Ermenegildo Zegna(US:ZGN)2025-10-23 12:00Financial Data and Key Metrics Changes - In Q3 2025, the company reported revenues of €398 million, representing a 4% organic growth, with nine months' revenues totaling €1.3 billion [4][5] - Direct-to-Consumer (DTC) channel revenues increased by 9% in the quarter, accounting for 82% of total revenues in the first nine months [8][9] Performance by Business Line - Zegna brand revenues reached €249 million in Q3, growing by 6%, driven by strong DTC performance in EMEA and the Americas [4][5] - Thom Browne reported revenues of €48 million in Q3, showing slight negative growth but sequential improvement [4] - Tom Ford Fashion achieved €66 million in revenues, up 4% organically, supported by the successful reception of the full-winter 2025 collection [5][12] - Textile revenues remained flat, while other revenues related to finished products grew by 12% [5] Geographic Performance Changes - EMEA accounted for 36% of total revenue in the first nine months, with a 3% growth in Q3, primarily from DTC channels [6] - The Americas, contributing 29% of nine months' revenue, recorded a 13% growth in Q3, led by strong DTC performance [6][7] - Greater China, which represented 23% of total revenues, saw a 7% decline in Q3, although there were signs of sequential improvement [7][9] - The rest of APAC accounted for 12% of nine months' revenues, with a 3% growth in Q3 [7] Company Strategy and Industry Competition - The company is focusing on increasing control over the distribution of iconic products and converting wholesale points of sale into retail concessions [10] - The management emphasized the importance of maintaining a disciplined approach to executing key priorities for each brand [20] - The company is cautiously optimistic about navigating the current volatile consumer environment, particularly in China [19][20] Management's Comments on Operating Environment and Future Outlook - Management noted that currency fluctuations continue to pose challenges, with expected impacts on margins in the upcoming quarters [19][28] - The consumer demand remains volatile, especially in China, but the company anticipates settling into a new normal with balanced growth rates in the coming years [19][20] - The management expressed confidence in the ongoing projects and the potential for growth despite the challenges [20] Other Important Information - The company highlighted the success of recent fashion shows and the positive reception of new collections, which are expected to contribute to future growth [15][18] - A multi-year partnership with Art Basel was announced, aiming to enhance brand visibility and customer engagement [13] Q&A Session Summary Question: Current trading and expectations for Q4 - Management indicated that current trading trends are in line with Q3, with no substantial changes observed so far [24][25] Question: Performance in mainland China - Management noted that high-end products are performing well, but there is still volatility in traffic and more affordable spending [25][26] Question: FX impact on margins - Management confirmed that while FX impacts exist, they have hedged effectively, mitigating some of the margin pressures [28][29] Question: Consumer environment across regions - Management reported solid growth in the U.S. and Europe, with slight improvements in Greater China, but emphasized the importance of strong product acceptance [36][37] Question: Wholesale sector trends - Management stated that rationalization efforts are ongoing, with expectations for continued selective conversions in the wholesale channel [38][39] Question: Performance of Tom Ford - Management highlighted positive reception of the new collection and ongoing efforts to enhance CRM and store performance [40][41] Question: Impact of new fashion designers - Management discussed the importance of innovation aligned with brand DNA, emphasizing that clients seek meaningful and resonant products [90][91]