Ermenegildo Zegna (ZGN) Q3 2024 TU earnings summary

Executive summary

• Q3 2024 revenues reached €397 million, down 8% year-on-year reported and 7% organic, reflecting a challenging environment, especially in Greater China, and softer wholesale performance due to door rationalization and store conversions.

• Revenues for the first nine months of 2024 totaled €1,357 million, up 1.7% year-on-year reported, 3% at constant currency, but down 4% organically.

• ZEGNA brand delivered double-digit growth in Americas and EMEA, supported by DTC strength and new store openings in key locations such as Monte Carlo, Beijing, Honolulu, New York, and Riyadh.

• Thom Browne and Tom Ford Fashion segments faced declines, with Thom Browne down 27% and Tom Ford Fashion down 11% organically in Q3, mainly due to wholesale streamlining and delivery timing.

• Management remains cautious for Greater China, expecting subdued consumer confidence to persist into early 2025, but continues to invest in brand strength and retail expansion.

Financial highlights

• Group revenues for the first nine months totaled €1,357 million (+1.7% YoY, +3% constant currency, -4% organic).

• Q3 2024 revenues were €397 million (-8% YoY, -6% constant currency, -7% organic).

• ZEGNA brand contributed €944 million in 9M 2024 (+5% organic for the brand); Thom Browne at €220 million (-27% organic); Tom Ford Fashion at €214 million (-4% organic).

• DTC channel grew 1% organically in Q3, with ZEGNA and Tom Ford Fashion positive, but offset by Thom Browne retail decline; wholesale dropped 24% organically.

• Textile business declined 15% in Q3, reflecting weaker B2B demand from external luxury brands.

Outlook and guidance

• Management expects continued uncertainty into Q4 2024 and 2025, particularly in Greater China, but expresses confidence in brand strength and leadership.

• ZEGNA wholesale expected to be flattish organically for full year 2024, with reported figures slightly negative due to store conversions.

• Thom Browne wholesale is guided to be down around 35% for the year, with further streamlining until Spring 2025.

• October trading was slightly better than Q3, but volatility and uncertainty remain.