attributing 1% to currency fluctuations - and lowered its second half organic sales estimate to 7% growth from 10% growth previously.

The lack of visibility for the second half beyond the easing of comparative figures - as the Chinese post-pandemic lockdown bounce tapered off a year ago - is unlikely to improve investor sentiment to the luxury sector, Citi analyst Thomas Chauvet said in an email to clients.

"No miracle with the luxury bellwether; sector likely to remain out of favour," he wrote.

Jefferies analysts said the miss came as investors eye Chinese shoppers for their potential to "resume their pre-COVID role as the locomotive of industry growth and debate when Western consumers will have fully digested their COVID overspend".

LVMH shares have been volatile since the luxury slowdown emerged, and are down about 20% over the past year, with middle-class shoppers in China, the world's No. 2 economy, a key focus as they rein in purchases at home amid a property slump and job insecurity.

LVMH offered some reassurance, with finance chief Jean-Jacques Guiony telling analysts during a call on Tuesday that Chinese customers were "holding up quite well," while business with US and European customers was "slightly better".