Ermenegildo Zegna(US:ZGN)2024-04-05 19:39Financial Data and Key Metrics Changes - Group revenue for 2023 reached €1.9 billion, up 28% and up 19% on an organic basis [29] - Adjusted EBIT reached €220 million with an adjusted EBIT margin of 11.6%, an increase of 100 basis points from 2022 [29][67] - Net profit more than doubled compared to 2022 [29] Business Line Data and Key Metrics Changes - Zegna brand generated €1.3 billion in revenues with an adjusted EBIT margin of 14.6% [68] - Thom Browne revenue reached €380 million, with a 15.5% adjusted EBIT margin, supported by a 20% organic growth in the DTC channel and a 15% organic growth in wholesale [69] - TOM FORD FASHION contributed €235 million in revenues since its acquisition [45] Market Data and Key Metrics Changes - The Americas and EMEA markets are leading in the Zegna One brand strategy, with positive signs in Greater China despite challenges [32] - Demand for high-end products in Greater China is strong and improving [32] - The wholesale business is expected to remain flat, with a focus on direct-to-consumer channels [10] Company Strategy and Development Direction - The company aims to streamline wholesale distribution and enhance direct-to-consumer channels, targeting a 70-30 split for brands [12] - Continued investment in sustainability and renewable energy, with 97% of energy used in European operations coming from renewables [30] - Focus on expanding retail presence and improving store productivity [40] Management Comments on Operating Environment and Future Outlook - Management acknowledges that 2024 will be a transition year with some volatility expected, particularly in Greater China [40][76] - Confidence in achieving revenue targets for 2024, with a focus on customer connection and product confidence [77] - The company is committed to enhancing brand equity and customer engagement through targeted marketing and store openings [40] Other Important Information - The acquisition of TOM FORD FASHION is seen as a significant addition to the portfolio, with plans for expansion in the linen wear and leather goods segments [36] - A new center for excellence in Parma is being developed to enhance luxury shoe production and R&D [39] Q&A Session Summary Question: Performance of Chinese consumers in 2024 - Management acknowledges challenges but remains positive about mid-term prospects, emphasizing the need for relationship-driven customer engagement [85][86] Question: Guidance for Q1 and impact of wholesale on Thom Browne - Thom Browne wholesale revenues are expected to decline high double digits, influenced by timing in deliveries and a strategic decision to streamline distribution [93][94] Question: EBIT margin expansion expectations - Management indicates that 2024 will be a foundational year for TOM FORD, with expectations for accelerated growth in EBIT in subsequent years [98]