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Ermenegildo Zegna builds factories as profits dip

Ermenegildo Zegna is to build production hubs for formal garments, leatherwear and footwear in Italy in a bid to strengthen its “control of the supply chain”, as the luxury menswear brand reports a dip in profits for last year.

Construction has now been completed of a formalwear factory at the new Inco plant in San Pietro Mosezzo and a factory for leather and footwear in Parma.

The focus on production comes as the company posted sales of €1.27bn (£1.04bn) and net profits of €116.3m (£95.5m) for 2013 in its annual results. Sales were slightly up on 2012’s €1.26bn (£1.035bn), but profits were down from 2012’s €130m (£106.8m).

Group chief executive Gildo Zegna said trading was primarily affected by two factors. First, a slowdown in the economies of countries defined as emerging, followed by the sustained depreciation of the yen and the dollar. We responded to the situation aggressively with a record level of investment.”

The most significant increases in sales were recorded in Hong Kong, Macao and the Middle East. Parts of Europe and the US saw a strong increase in sales due to increased tourism from China, Russia and Brazil, the company said.

In 2014 the group will focus on growing its Stefano Pilati-designed Agnona brand. It is investing in the brand’s distribution and communications infrastructure, under new chief executive Alessandra Carra.

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