Ermenegildo Zegna (ZGN) H2 2024 earnings summary

Executive summary

• FY 2024 revenues reached €1.947 billion, up 2–2.2% year-over-year, with constant currency growth of 3–3.4% and organic decline of 1.9–2%. Growth was driven by the Zegna brand and DTC channel, especially in the US and EMEA.

• Adjusted EBIT was €184 million (9.5% margin), with net profit at €90.9 million, reflecting a normalized 30% tax rate and a challenging environment, particularly in Greater China.

• DTC channel accounted for 78% of branded revenues for the year and 80% in Q4, up from 73% last year, supporting higher gross margins.

• Management remains focused on DTC expansion, cost control, and selective investments in marketing, CRM, and store network.

Financial highlights

• Gross margin improved by 230 bps to 66.6%, mainly due to a higher DTC mix and better inventory management.

• SG&A expenses rose to €1.008 billion (51.8% of revenue), mainly from investments in talent, Tom Ford Fashion, and store expansion.

• Marketing expenses were €121 million (6.2% of revenue), in line with midterm targets.

• Effective tax rate normalized to 30% from 20% last year.

• Dividend proposed at €0.12 per share, totaling about €30 million, subject to shareholder approval.

Outlook and guidance

• 2025 guidance assumes low single-digit growth in revenue and adjusted EBIT, with continued challenges in Greater China and a cautious market outlook.

• Midterm targets updated: revenue of €2.2–2.4 billion and adjusted EBIT of €250–300 million by 2027.

• More sustained growth expected in 2026–2027 as strategic initiatives mature.

• DTC share of revenues expected to reach 80% in 2025.

• Management is focused on brand equity, strategic investments, and leveraging existing strengths.