Ermenegildo Zegna (ZGN) H1 2024 earnings summary

Executive summary

• H1 2024 was challenging due to normalization in the luxury sector, with soft demand globally, especially in China, and significant investments across all brands, including the ZEGNA One Brand Strategy and new creative leadership at Tom Ford Fashion.

• Management remains confident in long-term growth potential, supported by resilient operations and positive partner relationships.

Financial highlights

• Revenues reached €960.1 million in H1 2024, up 6.3% year-over-year and 8% at constant currency, but down 2.7% on an organic basis.

• Gross profit rose to €637 million (66.4% margin), a 220 bps improvement year-over-year, driven by a higher DTC mix and better inventory management.

• Adjusted EBIT was €80.9 million (8.4% margin), down from €119.9 million (13.3% margin) in H1 2023, impacted by higher costs and investments.

• Net profit for H1 2024 was €31.3 million (3.3% margin), down from €52.1 million (5.8% margin) in H1 2023.

• SG&A expenses rose to €497.6 million (51.8% of revenues), up from 46% last year, reflecting investments and Tom Ford Fashion consolidation.

Outlook and guidance

• 2024 is expected to be below initial expectations due to macro and sector-wide challenges, but mid-term ambitions remain unchanged.

• Management expects gross margin to remain stable in H2, with marketing expenses normalizing and OpEx growth mainly inertial.

• CapEx for 2024 and 2025 will remain slightly above 6% of revenues, focused on key projects and store network investments.

• Continued focus on investments and cost controls to unlock long-term brand potential.