Ermenegildo Zegna(US:ZGN)2025-09-05 10:34Financial Performance - Revenues for the six months ended June 30, 2025, were €927,690 thousand, a decrease of 3.4% compared to €960,122 thousand in 2024[24] - Profit for the same period increased to €47,902 thousand, up 53% from €31,332 thousand in 2024[24] - Adjusted EBIT decreased to €68,670 thousand, down 15% from €80,910 thousand in 2024[24] - Adjusted Profit rose to €54,397 thousand, an increase of 46.3% compared to €37,184 thousand in 2024[24] - Operating profit for the six months ended June 30, 2025, was €61,346 thousand, a decrease from €73,081 thousand in 2024[34] - Profit before taxes increased to €68,018 thousand, up from €48,550 thousand in the previous year[34] - Adjusted EBITDA for the same period rose to €190,991 thousand, slightly up from €189,458 thousand in 2024, indicating a marginal increase of 0.8%[170] - The Group reported a profit of €47,902 thousand for the six months ended June 30, 2025, compared to €31,332 thousand in the same period of 2024, reflecting a profit margin increase to 5.2% from 3.3%[164] Revenue Breakdown - The ZEGNA brand saw an increase in revenues of €4,342 thousand or +0.8%, primarily driven by a DTC channel increase of €17,940 thousand[41] - Thom Browne revenues decreased by €37,567 thousand or -22.5%, primarily due to a €40,230 thousand decrease in the wholesale channel[43] - Total Direct to Consumer (DTC) revenues increased by €28,436 thousand or +4.2%, with DTC representing 82% of branded products[45] - Wholesale branded revenues decreased by €57,439 thousand or -27.1%, with Thom Browne wholesale down €40,230 thousand or -52.4%[47] - Revenues in the Americas increased by €16,668 thousand or +6.8%, driven by strong performance in the ZEGNA brand and expansion of the Thom Browne DTC store network[51] - The Greater China Region experienced a revenue decline of €43,223 thousand or -16.2%, reflecting ongoing challenges in the luxury sector[49] - Zegna segment revenues remained stable at €660,319 thousand, a slight decrease of €219 thousand or 0.0%, with organic growth of +1.6%[96] - Thom Browne segment revenues decreased by €37,473 thousand or -22.4% to €129,462 thousand, with a significant drop in Adjusted EBIT by €15,704 thousand or -77.8% to €4,482 thousand[102] - Tom Ford Fashion segment revenues increased by €4,222 thousand or +2.8% to €152,715 thousand, but Adjusted EBIT decreased by €7,517 thousand or -63.1% to -€19,430 thousand[110] Cost and Expenses - Cost of sales decreased by €21,020 thousand or -6.5%, from €322,678 thousand in 2024 to €301,658 thousand in 2025, and as a percentage of revenues, it decreased from 33.6% to 32.5%[57] - Gross profit for the six months ended June 30, 2025 was €626,032 thousand, a decrease of €11,412 thousand or -1.8%, with gross profit margin increasing from 66.4% to 67.5%[60] - Selling, general and administrative expenses increased by €4,192 thousand or +0.8%, totaling €501,804 thousand, with expenses as a percentage of revenues rising from 51.8% to 54.1%[65] - Marketing expenses decreased by €3,869 thousand or -5.8%, totaling €62,882 thousand, with marketing expenses as a percentage of revenues decreasing from 7.0% to 6.8%[70] Cash Flow and Financial Position - Net cash flows from operating activities decreased to €105,714 thousand for the six months ended June 30, 2025, down €14,734 thousand from €120,448 thousand in 2024[119] - Net cash flows used in investing activities were €50,044 thousand for the six months ended June 30, 2025, a positive change of €31,697 thousand compared to €81,741 thousand in 2024[123] - Capital expenditure for the six months ended June 30, 2025, was €53,958 thousand, down from €60,077 thousand in 2024, primarily related to store network investments[129] - Net Financial Indebtedness amounted to €92,140 thousand at June 30, 2025, a slight decrease from €94,225 thousand at December 31, 2024, reflecting negative Free Cash Flow of €23,109 thousand[137] - The Group's cash and cash equivalents at the end of the period were €159,896 thousand, down from €225,316 thousand at the end of June 2024, representing a decrease of €65,420 thousand[119] - The Group's liquidity sources include cash flows from operations, borrowings under bank credit lines, and available cash, which are deemed sufficient to meet short-term and long-term liquidity requirements[117] - Free Cash Flow for the six months ended June 30, 2025 was negative €23,109 thousand, compared to negative €6,579 thousand in 2024, with net cash flows from operating activities decreasing from €120,448 thousand to €105,714 thousand[197] Market and Strategic Insights - The Group operates a total of 472 Directly Operated Stores (DOSs) as of June 30, 2025, comprising 286 ZEGNA, 120 Thom Browne, and 66 TOM FORD FASHION stores[24] - The Group's DTC distribution channel is a significant pillar of its future growth strategy, enhancing clienteling and personalized client experiences[26] - The Group's presence spans approximately 80 countries worldwide, utilizing both DTC and wholesale distribution channels[24] - The luxury apparel market is subject to seasonal fluctuations in sales, impacting overall performance[28] - The Group expects seasonal trends affecting retail sales to continue, with higher sales typically in the last quarter of the year[32] Investments and Financial Instruments - The Group recognized a government grant of €3,117 thousand in 2025 to offset research and development costs related to product innovation in Italy[58] - Foreign exchange gains for the six months ended June 30, 2025 amounted to €10,214 thousand, a change of €17,898 thousand compared to losses of €7,684 thousand in 2024, primarily driven by favorable foreign exchange impact related to the Thom Browne non-controlling interest[84] - Result from investments accounted for using the equity method increased by €345 thousand or +109.9% to €659 thousand for the six months ended June 30, 2025, compared to €314 thousand in 2024[87] - Income taxes for the six months ended June 30, 2025 were €20,116 thousand, an increase of €2,898 thousand or +16.8% from €17,218 thousand in 2024, with an effective tax rate of 29.6% compared to 35.5% in 2024[89] Shareholder and Legal Matters - The weighted average number of shares for basic earnings per share increased to 253,023,790 in 2025 from 250,630,556 in 2024, an increase of 0.6%[182] - The company incurred legal costs of €320 thousand related to a trademark dispute in 2025, down from €1,388 thousand in 2024, a decrease of 76.9%[171] - Severance indemnities for the six months ended June 30, 2025, were €903 thousand, compared to €1,436 thousand in 2024, reflecting a decrease of 37%[175]