Ermenegildo Zegna(US:ZGN)2026-02-02 14:02Financial Data and Key Metrics Changes - The Ermenegildo Zegna Group reported total revenues of EUR 1.917 billion for FY 2025, reflecting a 1% increase compared to the previous year, with Q4 revenues reaching EUR 591 million, up 4.6% organically [13][16] - The Zegna brand specifically achieved revenues of EUR 1.2 billion, with Q4 revenues of EUR 362 million, representing a 7% growth driven by the DTC channel [3][15] - Thom Browne reported Q4 revenues of EUR 91 million, up 1.4% organically, while Tom Ford Fashion reached EUR 98 million, up 1.5% [14][15] Business Line Data and Key Metrics Changes - The DTC channel for the group grew by 10% in Q4, accounting for 82% of the group's branded revenues for FY 2025 [18][19] - Zegna DTC revenues grew 10% in Q4, with the Americas and EMEA regions showing strong performance, while Greater China experienced a revenue decrease of 10% in Q4 [16][17] - Thom Browne's DTC revenues increased by 11% in Q4, driven by new store openings, while the wholesale channel reported a decline of 14% [20][55] Market Data and Key Metrics Changes - Europe, the Middle East, and Africa accounted for 36% of total revenues, with a 7% increase in Q4, while the Americas represented 30% of revenues, showing a 16% increase in Q4 [16][17] - The Greater China region's contribution to total revenues decreased to 23%, with a negative trend in Q4 attributed to the wholesale channel [17] - The rest of Asia Pacific reported a 5% growth in Q4, driven by improvements in Japan and Korea [17] Company Strategy and Development Direction - The company aims to strengthen its DTC channel and reduce reliance on wholesale, with a focus on elevating product offerings and enhancing customer experiences [9][10] - The leadership transition, with Gianluca Tagliabue as Group CEO, is expected to drive integration and accelerate ambitions across brands [12][3] - The company plans to continue expanding its retail presence, particularly for Tom Ford, with new store openings in key markets [83][100] Management's Comments on Operating Environment and Future Outlook - Management acknowledges a "new normal" characterized by uncertainty and volatility, emphasizing the need for agility and coherence in strategy [10] - The outlook for 2026 includes expectations of continued growth in the Americas, while caution is advised regarding the Greater China market due to its volatility [16][74] - The company remains optimistic about its financial strength to absorb challenges, including the recent Chapter 11 bankruptcy filing of Saks Global [23][46] Other Important Information - The company is closely monitoring the situation with Saks Global, which has a low single-digit revenue exposure to the group [46][23] - The introduction of new products, such as perfumes for the Zegna brand, is expected to contribute positively to growth in 2026 [36][38] Q&A Session Summary Question: What is the growth rate of Zegna brand DTC excluding China? - Management confirmed that the growth rate is around high teens percentage year-over-year, excluding China [25][28] Question: What FX impact is expected for 2026? - A headwind of approximately 2-3% is anticipated due to currency fluctuations, with some mitigation through hedging [28][29] Question: What are the key drivers for Zegna retail productivity? - Key drivers include a focus on price mix and elevated offerings, with a target of high single-digit improvement per year [36][41] Question: What is the exposure to Saks Global? - The overall exposure is in the low single-digit area, and the company is monitoring the situation closely [46][23] Question: What are the expectations for wholesale performance in 2026? - Wholesale is expected to decline, with high single-digit negative growth anticipated for the group, particularly for Thom Browne [55][56] Question: How is the U.S. market performing? - The U.S. market continues to show strong performance, with good traction across all brands, and new store openings are planned [75][76]