Ermenegildo Zegna(ZGN)2024-09-18 15:18Company 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.