Ermenegildo Zegna N.V. (ZGN) Q1 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights a mix of positive and negative elements. While there is growth in the U.S. and EMEA DTC channels, significant declines in Greater China and wholesale revenue, along with economic uncertainties and tariff impacts, weigh heavily. The lack of a share buyback program and management's unclear responses further contribute to a negative sentiment. Despite some optimistic guidance, the overall market reaction is likely to be negative due to these challenges, especially given the company's market cap.
Key Financial Performance
Revenues EUR 459 million, down 1% year-on-year due to a decline in Thom Browne's wholesale channel.
Zegna Brand Revenues EUR 293 million, up 3% year-on-year, supported by direct-to-consumer (DTC) growth in EMEA and the U.S.
Thom Browne Revenues EUR 64 million, down 9% organic year-on-year, due to ongoing reduction in wholesale.
Tom Ford Fashion Revenues EUR 67 million, up 3% organic year-on-year, driven by strong DTC performance and the impact of Haider Ackermann's first fashion show.
Textile Revenues Down 9% year-on-year, largely due to decreased global demand from luxury goods brands outside the group.
EMEA Revenues Down 2% year-on-year, primarily due to decline in Thom Browne's wholesale channel.
Americas Revenues Up 9% organic year-on-year, with strong double-digit growth in Zegna brand, particularly in the U.S.
Greater China Revenues EUR 123 million, down 12% year-on-year, reflecting a cautious approach and ongoing negative traffic trends.
Rest of APAC Revenues Up 8% year-on-year, driven by strong performance in Japan and Singapore.
DTC Growth 5% growth across all brands, reflecting a strategic focus on direct-to-consumer channels.
Wholesale Performance Down 19% year-on-year, reflecting the strategic decision to focus on DTC and the performance of Thom Browne.
Zegna DTC Revenues Up 4% year-on-year, accounting for 86% of total brand revenues.
Thom Browne DTC Revenues Up 3% organic year-on-year, driven by new store openings.
Tom Ford Fashion DTC Growth Up 9% organic year-on-year, supported by strong double-digit growth in EMEA and robust performance in the U.S.
Tom Ford Fashion Wholesale Performance Down 8% year-on-year, largely due to wholesale shop-in-shop conversions and a natural slowdown in orders.
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Operating Highlights
New Product Launch: In early April, Zegna brand presented its summer drop collection, featuring 100% traceable fabrics and a new Moccasin shoe family.
Fashion Show Impact: Tom Ford Fashion leveraged momentum from the March fall/winter '25 fashion show, with positive results from the 'see now, buy now' collection.
Store Openings: Thom Browne opened a new store in Palm Beach and is set to open another in Los Angeles Melrose Place to strengthen U.S. market presence.
Geographic Performance: The Americas region recorded a 9% organic growth, particularly strong for the Zegna brand in the U.S.
DTC Growth: Zegna DTC revenues grew by 4%, accounting for 86% of total brand revenues.
Wholesale Strategy: Thom Browne's wholesale was down 48% due to a strategic focus on DTC distribution.
Tariff Strategy: Considering a mid single digit increase in pricing in the U.S. due to a 10% tariff increase on imported products.
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Risk or Challenges
Revenue Decline: The company reported a 1% year-on-year decline in revenues, indicating potential challenges in maintaining sales growth.
Wholesale Channel Reduction: Thom Browne's wholesale revenues decreased by 48% organic, reflecting a strategic decision to reduce volumes in this channel and focus on direct-to-consumer (DTC) distribution.
Global Demand Decrease: The Textile product line experienced a 9% decline due to decreased global demand from luxury goods brands outside the group.
Greater China Region Performance: The Greater China region reported a 12% revenue decline, continuing a negative trend from previous quarters, despite some initial signs of improvement.
U.S. Tariffs Impact: A potential 10% increase in tariffs on imported products to the U.S. could affect pricing strategies, with the company considering a mid single-digit price increase to protect EBIT.
Economic Uncertainty: The overall environment remains uncertain, which could impact future performance and consumer demand.
Supply Chain Challenges: The company faced challenges related to timing in deliveries and the conversion of wholesale shop-in-shop into retail concessions.
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Guidance & Outlook
DTC Growth: Zegna DTC revenues grew by 4% and accounted for 86% of the brand's total revenues.
New Store Openings: Thom Browne opened a new store in Palm Beach and plans to open another in Los Angeles Melrose Place.
Product Launches: Zegna launched a summer drop collection featuring 100% traceable fabrics and a new Moccasin shoe.
Tariff Strategy: Considering a mid single digit increase in pricing in the U.S. due to a 10% tariff increase on imported products.
Revenue Expectations: The Americas region recorded a 9% organic growth, indicating positive revenue expectations.
Future Product Launches: The Ackermann fall/winter '25 collection will hit stores starting in September.
Market Response: Positive customer response to new product launches and marketing campaigns across all regions.
Overall Demand: No significant changes in overall demand globally, with some improvement noted, particularly at the Zegna brand.
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Shareholder Return Plan
Share Buyback Program: None
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Key Q&A
Q:What's happening geographically in terms of trends you might be seeing?
A:In the U.S., we have not seen areas of softness or stronger performance; Zegna is performing well across the board, especially in New York, Florida, and Southern California. Globally, Japan and Singapore are performing well, while Greater China, particularly Hong Kong, is experiencing softness.
Q:What's the timing on impact from Haider Ackermann's new product launches?
A:The fall/winter products will be delivered starting from the end of May, with major drops occurring from June onwards. The full impact will be seen in Q2 and Q3.
Q:Can you provide a framework for thinking about the mid single digit price increase with tariffs?
A:We are not changing our sourcing strategy due to tariffs and will adjust prices in the fall/winter range to offset the tariff impact.
Q:What are the key nationalities moderating growth in the DTC channel?
A:We are not seeing a slowdown in the U.S. or Europe, but there is low double-digit softness in Greater China.
Q:Is there any change in EBIT guidance for 2025?
A:We confirm the low single-digit EBIT guidance that was previously declared.
Q:Should we expect a sequential acceleration in Tom Ford's performance?
A:Tom Ford is still in an early stage of growth, and we are confident in its long-term journey despite tougher comps.
Q:Can you break down the DTC growth by mix, price, and volume?
A:The major driver in Q1 was mix, with organic growth primarily from comp. The Triple Stitch shoe is performing above average.
Q:What is the wholesale outlook for Thom Browne?
A:We expect a 25%-30% decline in wholesale for Thom Browne due to rationalization and weaker demand.
Q:What level of organic revenue growth is needed for stable margins?
A:We are confident that low single-digit growth in top line and EBIT will keep margins stable.
Q:Review of Unclear Management Responses
A:Management appeared to avoid giving a direct answer to the question about the specific impacts of the mid single digit price increase on volumes, as they stated it wouldn't significantly affect volumes but did not provide detailed data or examples.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
APAC Japan
APAC Page
APAC revenue
Ackermann
Americas region
COO CFO
Chief External
China region
DOS
DTC channel
DTC revenue
EMEA
EUR revenue
External Relations
Revenues
Textile
Zegna Group
Zegna brand
Zegna digit
channel Zegna
demand
distribution channel
group revenue
launch
organic
product line
region Americas
region revenue
remark
revenue EUR
revenue Zegna
revenue brand
revenue distribution
revenue region
segment revenue
shop conversion
timing delivery
ZGN Transcript
Ermenegildo Zegna N.V. (ZGN) Q4 2025 Earnings Call Transcript
Positive3-20
The earnings call summary indicates a solid financial performance with improved free cash flow and net cash surplus. The Q&A section highlights cautious but optimistic guidance, especially in China and the Middle East, and strong DTC growth. Despite some currency headwinds and uncertainties, the overall sentiment is positive, supported by strategic pricing and marketing plans. Given the market cap of approximately $2.9 billion, the stock is likely to see a positive reaction, between 2% to 8%.
Ermenegildo Zegna N.V. (ZGN) Q2 2025 Earnings Call Transcript
Unknown9-5
Despite strong net profit growth and improved margins in the Zegna segment, the company faces challenges such as declining EBIT in Thom Browne and Tom Ford segments, and higher cash absorption. The cautious outlook on China and flat EBIT guidance temper optimism. The Q&A highlighted risks, particularly in China, and management's reluctance to provide detailed guidance. Given these mixed signals and the company's market cap, a neutral stock price movement is expected.
Ermenegildo Zegna N.V. (ZGN) H1 2025 Sales/ Trading Statement Earnings Call Transcript
Neutral7-31
Ermenegildo Zegna N.V. (ZGN) Q1 2025 Earnings Call Transcript
Unknown4-24
The earnings call highlights a mix of positive and negative elements. While there is growth in the U.S. and EMEA DTC channels, significant declines in Greater China and wholesale revenue, along with economic uncertainties and tariff impacts, weigh heavily. The lack of a share buyback program and management's unclear responses further contribute to a negative sentiment. Despite some optimistic guidance, the overall market reaction is likely to be negative due to these challenges, especially given the company's market cap.
ZGN Report
Frequently Asked Questions
Where does this earnings call transcript come from?
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When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
