Ermenegildo Zegna (ZGN) Q4 2024 TU earnings summary

Executive summary

• FY 2024 revenues reached €1,947 million, up 2.2% year-over-year, with Q4 revenues at €589 million, up 3.3% year-over-year, driven by strong ZEGNA brand and DTC channel growth, especially in the US and EMEA.

• ZEGNA brand Q4 organic growth was 7%, with DTC up 10.5% and Americas region up 14.6% year-over-year; Thom Browne and Tom Ford Fashion also saw positive DTC momentum.

• Strategic focus included reinforcing talent, investing in CRM and personalization, and enhancing merchandising and retail operations, while navigating geographic volatility, especially in China.

• Geographic rebalancing reduced Greater China Region exposure to 26% of revenues, down from 46% in 2021.

Financial highlights

• ZEGNA brand accounted for 60% of FY revenues, with Q4 organic growth of 7% and strong DTC performance; Thom Browne and Tom Ford Fashion each represented 16% of FY revenues, with Q4 organic growth of 4% for Tom Ford Fashion and a 4% decline for Thom Browne.

• Textile business declined 13% organically in Q4, reflecting weak demand from external luxury brands.

• DTC channel accounted for 78% of branded product revenues in FY 2024, up from 73% in FY 2023, with Q4 DTC revenues up 8% organically.

• EMEA Q4 organic growth was 5%, Americas 15%, Greater China Region -11%, and Rest of APAC 8%.

• Wholesale branded revenues declined 7% organically in Q4, reflecting channel streamlining and store conversions.

Outlook and guidance

• 2025 expected to see similar regional trends as late 2024: strong Americas, solid Europe, robust Middle East, and continued volatility in China.

• Strategic investments in brand value and U.S. market to continue, especially for Tom Ford Fashion.

• H1 2025 wholesale revenues for Thom Browne expected to decline double digits, with improvement anticipated in H2.

• Pricing actions for 2025 expected to be low single-digit increases, mainly to offset inflation.

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