Earnings call transcript: Ermenegildo Zegna Q3 2025 misses revenue forecast

Ermenegildo Zegna Group reported its Q3 2025 earnings on October 23, revealing a slight miss in revenue expectations. Actual revenue stood at €398 million, falling short of the forecasted €404.2 million, resulting in a 1.48% negative surprise. The company’s stock reacted with a pre-market decline of 0.08%, trading at $10.14. Despite the miss, the company remains cautiously optimistic about future performance, with strong growth in direct-to-consumer channels and strategic brand initiatives. According to InvestingPro data, the company maintains impressive gross profit margins of 67.14%, demonstrating strong pricing power in the luxury segment.

Key Takeaways

• Revenue for Q3 2025 was €398 million, a 4% organic growth but below forecasts.
• Direct-to-consumer sales grew by 9% and now represent 82% of total revenues.
• Zegna brand revenues increased by 6%, while Thom Browne faced a slight decline.
• The stock price saw a 3.06% drop in the latest trading session.
• Continued volatility in the Chinese market poses challenges.

Company Performance

Ermenegildo Zegna’s performance in Q3 2025 was characterized by a 4% organic growth in group revenues, reaching €398 million. The Zegna brand saw a 6% increase, while Thom Browne experienced a slight decline. Direct-to-consumer channels, accounting for 82% of revenues, showed robust growth, indicating a successful shift towards this model. However, the company faces challenges in its wholesale channels, with notable declines in Thom Browne and Tom Ford Fashion.

Financial Highlights

• Revenue: €398 million (+4% organic growth YoY)
• Nine Months Revenue: €1.3 billion
• Zegna Brand Revenue: €249 million (+6%)
• Thom Browne Revenue: €48 million (slightly negative)
• Tom Ford Fashion Revenue: €66 million (+4% organic)

Earnings vs. Forecast

Ermenegildo Zegna’s Q3 2025 revenue of €398 million fell short of the €404.2 million forecast, marking a 1.48% negative surprise. This miss is relatively minor compared to previous quarters, where the company generally met or exceeded expectations.

Market Reaction

Following the earnings release, Zegna’s stock experienced a 0.08% drop in pre-market trading, priced at $10.14. The stock also saw a 3.06% decline in the latest session, reflecting investor concerns over the revenue miss and ongoing challenges in the Chinese market, despite the company’s strong direct-to-consumer growth. However, InvestingPro analysis suggests the stock is slightly undervalued at current levels, with a remarkable six-month price return of 42.72%. Additional insights and detailed valuation metrics are available in the comprehensive Pro Research Report, one of 1,400+ deep-dive analyses available to subscribers.

Outlook & Guidance

Looking forward, Zegna remains cautiously optimistic, focusing on brand-specific priorities and potential store expansions in the US market. The company is hedged against currency fluctuations for Spring 2026, anticipating continued volatility in the Chinese market. InvestingPro data reveals strong financial health with a GOOD overall score of 2.77, supported by consistent dividend growth of 16.43% and robust cash flow metrics. InvestingPro subscribers have access to additional ProTips and detailed financial analysis that can help evaluate the company’s growth trajectory.

Executive Commentary

"Innovation has to be coherent with the brand’s DNA," stated Paola Durante, Chief of External Relations, emphasizing the company’s focus on maintaining brand heritage while innovating. Gianluca Tagliabue, Group CFO and COO, noted, "We are seeing good traction in new clients, especially on retaining new clients," highlighting the company’s success in expanding its customer base.

Risks and Challenges

• Volatility in the Chinese market continues to affect revenue.
• Wholesale channel declines, particularly in Thom Browne and Tom Ford Fashion.
• Currency fluctuations and tariffs could impact future margins.
• Store closures in Greater China may affect local market presence.
• Competitive pressures in the luxury fashion sector.

Q&A

During the earnings call, analysts questioned the ongoing challenges in the Chinese market and the company’s wholesale channel strategy. Executives detailed the integration of the Tom Ford Fashion brand and addressed concerns about currency and tariff impacts on margins, reiterating their strategic focus on innovation and brand coherence.

Full transcript - Ermenegildo Zegna NV (ZGN) Q3 2025:

Call Moderator: Hello everyone, and thank you for standing by. The Ermenegildo Zegna Group Q3 2025 revenue call will be beginning in just a few minutes’ time. We thank you for your patience, and we will begin shortly. Good afternoon, good morning everyone. Thank you for joining the Ermenegildo Zegna Group Q3 2025 revenues call. Please note that today’s material and presentation are available under the zegnagroup.com website. Joining us today are the Zegna Group Senior Management Team, including Gianluca Tagliabue, Group CFO and COO, and Paola Durante, Chief of External Relations. Before we begin, we need to point out that the team will make certain forward-looking statements during the call. The Group actual results may be materially different from those expressed or implied by these forward-looking statements. Also, these statements are subject to a number of risks and uncertainties, including those described in our SEC filings.

Please refer to the forward-looking statement’s cautionary statement included at page 2 of today’s presentation. I’ll now hand over to Paola Durante.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: Thank you. Thank you, Professor, and good morning also from myself, and good afternoon to everybody. Welcome to our group Q3 and nine months 2025 revenues call. As usual for Q1 and Q3 revenues, today’s call is led by Gianluca Tagliabue and myself. Alice Poggioli is absolutely here with us. Our CEO, Mr. Gildo Zegna, will attend the February call on full-year 2025 revenue. Let’s then move to page 7 of the presentation, where we comment on revenue strengths. You know that commenting on revenue strengths, we normally want to focus on organic performance, which excludes foreign exchange impacts, and therefore it is better to reflect the underlying business dynamics. This approach actually is particularly relevant this year, given the sharp appreciation of the euro against key currencies such as the U.S. dollar and the Chinese renminbi, among the others.

I have to say even more in this quarter and the next one. In Q3 2025, our group reported €398 million in revenues, up 4% organic, with a sequential acceleration of the DTC channel, which was up 9% in the quarter, with, I have to say, remarkable results across the three brands. Nine months’ revenues were €1.3 billion. Let’s then move to page 8, and let’s go directly to, I’d like to comment on the performance by brand. In Q3, Zegna brand recorded revenues of €249 million, with a 6% growth. This performance was led by solid performance in the DTC channel, particularly in EMEA and the Americas. Thom Browne revenues of €48 million in Q3. The brand, although remaining slightly negative in the quarter, showed a sequential improvement in both channels.

Tom Ford Fashion, which reported €66 million in revenues, was up 4% organic, which was driven by the DTC channel, also supported by the good reception of the full-winter 2025 show collection. Last, Textile was flat in the quarter, while other revenues that you know are today a marginal part of our business and relate to the finished product, the ready-to-wear garments that we produce for third-party brands, reported a 12% growth. Moving now to page 9 and commenting on the geographic area revenues. Starting from EMEA, EMEA represented in the first nine months 36% of the group total revenue. It’s the first region of our group. The revenues in the quarter were up 3%, thanks to a very solid performance in the DTC channel, particularly at Zegna and Tom Ford Fashion, which was partially offset by the negative contribution of the wholesale.

Americas, second region, with contributing to 29% of the nine months’ revenue, recorded in the quarter a 13% growth, driven by the solid DTC performance across the three brands, with the US as the market, which is also the largest market, leading the performance. Let me say that also Latam, even if still a relatively small contributor to the region, continues to show robust double-digit growth. Commenting on cluster, I know that this is a question you normally ask after considering Zegna brand US customers’ cluster continues to grow sound double-digit. The Zegna US customers were growing both domestically and abroad. Moving to the Greater China region, which in the first nine months accounted for 23% of total revenues. In the quarter, revenues were down 7%, showing a sequential improvement across the three brands, with Thom Browne leading the trends.

Finally, on the rest of APAC, 12% of nine months’ revenues, the quarter showed a 3% growth, driven by strong performances recorded in Singapore, of course, on a smaller basis, but nice performance and some improvements mainly in Korea. Page 10, I won’t really go much in detail because, as you know, I prefer to comment, we prefer to comment on the brand by channel performance. Only two numbers I would like to highlight. The first one is the 9% DTC growth in the quarter, and the second one that DTC in the first nine months accounted at the group level for 82% of our revenues. Let’s then move to page 11, Zegna. Commenting on Zegna. In the third quarter, Zegna DTC revenues grew 7%, or equal to 87% of the brand’s nine months’ revenues.

This 7% growth in the quarter was led by solid double-digit growth in EMEA and Americas. The Greater China region revenues trend remained negative, but showed some signs of improvement compared to the second quarter, thanks to a slightly easier base of comparison in this quarter. The performance in the region remains volatile. I have to say it remains volatile and still difficult to read. Commenting on the cluster, the cluster improved in the quarter sequentially and was a negative, high single-digit compared to the double-digit we reported, you remember, previously. In Zegna, in the third quarter, closed up four stores, and these were mainly actually in Greater China region. Briefly, on the wholesale performance for Zegna, revenues were down 3%, or 11% in the nine months.

I ask you, in particular for the wholesale performance, to consider or to look more into the year-to-date, in this case, the nine-month performance, which better reflects the underlying business. Sometimes quarterly performance can be affected by different timing of deliveries, in particular for Zegna, also for the drop strategy that, as you know, can cause different deliveries to our wholesale customers. For year-end, we confirm the indication for Zegna of a wholesale down in the mid-teens because, as we commented already several times, we are increasing control in the distribution of iconic products, and we also did some conversion of wholesale point of sales in retail concessions. Okay. Now, page 12, Thom Browne.

Thom Browne DTC revenues were up 10% in the third quarter, showing a sequential acceleration, which was driven by the American region, also because of the new openings, as well as some sequential improvement in Greater China and rest of APAC. Thom Browne opened four DOS in the quarter, including an important concession at Selfridges Women in London and Kyoto Isetan. The wholesale, in line with expectation, was down 37% in the quarter and 50% in the first nine months. Let’s then move to Tom Ford Fashion. I would say I can say last but not least, page 13. Tom Ford Fashion reported in the third quarter a 16% growth in the DTC channels, which has been driven by the successful reception of the fall-winter ’25 collection in stores across all regions and also by some new store openings.

Of course, also the work that has been done in these months in terms of people and training and talent in stores is also bearing some results. We know that we are just at the beginning of the journey to strengthen the brand in the fashion business, in particular in the DTC important channel. The path ahead of us is clear, is defined. We need to follow it step by step, and we just are doing the first step into it. That said, we are absolutely encouraged by the client’s positive feedback on the collection. Tom Ford Fashion didn’t open any store in the quarter, and the wholesale was down 19%, 10% in the first nine months. Again, some timing differences we confirm here by year-end, and wholesale performance negative in the region of 10%.

I finish my comment showing on page 14 the nice facade of the very beautiful, sorry, Zegna store in the Miami Design District. Miami is a vibrant city not only in the US, and in December, Zegna will host an event during the Art Basel Miami. As you know, art has always been part of Zegna’s identity and legacy since our founder, Ermenegildo Zegna. Early this year, we signed a multi-year partnership with Art Basel, which offers a global platform to celebrate art that resonates with Zegna customers and Zegna values. In early December, we will have this nice event with our customers in Miami. On page 15, moving to page 15, you find our store network. No comments to be made here. You just need to see the numbers, I think. Before leaving the floor to Gianluca, on page 16, we have published the financial calendar for 2026.

You can find it here in our press release and also on our website. Please mark your agenda for next year. With this, I now hand over to Gianluca for some final remarks before your Q&A.

Gianluca Tagliabue, Group CFO and COO, Ermenegildo Zegna Group: Thank you, Paola. Before heading to the Q&A session, I would like to share a few final remarks. Let me begin by highlighting the exceptional fashion shows presented by both Tom Ford Fashion and Thom Browne in Paris in October. Both received enthusiastic recognition from the press and from our clients, reflecting continued progress along the path set for these brands. Talking about Tom Ford Fashion in particular, as Paola noted, the first Haider Ackermann collection for Winter 2025 arrived in the store at the end of August and was well received and contributed to our quarterly results. Of course, these are early signs, and while we are pleased to see such a positive start, we are aware that the journey to fully unlock Tom Ford Fashion’s potential is still ahead of us and that it might not be a straight line. We must continue anyway building this momentum.

On Thom Browne, let me highlight the recent events also held to celebrate the opening of the Ginza store in Tokyo. The brand hosted a series of curated experiences from a screening of the Thom Browne documentary presented by GQ Japan to a cocktail party, an intimate dinner with celebrities and friends of the brand, and the presence of Thom himself. These moments reflect the brand’s emotional connection with its audience. We will see more of this unfolding on Thom Browne’s social media channels in the coming weeks. Finally, turning to Zegna, we have already touched on the success of Drop 2, which saw an activation on September 1 and was launched alongside the campaign, "It’s Not a Suit, It’s a Zegna." With this collection, Zegna celebrated its heritage and the ongoing pursuit of excellence and innovation embodied by Vellusarium, the finest wool. Vellusarium means golden fleece.

The Zegna Torino suit draws directly from our founder’s personal wardrobe, recalling the days he would drive to his Torinese tailor to craft suits with a unique, defined, and unmistakable style. Rooted in heritage yet forward-looking, the Torino style bridges the past and the future. This campaign reaffirmed Zegna’s role in shaping contemporary style, while the collection’s results confirmed the strength of the brand’s vision and the robustness of its execution. Let me remind you also that on October 1, we celebrated the reopening of the fully renovated store in Dubai Mall, which now includes Il Salotto, the brand’s exclusive, by-appointment-only, private space. A space that is truly exceptional. I invite you, whenever you pass in Dubai, to visit. I will now share a few general closing remarks. Currency fluctuations, as Paola anticipated, continue to present a headwind for the sector.

We have seen that in Q3 it was between 3 and 4 points, and the base of comparison in this regard will be even stronger in the fourth quarter where the impact of currency might be between 4 and 5 from organic to reported. The volatility of consumer demand remains a defining factor, particularly in certain regions, starting with China, which we expect to remain volatile in the coming months. As Gildo noted in the prior calls, China remains a cornerstone for the sector and for us. We see it settling into a new normal, which we expect to lead into balanced growth rates in the coming years. That is the way we put ourselves in the mindset we had towards budget, towards open Dubai.

In this environment, we know how important it is to stay sharply focused on the key priorities we have defined for each of the three brands and to deliver on them. The direction is clear. The projects in our pipeline are being implemented with discipline. This gives us a solid base to remain cautiously confident as we navigate the period ahead of us. With that, let me open the Q&A session.

Call Moderator: Thank you. We will now begin the question and answer session. If you would like to ask a question today, please do so now by pressing the star followed by the number one on your telephone keypad. If you change your mind or you feel like your question has already been answered, you can press star followed by two to remove yourself from the queue. Our first question today comes from Anthony Charchafji with BNP Paribas. Please go ahead. Your line is now open.

Anthony Charchafji, Analyst, BNP Paribas: Good morning. It’s Anthony from BNP Paribas. Thank you very much for taking my question. The first one would be on current trading and any expectation that you could share into Q4. My second one would be on China and namely mainland China performance at Zegna. Could you add a bit of color on what you’re seeing in terms of traffic and, more importantly, if you’re seeing rather the affordable part of the demand that is coming back rather than the high end? That would be my second question. My last one would be on the FX impact, not on top line, but rather on margin. What do you expect for this year or rather into next year, and do you think that it’s a fair assumption to assume some kind of impact into next year? Thank you very much.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: Okay. Thank you, Anthony. Thank you for the three questions. I leave to Gianluca and then if there are other comments, but on current trading and on China performance.

Gianluca Tagliabue, Group CFO and COO, Ermenegildo Zegna Group: Hi, Anthony. The current trading, so Q4 just started, so it’s early to make a final comment after just a few weeks. In any event, what I can anticipate, we are not seeing trends substantially different from the one of Q3. We need to keep on executing. The performance so far has been not different, in line. We need to remember a couple of things adding into Q4. First, as I said before, and that was also your third question, FX is steep in terms of delta between reported and organic in Q4 because if you remember, we had a USD around 103, 104, and that from November through January, that was probably the strongest moment for both USD and renminbi. Last year, we had a very solid Q4 with a high single-digit organic in DTC. Anyway, having said that, the trend is not that different so far.

In terms of China, giving color, I can give you colors by geography within Greater China and some by cluster spending. First, we are seeing that the top of the pyramid guests are performing well also in China, both on Veddo’s Aureos, on the most sophisticated high-price point suits. We are seeing good traction on the top of the spending. We are not yet seeing a solid, consistent indication on traffic and more affordable spending. That is what we are seeing. From a geographic standpoint, we can report some improvement on Hong Kong in terms of trend. We see the, call it, second-tier cities performing slightly better. I’m taking out Beijing and Shanghai, the other important cities, call it Shenzhen, Chengdu, Hangzhou. Those cities are slightly performing better than the two big ones. As I said, as Paola said, the environment is volatile.

That’s why we want to be cautious, and that being cautious means for us betting on Open Dubai for next year, betting on CapEx and OpEx for next year, and possibly also, and that is something we already mentioned, we have been pruning the landscape of our network by wherever meaningful, trying to consolidate the business in fewer, better stores. This is something that started in 2025, will continue in the next couple of years.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: On Forex impact in 2026, we can comment on our Forex.

Gianluca Tagliabue, Group CFO and COO, Ermenegildo Zegna Group: Of course, the impact does exist because we hedge, but you still have some mitigated impact on the bottom line. This year, I think we have hedged particularly well, both the USD and renminbi. This is very true for full-winter 2025, and is also true for spring 2026. The topic will be on how we handle prices in full-winter 2026, which will be the second part of the year. The hedging covers at this point, and we are happy with the hedging we have done through spring 2026 included.

Anthony Charchafji, Analyst, BNP Paribas: Thank you.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: I don’t know.

Anthony Charchafji, Analyst, BNP Paribas: Thank you.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: Thank you, Anthony. Thank you. I don’t know. The second question, operator, or set of questions.

Call Moderator: Thank you. Our next question comes from Adrian De Verga with Goldman Sachs Group. Please go ahead.

Good afternoon, Gianluca, Paola, and Alice. Thank you very much for taking my questions. We also have three, if possible. The first one is if you could please provide us with a bit more information on the consumer environment across regions. You already commented on China, but if you could give us a bit more on the U.S. and on Europe, especially around traffic, conversion rates, and appetite to spend. My second question would be about the wholesale sector and the trends you’re seeing so far in the second quarter and ahead of 2026. Is the rationalization of the channel almost done, and do you expect it to be finished by the end of this year, or could we still expect some impact into next year? Maybe my last question would be on Tom Ford. Could you comment on the performance there and on the integration of the brand?

If you could provide us a bit more color around this. Thank you very much.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: Okay. Okay. Three questions, so very, let’s say, articulated. On the consumer environment across regions, maybe I just comment quickly on the by-cluster performance, and I’ll leave Gianluca to elaborate more if he has comments. On wholesale, Thom Browne, and Tom Ford Fashion performance, I’ll leave immediately directly to Gianluca. On by regions, what we have seen in the third quarter is a continued solid growth by cluster of double-digit growth of the U.S. and the European cluster. As I commented during the call, during the first part, a slight improvement on the Greater China Region cluster to a mid-single-digit negative. I have to say that in the Americas, U.S. continues to remain very strong, but also Latam. This is driven by, I would say, more than by traffic.

Of course, traffic in our store is always, but really by the very strong work, good work that our people are doing, and of course, the very well-acceptance of our collections and the product because everything starts from there. I have to say, I would say the same in Europe. Of course, in Europe, you have the Middle East that continues to remain very strong, but even Europe, excluding the Middle East, has done very well in the quarter.

Gianluca Tagliabue, Group CFO and COO, Ermenegildo Zegna Group: In terms of wholesale, I think that most of the effort has been done in terms of selection, especially on the Thom Browne side. If I recall which are the numbers of this year, we don’t set numbers for next year, but we start from this year having Thom Browne declining 35% and mid-teens for Zegna and around 10% negative on Tom Ford. This is the result of different things. The conversions that we have been doing will continue next year selectively, of course, depending, for instance, with some U.S. wholesalers we are debating location by location. This will continue, probably to a lower extent because most of the conversions we have already done, but the conversion trend will continue as long as we will find the opportunity to do it. There is still a selection of distribution on iconic items for Zegna.

We are pretty much happy with the distribution at this point through wholesale, but definitely, we will continue to limit as much as possible our iconic items that we would not like to be resold at discounts or in distribution markets that we don’t want. Tom Ford minus 10% will be, overall, I think the comment for next year, I think, will continue some decline, but to a much lower intensity. That is mainly driven by conversion, driven by the fact that we keep on selecting distribution on Thom Browne, of course, not to the level that we have seen in the last two years. I think that we will see a much more muted decline still for next year of wholesale channel.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: Okay. Tom Ford Fashion, the last one. Overall performance, any comment? I don’t know, Adrian, if there was something specific. The performance, as we said, the quarter has benefited from several factors, but for sure, the good acceptance and the good reaction of our clients of the first Haider Ackermann collection for Tom Ford, that I remind you, is the one that showed in Paris in March, but touched the floor in the stores as usual a few months after. It was introduced at the end of August, and this creates, in particular in the U.S., but in reality, also in Europe, across all the regions, a very nice vibe. Our clients, customers, loyal, so existing customer, but also new one, came and bought and purchased the collection. This has been for sure a positive factor.

The second one is the openings that we have done, some nice openings that are doing, that are also providing good revenue results. As I was saying, in the past month, we have invested in the platform, in the people, in starting to create a CRM system. We are still at the beginning, but all this step by step has done some and is doing some results. Still at the beginning, as we said.

Gianluca Tagliabue, Group CFO and COO, Ermenegildo Zegna Group: Just to add one point, you have seen the DTC in Q3 at plus 16%. We want to clearly, there is a space, but there is also a substantial component which gives us comfort because we start seeing traction on assortment planning, on training of the people, the people on the field, the retail management. We see the growth of DTC is not just space. There is an important component on the wholesale linking to what we said before. The decline, for instance, there is the impact of a few conversions. I name the most important ones. Last year, in Q3 of last year, we converted SAS women. We converted Arroz men. We converted Puerto Banús in Spain. Some part of the new comp comes also from this conversion of wholesale locations that have been redirected into DOS, Directly Operated Store.

In terms of geography, we have seen across the board, US solid, EMEA very strong, Greater China for those from a small base has shown an interesting sequential improvement. We report positive comp wholesale affected by these three important conversions and good performance in the major regions for the brand.

Yeah, that is very helpful. Thank you very much.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: Thank you. Thank you. The next one, operator.

Call Moderator: Thank you. Our next question comes from Oliver Chen with TD Cowen. Please go ahead, Oliver.

Nicole Silvia, Analyst, TD Cowen: Hi, this is Nicole Silvia on for Oliver. Thank you both for taking the time, Gianluca and Paola. I know you just touched on the wholesale distribution. Continuing on with channel distribution, could you comment more on how Zegna is leveraging the direct-to-consumer network to drive growth? The second part is, with FX impact, I agree that’s definitely a headwind that we’ve seen across the sector. Could you touch more on how you’re offsetting those costs and currency pressures that are posing a headwind in light of the recent tariff impacts that you mentioned? Thank you both so much.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: Sorry, we need to ask you to repeat the two questions because we couldn’t really get the line very clearly. If you can repeat maybe one and the other. Sorry for asking, but really, there was a lot of noise.

Nicole Silvia, Analyst, TD Cowen: Of course. Is this better?

Gianluca Tagliabue, Group CFO and COO, Ermenegildo Zegna Group: Much better.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: Better. Yeah.

Nicole Silvia, Analyst, TD Cowen: Excellent. Hi, starting over here. This is Nicole Silvia on for Oliver. Thank you both for taking the time, Gianluca and Paola. I know you touched on wholesale. Continuing on with channel distribution, could you comment more on how Zegna is leveraging the direct-to-consumer network to drive growth? The second part I have here is with FX. I agree that’s definitely a headwind we’ve seen across the sector. Could you touch more on offsetting those costs and currency pressures that are posing a headwind in light of the recent tariff impacts? Thank you both so much.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: Okay. The first one is, in particular, on Zegna DTC network and the evolution, if I got it correctly. The second one is regarding Forex and how, given the Forex, how we are offsetting the cost of higher tariff increase in the U.S. I’ll leave to Gianluca.

Gianluca Tagliabue, Group CFO and COO, Ermenegildo Zegna Group: We drive a positive trend on the retail side. I think I give you some comments distinctly from boutique and outlet. I start from outlet, which is probably the easiest one. That is not a driver of growth. It’s on the opposite. It’s a channel that we keep shrinking as soon as we see the possibility to do it. The driver there is, of course, the sell-through of the season. Our internal KPI that we monitor carefully is sell-through at full price because Zegna doesn’t do any bargain at this point anymore. As soon as we have a good level of inventory on end from leftovers, we reduce the outlet channels. That is a driver of non-growth within the retail environment. On the full price boutique, yes, we have this year, the number that you have seen, it’s mostly comp.

First, to remark that the number that you reported, it’s 7.4%. It’s a growth organic. It’s, I would say, almost entirely comp. What is the driver behind the comp? It’s conversion. We need to work, and that’s the CRM machine that is behind the scenes. We cannot enjoy in this moment in some areas of our market traffic. We need to generate ourselves the traffic. The outreach is laser-focused on bringing clients in, preparing the appointment with the selection for them. This is the driver behind a good improving conversion trend. This mitigates, in terms of number of tickets, the decline coming from traffic. On the other side, the value of the tickets is increasing.

It’s increasing through AUR because we are elevating the offer in every season, whether it’s Vellusarium, whether it’s personalization, whether it’s second skin, whether it’s new leather outdoor pieces that are coming out, or the enlarged collection of Conte jackets. AUR and conversion are the two numbers that are driving up the comp for this year. Space so far has not been a point. I think that we still have some opportunities in terms of space going forward. For instance, Zegna next year is expanding the network in the US, which is still, in terms of distribution, not fully exploited. We will have, at the end of the year, for instance, a location in Troy, Michigan. We will have next year San Diego. We will have Scottsdale. We will remodel Ballard. There are still interesting opportunities in the US, not as much in China, as we said.

It’s probably the other way around where we will try to consolidate. Space might be a minor factor. We need to help ourselves with comp, as we have done so far. That is the algorithm and the logic behind our performance on DTC. In terms of effects, how we protect ourselves, the mechanic is always we fix the logic, is always that we fix the currency for the price list months in advance. We defend that price list. That’s why we have now, at this point, during the selling campaign of spring 2026, which was in June of this year, we set the FX at that time, and now we are basically fully covered at a good currency rate.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: Which means that we protect the selling margin.

Gianluca Tagliabue, Group CFO and COO, Ermenegildo Zegna Group: We protect the selling margin. The rest is self-protected because you have OpEx and you have the revenues offsetting. As I said, now we need to add into the full-winter 2026, our mindset is always to stay in a low mid-single-digit growth of prices. We need to consider if this is enough everywhere. Probably there is also the tariff component in the U.S., which might bring us a bit a touch-up upwards. Definitely, these are the mechanics that we use to defend ourselves in an environment of currencies.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: Yeah, it’s nice. It’s nice also to underline that we did in September this year some price increase because of the tariff, as you know. The reaction from the customers was very positive. There was no, I would say, negative reaction. Of course, everything that we do in terms of price increase has to be, you know, always an elaboration and an analysis done by the merchandising team, looking at the full-price collection and protecting, you know, the important price point of every collection. This is part of the job that Gianluca Tagliabue, Gildo Zegna, and the merchandise team do every season, every collection. I don’t know if we answered.

Nicole Silvia, Analyst, TD Cowen: Yes, that’s very helpful. Thank you both.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: Thank you. Thank you so much. Sorry for asking again. Next one, operator.

Call Moderator: Thank you. Our next question comes from Chris Huang with UBS. Chris, please go ahead.

Anthony Charchafji, Analyst, BNP Paribas: Hello. Hi. Thanks for taking my questions. I have three. The first one, just to follow up on the Q4 current trading commentary. If I look at your group DTC channel performance as a whole, the improvement in Q3 pretty much was in line with what your comps would have suggested. In light of the very impressive Q4 you had last year, and Gianluca, I think your previous comments around trends so far unchanged in the fourth quarter, would it be possible that perhaps, you know, in Q4, we continue to see a high single-digit DTC growth at a group level? That’s the first one. Secondly, on cluster, I just wanted to clarify a little bit here on the Chinese consumers if it’s down mid-single digit or a high single digit.

Related to that, it seems like the Chinese consumers really accelerated in Q3 when the total Zegna DTC is kind of in line. What other nationalities are probably moderating or normalizing a little bit if you can give some color on that? Last but not least, on H2 margins, I think on the previous call, H1 call, you commented that for the full year, you’re expecting the Zegna segment margins to land between 13% and 14%. If I heard correctly, the 7% growth in DTC in Q3, you said, was mostly driven by comps. That is quite a good number to really see some operating levers. I’m just wondering if there’s any update on the margin expectations you can give us for the Zegna segment for 2025. Thank you.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: Okay, thank you for the three questions. The first one is on the follow-up on Q3, and in particular, if this is a question that you direct rightly to Gianluca, if we can deliver on a high single-digit Q4 growth for DTC. The second one is on the Chinese cluster, and then we go after. I’ll ask Gianluca to comment the first one in the meantime.

Gianluca Tagliabue, Group CFO and COO, Ermenegildo Zegna Group: If I’m from the Chinese cluster, the Chinese cluster has seen a high single-digit negative, and we have seen a stronger decline on Chinese abroad, although smaller in terms of incidents for us. The decline has been steeper for Chinese buying outside of the Greater China region. Anyway, overall, it’s been on the high single-digit environment. In terms of Q4, I don’t want to comment on the expectation by channel, by brand, because it’s then it’s conceptually, we are trailing not different than what we have seen in Q3. Of course, we need to know that last year we had a solid performance. It will be more challenging. So far, I would say same trend than Q3. If you want to have an indication, I would probably stick, rather than by brand, by geography. I think that the consensus out there today is reasonable.

Overall, I think the consensus that is out on our website that we report for full-year revenues looks a good indication.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: On Zegna margin for a full year, Chris was reminding that the comment we made in September that we were expecting a Zegna margin around the 13, 14%. Of course, Chris, this was an indication we gave. I don’t think this is the place, the moment to comment on margins, but just reminding you that the growth by comp is not something that is coming as a surprise for Zegna. It’s something that is planned in our expectations and in our numbers. It’s absolutely a nice, very important growth, but it’s aligned with, or at least following, let’s say, our expectations. Maybe a little bit better, but not much. I don’t know if we answered, Chris. If you don’t have any follow-up, we can go to the next one.

Anthony Charchafji, Analyst, BNP Paribas: Yeah, sounds good. Thank you.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: Thank you.

Call Moderator: Thank you. Our next question comes from Chiara Battistini with J.P. Morgan. Please go ahead.

Chiara Battistini, Analyst, J.P. Morgan: Hello. Thank you very much for taking my questions. I have a couple of follow-ups and maybe a curiosity. First question on Zegna. If I can follow up asking about the mix, like the price/mix and volumes, and also the evolution for the Zegna brand between the recruitment of new consumers versus returning customers, what you’re seeing from that point of view. The second question, a follow-up on Tom Ford. I was wondering, given all the initiatives in place, the fact that the product under the new designer is ramping up the CRM and also the ongoing store rollout, is there any reason why we should not be assuming further acceleration sequentially for Tom Ford into year-end and also into next year from a DTC perspective? Finally, more of a high-level question.

There’s been a lot of debate in the market lately about the debut of the new fashion designers at different houses, and this potentially reinvigorating and reigniting a desire for bolder fashion and more outdated fashion. Potentially penalizing more understated brands. I was wondering if you could share your views about this ongoing debate that there is in the market at the moment. Thank you.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: Thank you, Chiara. Ciao. Okay. On the price mix, on the price mix volume evolution for Zegna. Price mix is clearly very important. I ask Gianluca if he wants to comment more also on the returning customers. On the Tom Ford, the further acceleration, why not? Let’s ask Gianluca. On the third one, sorry, Chiara, the theme and the debate is, if I understood well, but I’m not sure, how that designer becoming even more important for the brand or that there were many changes in the design. Sorry. Alice is looking at me and saying, "No, you don’t understand anything." Sorry.

Call Moderator: Ciao, Alice Poggioli, too.

Chiara Battistini, Analyst, J.P. Morgan: I was wondering because as there’s been a lot of renewed enthusiasm around potential fashion trends and reigniting appetite for bolder fashion as some of the new designers or designers that have moved out.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: Thank you.

Chiara Battistini, Analyst, J.P. Morgan: Thank you.

Gianluca Tagliabue, Group CFO and COO, Ermenegildo Zegna Group: I start from the Zegna. I confirm that price/mix is the biggest driver. Mainly, comp is coming from price and mix. Of course, there is the like-for-like price increase. As I said, the mix component of elevation of the content of the collection is the other component. Price/mix is the major driver of comp. In terms of returning, recruiting new, we are seeing good traction in new clients, especially on retaining new clients. Of course, there’s always someone coming in, walking. The point is whether you create stickiness. You create stickiness that you bring them in, possibly through Triple Stitch, possibly through knitwear, and then little by little, some of those go away, some return. The ones that are returning are our focus, and we see good numbers over returning new clients. Especially, the objective is elevating these clients. What we are always looking at is the spending by cluster.

We try to identify by the type of product that they buy if they have potential. We intensify our activity around them in order to bring them above the $10,000, above the $25,000 threshold, and finally, above the $50,000 threshold that is our Zegna friend territory. Of course, the numbers, we are growing very well on the clusters above $25,000. On the lower spending, we see good traction of returning new, especially people that are coming in, maybe coming back to buy a second pair of Triple Stitch or starting to buy a more broad total look. I think it’s a healthy proposition of clients staying, clients entering, and staying with us for a longer time.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: On Tom Ford Fashion and the Q4, why not further acceleration? Okay. I asked Gianluca to answer, but I just remind you two things. One, of course, there is always a sort of wow effect when you have a new collection, and this is something that we want to continue to keep it. The first time, normally, it’s a little bit more sound or strong. This is normal. It happens like this. The second one is also for Tom Ford. The Q4 last year was a little bit more dense in terms of performance. There is also for Tom Ford Fashion a base of comparison effect. I leave Gianluca if any further comments also on what we are doing on Tom Ford Fashion.

Gianluca Tagliabue, Group CFO and COO, Ermenegildo Zegna Group: I think that the solid double-digit growth, like we did in Q3, is something that we are happy with, especially because it’s partially generated by comp.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: Yeah, very good point.

Gianluca Tagliabue, Group CFO and COO, Ermenegildo Zegna Group: I think that run rate, I think it’s something that we are definitely pleased with. What we are doing is injecting into the machine of Tom Ford Fashion some of the lessons learned we have done with Zegna. For instance, we are injecting more and more CRM logic and approach. I think that the team is with the logic of Tom Ford Fashion, but trying to intensify the drops of product in order to create the reason why they call the clients back. I think that in Tom Ford Fashion, as I called out on Zegna, we see the opportunity to increase the presence in the successful U.S. market. Next year, Tom Ford Fashion will open stores in the U.S. We are also, I think we mentioned last time, working on a store in Paris. There are different arrows for Tom Ford Fashion distribution.

In terms of assortment, the collection, the team is working hard on the women’s side. That is the biggest opportunity, both on the daywear as well as on shoes and handbags. Those are the areas of opportunity. The distribution, as I said, notably on the Western world. There is, I think, some mechanics in terms of merchandising, in terms of CRM that we are injecting, cross-fertilizing across the different brands.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: On the third question, Chiara, I started giving my view, but of course, this would be better off if Gildo would have been here. Next time, you can ask him as well. Of course, Gianluca will also give his own view. This is a debate that we are. In terms of fashion, I know people like to talk about quite luxury fashion. I think the reality is that innovation is what clients and what the clients want. Innovation has to be coherent with the brand’s DNA. Zegna is an innovative brand. We innovate in terms of garments. We innovate in terms of style. As also our Creative Director explains, and actually, there was an interview yesterday in a newspaper, the innovation comes always taking in consideration what was presented the season before.

It is not changing everything, but it has to grow within the DNA and within the legacy of the brand. By doing this, you create a stronger brand, but also something new for the clients. I don’t think there is, you know, clients don’t want to buy always the same things. I don’t think so, but they want to buy something that is resonant, that has a meaning behind, that has something that goes just, it’s not only a nice garment, but it means something because of the quality, because of how it’s made, because of the values of the brands. This is what I think is true today as much as in the past, maybe not always, but in many periods of the history of the sector.

This is my view, but sorry, I cannot talk for our CEO here, and I actually would be very happy to have him or to have the same question presented to him in February for the full-year results. I don’t know if Gianluca has.

Gianluca Tagliabue, Group CFO and COO, Ermenegildo Zegna Group: Nothing to add.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: Okay. Thank you, Chiara. I don’t know if there are any other questions.

Gianluca Tagliabue, Group CFO and COO, Ermenegildo Zegna Group: Thank you.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: I don’t know if there is.

Call Moderator: Our next question comes from Daria Nasledysheva with Bank of America. Please go ahead.

Daria Nasledysheva, Analyst, Bank of America: Hi, everyone. This is Daria from Bank of America, and thank you for taking my questions. I have two quick ones, actually. Is there any way you could help us quantify the impact of Haider’s new collection on the acceleration this quarter, given you said that there is the initial wow effect that exists? How should we be thinking about the pace of product rollout for next year as % of revenues for the brand? My next one, could you please comment on your thoughts about full-year EBIT consensus as well, like you normally do? I know you commented on revenues, but what about profitability? Thank you.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: Okay. Ciao, Dasha. Thank you for the quick, the two follow-ups. In terms of quantification of either in the acceleration of Tom Ford Fashion, I would leave Gianluca to give you some qualitative, and I think it’s something that we will repeat what we said. I don’t think there is not a way, but clearly, yes, there is a wow effect. Haider is designing the collection of also the next one. Plus, it’s not only there is, as we were saying, a work together with having better people in stores, having better instruments in terms of CRM, having a better collection, not only the Haider one, but also the one that is, we call it pre, but is not the show one.

It’s having better merchandise in store, being better in buying for the store, and also the marketing and the visibility effect that the collection designed by Haider has created. It’s a mix of everything. I leave Gianluca to comment a little bit more.

Gianluca Tagliabue, Group CFO and COO, Ermenegildo Zegna Group: To identify what is the specific driver coming from either collection. Let’s remember that Ease’s part was mostly on the winter side that came through the quarter, not at the beginning of the quarter. There has definitely been part. Either part was also the collection that was before the drop of the show collection that came. I think it was around.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: That was June, July, July.

Gianluca Tagliabue, Group CFO and COO, Ermenegildo Zegna Group: June, July, the fall, the collection of.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: Oh, yes.

Gianluca Tagliabue, Group CFO and COO, Ermenegildo Zegna Group: Either.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: No, either end of August.

Gianluca Tagliabue, Group CFO and COO, Ermenegildo Zegna Group: Of course. Yes, end of August. Yes, sure. Of course, part of the quarter has been impacted by the specific fashion show collection. Part was before. I think it has had an effect in terms of curiosity to visit the show, visit the collection of the show, but it’s not only that one, that thing. In terms of consensus, I would reiterate what I said on revenues. I think that the consensus on full year for EBIT looks pretty reasonable. Of course, having always the line of thinking that we still have a couple of months, which for us are still very important. Therefore, it’s subject to the performance of the coming two months. We think today that the consensus out there on revenues and EBIT looks pretty reasonable.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: Thank you. If it’s okay, Daria, we’ll ask if there are other questions. Otherwise.

Daria Nasledysheva, Analyst, Bank of America: I think that’s good. Can you just comment on the percentage of revenues of new product for Tom Ford throughout the next year?

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: Yes. Okay. The drop or the, let’s say, the delivery of Tom Ford, the collections. There is.

Gianluca Tagliabue, Group CFO and COO, Ermenegildo Zegna Group: We will have, I think, on.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: November.

Gianluca Tagliabue, Group CFO and COO, Ermenegildo Zegna Group: November, second part of November, a first injection of spring, and then the second will be in January. The next will be, I don’t remember the specific date, but will be around mid-November, should be the first drop of spring hitting the floors.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: Yeah. Remember that the first drop is always the no-show collection. We call it pre, but in any case, apart from that, it is the most important part because the collection show for everybody, for any fashion brand, represents a smaller part, not as small, but a smaller part of the collection for the whole season.

Call Moderator: Thank you.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: Thank you, Dasha. If there is the last one, I think, because I know there is also another company reporting in half an hour, we might give you the time to prepare if anything. If there are questions, we’re very happy to answer.

Call Moderator: Thank you. We have one final question, which comes from Boomi Kanabar with Jefferies. Please go ahead.

Boomi Kanabar, Analyst, Jefferies: Hi, Gianluca, Paola, and Boomi. Just two questions from me, if I may. Number one, could you add a little bit of color on what you’re seeing in APAC ex-China, given the very slight sequential decline there versus H1? I think every other region was an improvement. I know you mentioned Korea and Singapore, but any other regions to call out that didn’t go as well? Number two, you mentioned you’re happy with EBIT consensus for the year, but I just wanted to ask on gross margin. It seems that given the share of DTC revenue.

Call Moderator: the nine months. There’s a little bit of upside there, if you could comment on that. Thank you.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: Okay. Leave Gianluca Tagliabue for the color of APAC as expected, as expected, and gross margin consensus, not EBIT.

Gianluca Tagliabue, Group CFO and COO, Ermenegildo Zegna Group: On NAPAC, I would call out, of course, Singapore is doing well, both for Zegna and also, we have a new store of Tom Ford that is picking up after the opening. I think we are seeing good momentum there in Singapore overall. In terms of Japan, I would say that we still see softness, especially on Japanese residents buying in Japan, which is the majority for us. We still see some softness. In Korea, we have seen some slight sequential improvement compared to the second quarter. Macau, we are not seeing good momentum. As I said before, Hong Kong, yes. Hong Kong, both traffic and also top line. China, I think I commented already before. I don’t have any other major. Australia is,

Call Moderator: Not so.

Gianluca Tagliabue, Group CFO and COO, Ermenegildo Zegna Group: Not so important for us. In terms of what was the second question? Was the?

Call Moderator: The gross margin consensus. She said that I understand you, you are okay with EBIT consensus. Are you okay also with the gross margin consensus, which is at around 67, 67%?

Gianluca Tagliabue, Group CFO and COO, Ermenegildo Zegna Group: I think so. Yeah. I think that overall, the consensus directionally is meaningful from what we say. If you say we have an upside, I’m happy to hear. We will see at the end of the year if you are right. For the time being, I would stick to the consensus.

Call Moderator: Perfect. Great. Thank you.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: Thank you, Bumi. I don’t know if you have any. Otherwise, I’ll leave to the operator.

Call Moderator: Thank you. We have no further questions. Paola, I will hand back to you.

Paola Durante, Chief of External Relations, Ermenegildo Zegna Group: Okay. Thank you so much for all your questions. We are here at your disposal for any follow-up that you have. We will rejoin together on February 2, 2025, for the full year 2025 preliminary revenues. Thank you so much for the time you spent with us, and speak to you soon. Ciao.

Call Moderator: Thank you, everyone, for joining us today. This concludes our call, and you may now disconnect your line.

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