Ermenegildo Zegna(US:ZGN)2025-07-30 12:30Financial Data and Key Metrics Changes - For H1 2025, group revenues reached €928 million, down 3% year-on-year and 2% in organic terms, with a solid performance in the DTC channel showing 6% organic growth [19][21][32] - Q2 2025 revenues were €469 million, down 3% organically, with positive performance in the Zegna and Tom Ford segments, while Thom Browne experienced negative performance [21][32] Business Line Data and Key Metrics Changes - Zegna brand showed solid performance in Q2 with 2% organic growth, driven by the DTC channel, particularly in the Americas and EMEA [21][26] - Thom Browne reported a 24% decline in organic growth in Q2, reflecting a strategic decision to streamline the wholesale channel [22][32] - Tom Ford Fashion achieved 4% organic growth in Q2, driven by the DTC channel [22][32] Market Data and Key Metrics Changes - The Americas region showed a strong 10% organic growth in Q2, driven by the DTC channel, particularly at the Zegna brand [23][32] - Greater China reported a 17% decline in Q2, primarily due to the wholesale channel's performance, while DTC trends remained stable [24][32] - EMEA recorded a 2% organic decline, reflecting negative trends in the wholesale channel, although DTC performance was positive [23][32] Company Strategy and Development Direction - The company aims to enhance its DTC channel, focusing on a client-first culture and evolving store concepts to prioritize customer experience [8][9] - A partnership with Temasek is expected to support the development of the brand portfolio in an organic and sustainable manner [5][6] - The company is committed to innovation, quality, and a timeless proposition while maintaining a vigilant approach to costs and inventory [18][32] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging environment in Greater China but expressed confidence in long-term strategies to adapt to the new normal [40][42] - The U.S. market remains resilient, with strong customer loyalty and conversion rates, despite concerns over tariffs [56][62] - The company anticipates continued growth in the Americas and EMEA, while Asia remains volatile [86][90] Other Important Information - The company has opened new retail spaces, including exclusive lounges, to enhance personalized shopping experiences [12][13] - The introduction of new management at Thom Browne is expected to drive brand awareness and customer engagement [15][44] Q&A Session Summary Question: Insights on Greater China revenue decline and traffic - Management noted that Greater China remains challenging, with traffic not meeting expectations, and emphasized the need for a new approach to store operations [38][40] Question: Comments on U.S. consumer environment and traffic - Management described the U.S. market as resilient, with strong traffic and customer loyalty, and noted successful store openings [56][62] Question: Wholesale trends for the second half - Management expects mid-teens negative performance for Zegna wholesale and low double-digit negative for Tom Ford wholesale for the full year [70][72] Question: Acceleration in Tom Ford's performance - The acceleration in Tom Ford's performance was attributed to new store openings and space expansion [73][75] Question: Comments on margins and liquidity - Management indicated that the wholesale business is profitable, but the current streamlining may impact margins in the short term [78][81] - There are no immediate plans for dual listing, and liquidity concerns are not seen as a major issue [90][92]