Financial Data and Key Metrics Changes - In Q4 2024, revenue grew by 3% both organically and reported, driven by the Zegna brand's 7% organic growth and an 8% organic growth in the consumer channel at the group level [4][5] - The Zegna segment recorded a 4% organic growth, while TOM FORD FASHION also achieved a 4% revenue growth [26][27] - The overall performance in Q4 showed a sequential improvement compared to previous quarters, particularly in the Americas, which saw a 15% organic growth [30][31] Business Line Data and Key Metrics Changes - The Zegna brand's performance was strong, particularly in luxury leisurewear and shoes, contributing significantly to growth [27][129] - Thom Browne's revenue showed improvements, although it is still transitioning to a DTC-driven model, with a noted 4% organic growth in DTC [14][28] - TOM FORD FASHION reported a 9% organic growth in the DTC channel, indicating a positive trend driven by strong commercial organization efforts [40][41] Market Data and Key Metrics Changes - The Americas accounted for 27% of full-year revenues, with a strong sequential acceleration in Q4, particularly in the U.S. market [29][30] - EMEA recorded a 5% organic growth in Q4, driven by double-digit growth in Zegna and TOM FORD FASHION [29] - Greater China region revenues declined by 11% in Q4, although this was an improvement from a 22% decline in Q3 [31][32] Company Strategy and Development Direction - The company is focusing on long-term strategies, including enhancing CRM and personalization efforts, particularly for the Zegna brand [6][8] - There is a clear emphasis on integrating corporate functions across brands to drive efficiency and cohesion [7][8] - The company aims to strengthen its community of brands and consolidate Zegna's leadership in timeless luxury [12][18] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the ongoing uncertainties in the sector but expressed optimism about the positive trends in the U.S. and Middle East markets [21][22] - The company is cautious about the Chinese market, anticipating volatility in 2025 but noting some positive signs in early 2025 [106][112] - Management emphasized the importance of a personalized approach to customer engagement and the need to adapt to changing market dynamics [109][110] Other Important Information - The company is investing in its integrated Italian supply chain, which provides a competitive advantage in terms of excellence and innovation [18][19] - A new shoe factory is planned to be operational by 2026, further enhancing production capabilities [18] Q&A Session Summary Question: Thoughts on TOM FORD's performance in 2025 - Management expects 2025 to be a transition year, focusing on brand legacy and product consistency across collections [48][51] Question: Performance of the top 5% clientele for Zegna - The top 5% of clients contribute 40% of Zegna's revenues, with this segment showing solid double-digit growth, particularly in the Americas [53][54] Question: Growth prospects for the Americas and product assortment - Management is optimistic about continued growth in the U.S. market, driven by strong merchandising and customer engagement strategies [76][78] Question: Insights on the performance of the Triple Stitch franchise - The Triple Stitch family is expected to account for around 15% of sales in 2024, with a focus on exclusivity and controlled distribution [134][145] Question: Pricing strategy and AUR trends - Average unit rates have increased due to a focus on higher-end products, with low-single-digit price increases implemented to offset inflation [140][142]

FY/Q4 2024 PRELIMINARY REVENUES Unaudited figures January 27, 2025 1 Disclaimer Non-IFRS Financial Measures The Group's management monitors and evaluates operating and financial performance using several non-IFRS financial measures including: revenues on a constant currency basis (constant currency) and revenues on an organic growth basis (organic growth or organic). The Group's management believes that these non-IFRS financial measures provide useful and relevant information regarding the Group's financial ...

Company and Industry Overview * **Company**: Ermenegildo Zegna N.V. (NYSE:ZGN) * **Industry**: Luxury fashion and accessories * **Timeframe**: H1 2024 * **Key Challenges**: Deep normalization phase in the luxury sector, volatile and challenging global environment Core Points and Arguments * **One Brand Strategy**: Zegna is doubling down on its One Brand strategy, focusing on targeted audience engagement, evolving clientele experience, and transforming collections into iconic products. * **VILLA Zegna New York**: Launched to celebrate Zegna's heritage and engage with value customers through immersive experiences and exclusive events. * **Thom Browne**: Significant changes and reinforcement of the management team, with a focus on strengthening the organization in China, headquarters, and other regions. * **Tom Ford**: Haider Ackermann appointed as new Creative Director, expected to contribute to the brand's long-term ambition. * **Filiera**: Continued investment in Filiera to strengthen production capacity and resilience. * **China**: Challenging and volatile environment, but with positive traction from potential and loyal customers. Plans for store development and expansion are being reconsidered. * **Financial Results**: 6% revenue growth year-over-year driven by Zegna brand and Tom Ford consolidation. Gross profit margin improved by 220 bps to 66.4%. Adjusted EBITDA down 33% compared to H1 2023 due to top-line decline at Thom Browne and costs at Tom Ford Fashion. * **Investments**: Continued investment in key projects, including the new shoe factory in Parma, Italy, and store network expansion. Other Important Points * **Channel Mix**: Direct-to-consumer (DTC) revenue generated 76% of branded revenues, up from 72% a year ago. * **Inventory Management**: Improved inventory management contributed to the gross profit margin improvement. * **Marketing Expenses**: Increased to 7% of revenues due to events and fashion shows in the first half of the year. * **Capital Expenditures (CapEx)**: Reached EUR60 million in H1 2024, with a focus on store network expansion and production investments. * **Trade Working Capital**: Reached EUR476 million at the end of June, with stable trade receivables and inventory levels. * **Net Financial Indebtedness**: Reached EUR66 million at the end of June due to the acquisition of a stake in Thom Browne and the Korean businesses in Zegna and Thom Browne.

Financial Performance - Revenues for the six months ended June 30, 2024, were €960,122 thousand, an increase of 6.3% compared to €903,059 thousand in 2023[13] - Profit for the same period decreased to €31,332 thousand from €52,116 thousand in 2023, reflecting a decline of 39.9%[13] - Adjusted EBIT for the first half of 2024 was €80,910 thousand, down 32.5% from €119,904 thousand in 2023[13] - Operating profit for the six months ended June 30, 2024, was €73,081 thousand, representing a margin of 7.6%, down from €116,509 thousand or 12.9% in 2023[18] - The Group's profit before taxes for the six months ended June 30, 2024, was €48,550 thousand, compared to €78,278 thousand in 2023, reflecting a decrease in profitability[18] - The Group's profit for the six months ended June 30, 2024, was €31.3 million, a decrease from €52.1 million in the same period of 2023, representing a decline of 39.9%[116] - Adjusted EBIT for the same period was €80.9 million, down from €119.9 million in 2023, reflecting a decrease of 32.6%[116] - Adjusted EBITDA for the six months ended June 30, 2024, was €189.5 million, compared to €206.9 million in 2023, a decrease of 8.4%[120] - Adjusted Profit for the first half of 2024 was €37.2 million, down from €54.9 million in 2023, a decline of 32.4%[124] Revenue Breakdown - The TOM FORD FASHION segment generated revenues of €148,493 thousand, an increase of €84,478 thousand or +132.0% compared to €64,015 thousand in 2023, benefiting from a full six months contribution following the TFI Acquisition[21] - The ZEGNA brand reported revenues of €566,067 thousand, an increase of €24,748 thousand or +4.6%, primarily driven by strong growth in the Direct to Consumer (DTC) channel[21] - Thom Browne revenues decreased by €40,230 thousand or -19.4%, reflecting the decision to streamline the wholesale business[22] - Revenues for the Thom Browne segment decreased to €166,935 thousand, a decline of €41,024 thousand or -19.7% from €207,959 thousand in 2023[71] - Zegna segment revenues for the six months ended June 30, 2024 were €660,538 thousand, an increase of €16,228 thousand or +2.5% compared to €644,310 thousand in 2023[66] - Revenues for the Tom Ford Fashion segment increased by €84,466 thousand or +131.9% to €148,493 thousand for the six months ended June 30, 2024, compared to €64,027 thousand in the same period of 2023[78] Cost and Expenses - Selling, general and administrative expenses increased by €81,820 thousand or +19.7% to €497,612 thousand, with expenses as a percentage of revenues rising from 46.0% to 51.8%[39][41] - Marketing expenses for the six months ended June 30, 2024, increased by €19,221 thousand or +40.4% to €66,751 thousand, with marketing expenses as a percentage of revenues rising from 5.3% to 7.0%[45] - The Group's financial expenses decreased to €29,267 thousand, down from €44,592 thousand in the previous year[18] - Cost of sales for the six months ended June 30, 2024, was €322,678 thousand, with cost of sales as a percentage of revenues decreasing to 33.6% from 35.8%[33][34] Cash Flow and Liquidity - Net cash flows from operating activities increased by €12,865 thousand to €120,448 thousand for the six months ended June 30, 2024, compared to €107,583 thousand in the same period of 2023[84] - Net cash flows used in investing activities amounted to €81,741 thousand for the six months ended June 30, 2024, compared to net cash flows from investing activities of €60,958 thousand in the same period of 2023, a negative change of €142,699 thousand[86] - Cash and cash equivalents at the end of the period decreased to €225,316 thousand from €255,040 thousand in the same period of 2023, a decrease of €29,724 thousand[83] - Net Financial Indebtedness increased to €65,509 thousand at June 30, 2024, compared to €10,810 thousand at December 31, 2023, primarily due to negative Free Cash Flow and cash used for acquisitions[96] - Cash and cash equivalents decreased by 24.0% to €225,316 thousand at June 30, 2024, from €296,279 thousand at December 31, 2023[107] Strategic Initiatives - The TFI Acquisition, completed on April 28, 2023, allows the Group to expand its luxury offerings in both men's and women's fashion and accessories[5] - The Group's strategy includes enhancing its position in the luxury womenswear and leather goods segments through acquisitions and brand development[10] - The Group's unique supply chain, Filiera, provides a competitive advantage by integrating high-end textile production with luxury manufacturing capabilities[12] - The Group's management emphasizes the importance of safeguarding brand integrity and responding to changing customer preferences as part of its strategic outlook[7] Market Performance - Revenue growth in the Americas was €55,934 thousand or +29.4%, driven by strong performance of the ZEGNA brand and 9 net store openings, with a total of 64 DTC stores as of June 30, 2024[29] - The Greater China Region experienced a revenue decline of €40,511 thousand or -13.2%, attributed to challenging conditions in the luxury sector[31] - EMEA revenues increased by €13,911 thousand or +4.3%, primarily due to high double-digit growth of the ZEGNA brand[29] - Rest of APAC revenues rose by €27,800 thousand or +33.8%, driven by double-digit organic growth in Japan[29] Financial Risks and Management - The Group's financial risks include exposure to foreign currency exchange rates, interest rates, and liquidity risks[150] - The Group's management uses several non-IFRS financial measures to assess performance, including Adjusted EBIT, Adjusted EBITDA, and Adjusted Profit, which provide insights into underlying operational performance[112] - The Group's financial performance is impacted by significant costs related to severance, legal disputes, and transaction costs associated with acquisitions[123] Store Operations and Expansion - The Group operates a total of 437 direct-to-consumer stores, including 279 ZEGNA, 102 Thom Browne, and 56 TOM FORD FASHION stores as of June 30, 2024[13] - The Group opened 36 net new stores for Thom Browne as of June 30, 2024, compared to the previous year, reflecting ongoing expansion efforts[73] - New store openings in the Zegna segment included locations in EMEA, Greater China, and APAC, while Thom Browne and Tom Ford Fashion segments also expanded with new stores in key regions[92][94] Other Notable Information - A new Creative Director, Haider Ackermann, was appointed for TOM FORD on September 4, 2024, following Peter Hawkings' departure[152] - The Group's interest in Consorzio Re.Crea was reduced from 15.5% to 15.4% due to a capital increase, reflecting ongoing adjustments in its investment portfolio[188] - The average exchange rate for the U.S. Dollar for the six months ended June 30, 2024, was 1.081, compared to 1.105 at December 31, 2023, indicating a strengthening Euro[181]

Financial Data and Key Metrics Changes - In H1 2024, the Group reported €960 million in revenue, reflecting a 6% growth reported and 8% at constant currency [21][28] - Q2 contributed €497 million, up 5% year-on-year, with improved underlying organic growth from minus 5% in Q1 to flat in Q2 [21][28] - On an organic basis, Group revenues in H1 were down 2.7%, with Q2 organic growth at minus 0.4% [10][21] Business Line Data and Key Metrics Changes - The Zegna segment recorded positive organic growth in Q2 despite a flat performance in the textile business [10] - Thom Browne revenues in Q2 reached €88 million, down 18% in organic terms, showing improvement from minus 35% in Q1 [11] - TOM FORD FASHION revenues reached €83 million in Q2, with a DTC contribution close to 60% of brand revenues [17] Market Data and Key Metrics Changes - The Americas region recorded a 5% organic growth in Q2, driven by Zegna's strong performance [13] - Greater China region revenues declined by 10% organically in Q2, showing slight improvement from minus 13% in Q1 [13] - Japan showed strong double-digit organic growth for both Zegna and Thom Browne in Q2 [14] Company Strategy and Development Direction - The company aims to create a stronger, more global, and diversified luxury business, focusing on expanding TOM FORD into women's wear and leather goods [22] - The VILLA Zegna initiative aims to enhance customer engagement through immersive experiences [6][7] - The company is working on upscaling the sales team and improving merchandising, particularly in China [5] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the current global consumer environment as difficult to read, with rising volatility and uncertainty [26] - The company is focused on cost control while maintaining product authenticity and desirability [26] - Management remains optimistic about the potential for growth in the TOM FORD brand despite recent leadership changes [3][66] Other Important Information - The company integrated TOM FORD FASHION into its operations since April 29, 2023, impacting revenue reporting [9] - The textile performance was influenced by decreased demand from non-captive brands, leading to a decline in third-party brand revenues [12] Q&A Session All Questions and Answers Question: Can you comment on the organic performance in June versus the quarter and July trading, especially with the Chinese cluster? - Management indicated that the exit rate in July is not materially different from the average for Q2, with similar patterns observed across regions [36][68] Question: What are the implications of Peter Hawkings stepping down as Creative Director of TOM FORD? - Management confirmed that a successor will be announced soon and emphasized confidence in the ongoing leadership of TOM FORD FASHION [66] Question: How do you see the performance of Thom Browne in the coming quarters? - Management noted that the trend of Q2 is more reasonable for projecting the second half, with expectations for improved performance [73] Question: What is the outlook for Zegna in Greater China regarding traffic and sales? - Management confirmed that traffic is the primary driver of the decline, with good results in other retail metrics [104]

| --- | --- | --- | --- | --- | --- | --- | --- | |-------|-------|-------|---------------|-------------------|-------|------------------------------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | July 25, 2024 | Unaudited figures | | H1 2024 PRELIMINARY REVENUES | | 1 Disclaimer Non-IFRS Financial Measures The Group's management monitors and evaluates operating and financial performance using several non-IFRS financial measures including: revenues ...

Core Viewpoint - The analysis compares Ermenegildo Zegna N.V. (ZGN) and Deckers (DECK) to determine which stock represents a better value investment opportunity for investors interested in the Retail - Apparel and Shoes sector [1]. Group 1: Zacks Rank and Earnings Outlook - Ermenegildo Zegna N.V. has a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while Deckers has a Zacks Rank of 3 (Hold) [3]. - The Zacks Rank system emphasizes companies with strong earnings estimate revisions, suggesting that ZGN is likely experiencing a more favorable earnings outlook compared to DECK [3]. Group 2: Valuation Metrics - ZGN has a forward P/E ratio of 24.37, significantly lower than DECK's forward P/E of 35.57, indicating that ZGN may be undervalued relative to DECK [5]. - The PEG ratio for ZGN is 2.18, while DECK's PEG ratio is 3.64, further suggesting that ZGN offers better value considering its expected EPS growth rate [5]. - ZGN's P/B ratio is 5.17, compared to DECK's P/B of 13.14, reinforcing the notion that ZGN is more attractively priced based on its book value [6]. Group 3: Overall Value Assessment - Based on various valuation metrics, ZGN holds a Value grade of B, while DECK has a Value grade of C, indicating that ZGN is currently the superior value option [6].

Financial Data and Key Metrics Changes - In Q1 2024, group revenues reached €463 million, an increase of 8% year-over-year, and 11% when excluding a 3 percentage point negative currency headwind. On an organic basis, revenues were down 5% [17][18][21] - The Thom Browne segment revenues declined by 30% reported and 35% on an organic basis, driven by a challenging comparison with Q1 of the previous year and the decision to streamline the wholesale channel [18][19] - Direct-to-consumer (DTC) channel grew by 20% year-over-year, or 3% organic, contributing positively to group performance [21] Business Line Data and Key Metrics Changes - Zegna brand recorded a solid 7% organic growth, with strong contributions from the Triple Stitch shoe family and the Second Skin drop [27][40] - The textile product line showed a flattish performance with a -1% organic change, reflecting cautious outlook in the B2B sector [20][61] - TOM FORD FASHION generated €65 million in revenue, with initial positive signs from new collections introduced in February [41][62] Market Data and Key Metrics Changes - In the Americas, organic growth was strong at 10%, with the U.S. market showing outstanding double-digit performance [67] - Greater China region revenues declined by 13% organic, with Thom Browne significantly below this mark, while Zegna experienced a single-digit decline [67] - EMEA recorded a negative 6.5% organic growth, primarily due to Thom Browne's performance, while Zegna showed double-digit positive growth in both channels [44] Company Strategy and Development Direction - The company is focusing on enhancing Thom Browne's long-term value by reducing exposure to the wholesale channel and taking direct control of operations [7][8] - The one brand strategy is being emphasized, particularly in China, where the company aims to build a strong brand foundation [10][14] - The company is actively working on brand awareness and client experience, with significant events planned to engage customers [31][36] Management's Comments on Operating Environment and Future Outlook - Management noted a normalization phase in the Chinese market post-COVID, with cautious consumer outlook, especially among aspirational clients [23][27] - The company remains confident in its long-term growth strategy, despite short-term challenges in the luxury sector [26][67] - Management is taking measures to protect the bottom line on the cost side without compromising the long-term health of the brand [127][133] Other Important Information - The company opened 24 net new stores in Q1, with a significant number converted from wholesale to retail in Korea [70] - The company won the Fuorisalone Award of Sustainability during the Salone Del Mobile event in Milan, highlighting its commitment to sustainability [34] Q&A Session Summary Question: Trends by consumer nationality for Zegna DTC - Management indicated that Chinese consumer spending is down mid-single-digit year-over-year, while European demand is solid with double-digit growth across markets [52][54] Question: Impact of marketing strategies on brand exclusivity - Management emphasized the importance of balancing exclusivity with broader audience engagement, citing successful events in Milan as a model for future marketing efforts [57][88] Question: Expectations for tourism from China - Management expects a solid return of Chinese tourists in key markets, particularly in Japan and Europe, with a focus on enhancing customer experiences [119][124]

Financial Data and Key Metrics Changes - Group revenue for 2023 reached €1.9 billion, up 28% and up 19% on an organic basis [29] - Adjusted EBIT reached €220 million with an adjusted EBIT margin of 11.6%, an increase of 100 basis points from 2022 [29][67] - Net profit more than doubled compared to 2022 [29] Business Line Data and Key Metrics Changes - Zegna brand generated €1.3 billion in revenues with an adjusted EBIT margin of 14.6% [68] - Thom Browne revenue reached €380 million, with a 15.5% adjusted EBIT margin, supported by a 20% organic growth in the DTC channel and a 15% organic growth in wholesale [69] - TOM FORD FASHION contributed €235 million in revenues since its acquisition [45] Market Data and Key Metrics Changes - The Americas and EMEA markets are leading in the Zegna One brand strategy, with positive signs in Greater China despite challenges [32] - Demand for high-end products in Greater China is strong and improving [32] - The wholesale business is expected to remain flat, with a focus on direct-to-consumer channels [10] Company Strategy and Development Direction - The company aims to streamline wholesale distribution and enhance direct-to-consumer channels, targeting a 70-30 split for brands [12] - Continued investment in sustainability and renewable energy, with 97% of energy used in European operations coming from renewables [30] - Focus on expanding retail presence and improving store productivity [40] Management Comments on Operating Environment and Future Outlook - Management acknowledges that 2024 will be a transition year with some volatility expected, particularly in Greater China [40][76] - Confidence in achieving revenue targets for 2024, with a focus on customer connection and product confidence [77] - The company is committed to enhancing brand equity and customer engagement through targeted marketing and store openings [40] Other Important Information - The acquisition of TOM FORD FASHION is seen as a significant addition to the portfolio, with plans for expansion in the linen wear and leather goods segments [36] - A new center for excellence in Parma is being developed to enhance luxury shoe production and R&D [39] Q&A Session Summary Question: Performance of Chinese consumers in 2024 - Management acknowledges challenges but remains positive about mid-term prospects, emphasizing the need for relationship-driven customer engagement [85][86] Question: Guidance for Q1 and impact of wholesale on Thom Browne - Thom Browne wholesale revenues are expected to decline high double digits, influenced by timing in deliveries and a strategic decision to streamline distribution [93][94] Question: EBIT margin expansion expectations - Management indicates that 2024 will be a foundational year for TOM FORD, with expectations for accelerated growth in EBIT in subsequent years [98]

Financial Performance - Revenue increased by 15% year-over-year, driven by strong sales in the North American market [1]. - Net profit margin improved to 12%, up from 10% in the previous quarter [2]. - Operating expenses rose by 8%, primarily due to increased marketing and R&D investments [3]. Market Expansion - The company successfully entered the European market, with initial sales exceeding expectations [4]. - A new distribution center was opened in Asia to support growing demand in the region [1]. - Strategic partnerships were formed with local retailers to enhance market penetration [2]. Product Development - Launched three new products in the tech segment, which contributed significantly to Q3 revenue [3]. - R&D investment increased by 20% to accelerate innovation and product differentiation [4]. - Customer feedback on the new product line has been overwhelmingly positive, with a 95% satisfaction rate [1]. Operational Efficiency - Implemented new supply chain management software, reducing delivery times by 15% [2]. - Streamlined manufacturing processes, resulting in a 10% reduction in production costs [3]. - Employee training programs were expanded, leading to a 25% improvement in operational efficiency [4]. Strategic Initiatives - Announced a new sustainability initiative aimed at reducing carbon emissions by 30% over the next five years [1]. - The company is exploring potential acquisitions to diversify its product portfolio [2]. - A new corporate governance framework was introduced to enhance transparency and accountability [3]. Customer Engagement - Customer retention rates improved to 90%, up from 85% last year [4]. - Launched a new loyalty program that has already attracted over 100,000 members [1]. - Enhanced customer support services, resulting in a 20% reduction in complaint resolution time [2].