Release Date: March 27, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ermenegildo Zegna NV (ZGN, Financial) reported an adjusted EBIT of EUR 184 million for FY2024, demonstrating resilience despite a challenging year.
- The Tom Ford Winter '25 Fashion Show in Paris received significant acclaim, doubling the media impact compared to previous shows.
- The company is seeing positive customer interest in the new Tom Ford collection, with strong initial sales of the 'see now, buy now' pieces.
- Thom Browne's February show was well-received, confirming the brand's strong journey and distinctive tailoring.
- Zegna's exclusive collection and innovative advertising campaign outperformed expectations, attracting both existing and new customers.
Negative Points
- The challenging environment in Greater China, particularly in Hong Kong, is expected to persist, impacting revenue growth in the region.
- The wholesale business is being streamlined, with Thom Browne's wholesale channel expected to see a similar trend to Q1 '24, indicating a decline.
- SG&A expenses increased to EUR 1.008 billion, with a higher incidence on revenues due to investments in talent and store network expansion.
- The adjusted EBIT for FY2024 decreased to EUR 184 million from EUR 220 million in 2023, reflecting the challenging sector environment.
- The company anticipates a cautious outlook for 2025, with expected low single-digit growth in revenue and adjusted EBIT.
Q & A Highlights
Q: Can you provide insights into the latest trends in Q1, particularly in the US, given concerns about a slowdown in the American consumer market?
A: Ermenegildo Zegna, CEO, noted that the US market remains resilient, with good traction for both Zegna and Tom Ford brands. While there are uncertainties, the customer base is considered resilient. The situation in Canada is slightly different, with a more cautious outlook. Latin America has shown satisfactory performance, contrasting with the challenging environment in Greater China.
Q: How do you see Zegna's EBIT margin evolving, and what confidence do you have in improving margins for the Zegna segment?
A: Gianluca Tagliabue, CFO, explained that the Zegna brand achieved a 15% EBIT margin in the second half of the year, influenced by a shift in marketing expenses. For 2025, investments in CRM, marketing, and store training will continue, with expectations for full results post-2025. The long-term target remains a 15% adjusted EBIT margin.
Q: Could you update us on the Thom Browne product assortment and when we might see a refreshed portfolio?
A: Ermenegildo Zegna, CEO, stated that significant improvements have been made in the product evolution, with a bolder approach. The refreshed assortment will start appearing in stores for summer 2025, with stronger offerings expected for winter 2025. The focus is on creating realistic and commercially viable collections.
Q: What are your expectations for growth opportunities in China, and how do you see the trends for different brands?
A: Ermenegildo Zegna, CEO, remains positive about China's long-term potential, despite current challenges. The focus is on personalization and training to attract new customers. Gianluca Tagliabue, CFO, added that high spenders are a key growth area, with efforts to engage them showing traction.
Q: How is the integration of Tom Ford Fashion progressing, and what is the scope for DTC expansion?
A: Ermenegildo Zegna, CEO, reported positive progress in the integration, with promising reactions from stakeholders. The focus is on expanding distribution and enhancing the women's line, with more developments expected in summer 2026.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
