Suitmaker Zegna Tears Up Budget
Zegna will renegotiate wages of its largely Italian Workers in Switzerland
Ermenegildo Zegna, head of the Italian luxury suitmaker that bears his name, is tearing up his 2015 budget after the Swiss National Bank unexpectedly removed the cap on the franc last week.
He’ll convene top managers today to review everything from the size of stores to pricing, the chief executive officer said in a Jan. 17 interview with Bloomberg. Ermenegildo Zegna Group makes most of its made-to-measure suits in Switzerland, which is now more costly after the franc surged as much as 41 percent against the euro, roiling markets worldwide. “We have to figure out what to do”, Zegna said before the Trivero, Italy-based company’s fall-winter menswear show. “It’s very destabilizing”.
Zegna will renegotiate wages of its largely Italian Workers in Switzerland and possibly pass on some of the cost increases to consumers, the CEO said. He’ll also assess distribution worldwide and personnel as he seeks to generate a ‘slight’ increase in annual sales after a similar decrease in 2014.
The franc’s climb wiped billions off the value of companies, including watchmaker Swatch Group AG, whose CEO Nick Hayek called the decision a “tsunami” for exports. It adds to pressure on Zegna and other luxury-goods makers already squeezed by a slowdown in China and a drop in Russian spending. Zegna’s revenue reached 1.27 billion euros ($1.47 billion) in 2013, the last year for which figures were available.