Nov 13, 2012
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Zegna and Estee Lauder see calm markets after stormy 2013

Nov 13, 2012

MILAN - Upmarket menswear maker Ermenegildo Zegna and U.S. cosmetics group Estee Lauder expect the luxury goods sector to regain vigour after another difficult year in Europe in 2013.

Z by Zegna, the fragrance

Family-owned Zegna and Estee Lauder are among luxury goods makers that have been shielded from the worst of the economic troubles in Europe by sales in growing markets such as China, India and Latin America.

But they are now under pressure due to slower economic growth in China, one of their biggest markets for clothes and accessories.

"Our business is similar to surfing. You always need to find a higher wave to ride, knowing it can always crash on the beach," Estee Lauder's Chief Executive Fabrizio Freda told Reuters at the launch of its first men's perfume for Zegna.

Estée Lauder, known for its namesake brand as well as lines such as La Mer and MAC, this month scaled back the top end of its full-year sales forecast, saying it expected poor demand in Europe to persist.

Founded as a wool mill in 1910 by entrepreneur Ermenegildo Zegna, the group's revenues rose 17 percent to more than 1.1 billion euros last year.

But the founder's grandson and Chief Executive Gildo Zegna said he did not expect the company's sales to grow as fast this year. However, the global footprint of the maker of suits worn by former U.S. President Bill Clinton and American actor Adrien Brody would help it ride out the storm, he said.

Zegna exports 90 percent of its products to 80 countries.

China, which the group entered in 1991, will remain Zegna's main market, followed by the Unites States and Italy and possibly Germany, Zegna said.


Zegna said the group will expand into five African countries over the next two to three years to cater to new luxury buyers.

"I remain cautiously positive but with some concerns because 2013 will not be an easy year," Zegna said at the group's futuristic headquarters.

Zegna on Monday launched its first men's scent with Estee Lauder since parting ways with L'Oreal in 2011 to cater to shoppers who indulge in a smaller luxury treat.

Called "Uomo", the Italian word for man, the bergamot, violet-scented perfume will compete in a growing fragrance and cosmetics market set to reach $106 billion in 2016.

Tightly controlled by the Zegna family, the company is one of the last Italian fashion groups besides Giorgio Armani to resist calls for a stock market listing or a private sale.

The group is led by Gildo Zegna as CEO and his cousin Paolo as chairman. Gildo's sister Anna is image director, while his sister Benedetta is talent manager.

"We face tough challenges. But we decided to go ahead with our forces and prepare for the next generation," Zegna said.

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