Ermenegildo Zegna (ZGN) H2 2025 earnings summary

Executive summary

• FY2025 revenues were €1,917 million, down 1.5% year-over-year reported but up 1.1% organically, with net profit rising 20% to €109.5 million and a proposed dividend of €0.12 per share (~€32 million total).

• Adjusted EBIT was €163 million (8.5% margin), including a €10 million provision for Saks Global; excluding this, adjusted EBIT was €173 million.

• Gross margin improved to 67.5%, driven by a higher DTC channel mix (82% of branded revenues).

• Positive free cash flow of €82 million and a net cash surplus of €52 million at year-end, reversing prior net indebtedness.

• Disciplined growth, cash generation, and execution remained management priorities amid sector and geopolitical uncertainty.

Financial highlights

• SG&A expenses increased to €1,034 million (53.9% of revenues), reflecting investments in talent, systems, and store expansion.

• CapEx was €103 million (5.4% of revenues), mainly for store network and production investments.

• Trade working capital reduced to €408 million (21.3% of revenues) due to improved inventory management.

• Effective tax rate dropped to 22% from 30% due to non-taxable income from remeasurement of put option liabilities.

• Net cash flows from operating activities reached €336 million, with €215 million used in financing activities.

Outlook and guidance

• 2026 profitability expected to move sideways, with FX headwinds (~2% on revenues) and Middle East conflict impacting margins and guidance.

• Revenue guidance for 2026 in the €2 billion range, subject to geopolitical developments.

• CapEx to increase in 2026 due to completion of the new shoe factory.

• DTC momentum in Q1 2026 is accelerating versus Q4 2025, with all three brands performing well.

• Management remains focused on 2027 targets despite increased uncertainty.