Ermenegildo Zegna N.v Stock Earnings Reports

Key points for investors: • FY25 results: Revenues €1.917bn (reported -1.5% y/y; organic +1.1%). Gross margin improved to 67.5%. Adjusted EBIT €163m (includes €10m provisions related to Saks Global Chapter 11); excluding that provision adjusted EBIT would be ~€173m. Reported net income €109.5m, up 20% y/y. • Cash & capital allocation: Group ended FY25 with net cash surplus of €52m (vs. €94m net debt at end-2024). Free cash flow €82m. Board proposed dividend €0.12 per ordinary share (~€32m total). • Investments: CapEx paid €103m in FY25 (5.4% of revenues); expect higher CapEx in 2026 (~7% of revenues) driven by completion of a new shoe factory near Parma and store openings/IT. • Margin dynamics: Improvement in gross margin driven by channel mix (DTC 82% of branded revenues vs 78% prior year) and better full‑price sell‑through; SG&A ratio rose to 53.9% of revenues due to investments in talent, systems, store expansion (esp. Tom Ford, Thom Browne) and negative operating leverage from Thom Browne wholesale streamlining. Management expects group profitability to be broadly sidelined in 2026 (currency headwinds ~2 percentage points to revenues) while continuing to invest for long‑term growth. • Brand highlights and commercial progress: Tom Ford rebound in H2 with improving profitability trends; promising traction for Thom Browne x ASICS sneaker collaboration (strong visibility and early revenue ahead of expectations) and continued focus on customer acquisition and personalization; Zegna fragrance (Memory) rollout and cultural partnerships (Art Basel, Italian Pavilion at Venice Biennale) to reinforce brand positioning. • Regional / trading update: Early 1Q trading DTC slightly better than Q4; Americas remain resilient; China showing sequential improvement but management remains cautious and models flat for the year; Middle East stores mostly open but experiencing lower traffic — region is material (mid‑to‑high single‑digit share of group sales) and outcome for 2026 depends on the duration/impact of the conflict. • Wholesale posture: Continued deliberate wholesale contraction (Zegna mid‑teens decline, Tom Ford modest negative, Thom Browne double‑digit negative but smaller in absolute terms), part of channel mix and brand protection strategy. Overall message: solid cash generation and margin mix improvement in FY25, continued investment to scale Tom Ford and Thom Browne, cautious near‑term outlook due to FX and geopolitical uncertainty (Middle East) but management focused on delivering 2027 targets through brand and retail initiatives.