Ermenegildo Zegna(US:ZGN)2025-04-24 18:30Financial Data and Key Metrics Changes - In Q1 2025, the group reported revenues of EUR 459 million, a decrease of 1% year-on-year compared to EUR 463 million in Q1 2024, with organic performance also down 1% [7][8][10] - The EBIT guidance for 2025 remains low single digit growth, reaffirming previous expectations [62][110] Business Line Data and Key Metrics Changes - Zegna brand revenues were EUR 293 million, up 3% supported by direct-to-consumer (DTC) channels, particularly in EMEA and the U.S. [10][11] - Thom Browne reported revenues of EUR 64 million, down 9% organic due to ongoing reduction in wholesale [11][12] - Tom Ford Fashion recorded revenues of EUR 67 million with a 3% organic growth driven by DTC channels [11][12] - Textile product line performance was down 9% due to decreased global demand from luxury goods brands outside the group [12] Market Data and Key Metrics Changes - The Americas remained the best-performing region, contributing 27% of total revenues with a 9% organic growth [14][15] - EMEA represented 34% of total revenues but was down 2%, primarily due to declines in Thom Browne's wholesale channel [13][14] - Greater China generated EUR 123 million, accounting for 27% of group revenues, down 12% [15][16] - Rest of APAC reported 8% growth, driven by strong performance in Japan and Singapore [17] Company Strategy and Development Direction - The company is focusing on a more selective distribution approach, particularly for iconic products, to protect brand integrity [121][125] - There is a strategic shift towards enhancing DTC channels, with a noted decline in wholesale performance [19][21] - The company plans to implement a mid single-digit price increase in response to U.S. tariffs, without significant changes to sourcing strategies [35][44][108] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the U.S. market, noting strong performance across various regions, while acknowledging ongoing softness in Greater China [42][120] - The company is seeing positive reactions to new product launches and marketing initiatives, particularly in the U.S. [30][35] - Management remains confident in the long-term trajectory of the brands despite current market challenges [66][110] Other Important Information - The company is preparing for the launch of new collections, with significant drops expected in Q2 and Q3 [49][50] - The upcoming fashion show in Dubai is expected to be a key event for brand visibility and engagement [110][111] Q&A Session Summary Question: Trends in Zegna Americas and market volatility - Management noted strong performance across the U.S. with no significant areas of weakness, although Greater China remains a concern [41][42] Question: Impact of Haider Ackermann's fashion show - The fall/winter products will be delivered starting from late May, with significant drops expected in June and September [49][50] Question: Zegna brand DTC growth and performance metrics - Management confirmed that the growth in DTC was primarily driven by mix, with higher ticket items contributing positively [75][76] Question: Thom Browne wholesale outlook - The full-year outlook for Thom Browne wholesale is expected to decline by 25% to 30% due to a more selective distribution strategy [81][82] Question: EBIT guidance and cost control measures - Management reiterated the low single-digit EBIT growth guidance and discussed ongoing efforts to control discretionary expenses [109][110] Question: Expectations for Greater China market - Management anticipates continued negative performance in Greater China, though less severe than in Q1 [120][121] Question: Retail KPIs and consumer sentiment - Positive retail KPIs in China include improved average selling price and conversion rates, despite low traffic [155][156]