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01/11 10:51
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights a mix of positive and negative elements. While there is growth in the U.S. and EMEA DTC channels, significant declines in Greater China and wholesale revenue, along with economic uncertainties and tariff impacts, weigh heavily. The lack of a share buyback program and management's unclear responses further contribute to a negative sentiment. Despite some optimistic guidance, the overall market reaction is likely to be negative due to these challenges, especially given the company's market cap.
Revenues EUR 459 million, down 1% year-on-year due to a decline in Thom Browne's wholesale channel.
Zegna Brand Revenues EUR 293 million, up 3% year-on-year, supported by direct-to-consumer (DTC) growth in EMEA and the U.S.
Thom Browne Revenues EUR 64 million, down 9% organic year-on-year, due to ongoing reduction in wholesale.
Tom Ford Fashion Revenues EUR 67 million, up 3% organic year-on-year, driven by strong DTC performance and the impact of Haider Ackermann's first fashion show.
Textile Revenues Down 9% year-on-year, largely due to decreased global demand from luxury goods brands outside the group.
EMEA Revenues Down 2% year-on-year, primarily due to decline in Thom Browne's wholesale channel.
Americas Revenues Up 9% organic year-on-year, with strong double-digit growth in Zegna brand, particularly in the U.S.
Greater China Revenues EUR 123 million, down 12% year-on-year, reflecting a cautious approach and ongoing negative traffic trends.
Rest of APAC Revenues Up 8% year-on-year, driven by strong performance in Japan and Singapore.
DTC Growth 5% growth across all brands, reflecting a strategic focus on direct-to-consumer channels.
Wholesale Performance Down 19% year-on-year, reflecting the strategic decision to focus on DTC and the performance of Thom Browne.
Zegna DTC Revenues Up 4% year-on-year, accounting for 86% of total brand revenues.
Thom Browne DTC Revenues Up 3% organic year-on-year, driven by new store openings.
Tom Ford Fashion DTC Growth Up 9% organic year-on-year, supported by strong double-digit growth in EMEA and robust performance in the U.S.
Tom Ford Fashion Wholesale Performance Down 8% year-on-year, largely due to wholesale shop-in-shop conversions and a natural slowdown in orders.
New Product Launch: In early April, Zegna brand presented its summer drop collection, featuring 100% traceable fabrics and a new Moccasin shoe family.
Fashion Show Impact: Tom Ford Fashion leveraged momentum from the March fall/winter '25 fashion show, with positive results from the 'see now, buy now' collection.
Store Openings: Thom Browne opened a new store in Palm Beach and is set to open another in Los Angeles Melrose Place to strengthen U.S. market presence.
Geographic Performance: The Americas region recorded a 9% organic growth, particularly strong for the Zegna brand in the U.S.
DTC Growth: Zegna DTC revenues grew by 4%, accounting for 86% of total brand revenues.
Wholesale Strategy: Thom Browne's wholesale was down 48% due to a strategic focus on DTC distribution.
Tariff Strategy: Considering a mid single digit increase in pricing in the U.S. due to a 10% tariff increase on imported products.
Revenue Decline: The company reported a 1% year-on-year decline in revenues, indicating potential challenges in maintaining sales growth.
Wholesale Channel Reduction: Thom Browne's wholesale revenues decreased by 48% organic, reflecting a strategic decision to reduce volumes in this channel and focus on direct-to-consumer (DTC) distribution.
Global Demand Decrease: The Textile product line experienced a 9% decline due to decreased global demand from luxury goods brands outside the group.
Greater China Region Performance: The Greater China region reported a 12% revenue decline, continuing a negative trend from previous quarters, despite some initial signs of improvement.
U.S. Tariffs Impact: A potential 10% increase in tariffs on imported products to the U.S. could affect pricing strategies, with the company considering a mid single-digit price increase to protect EBIT.
Economic Uncertainty: The overall environment remains uncertain, which could impact future performance and consumer demand.
Supply Chain Challenges: The company faced challenges related to timing in deliveries and the conversion of wholesale shop-in-shop into retail concessions.
DTC Growth: Zegna DTC revenues grew by 4% and accounted for 86% of the brand's total revenues.
New Store Openings: Thom Browne opened a new store in Palm Beach and plans to open another in Los Angeles Melrose Place.
Product Launches: Zegna launched a summer drop collection featuring 100% traceable fabrics and a new Moccasin shoe.
Tariff Strategy: Considering a mid single digit increase in pricing in the U.S. due to a 10% tariff increase on imported products.
Revenue Expectations: The Americas region recorded a 9% organic growth, indicating positive revenue expectations.
Future Product Launches: The Ackermann fall/winter '25 collection will hit stores starting in September.
Market Response: Positive customer response to new product launches and marketing campaigns across all regions.
Overall Demand: No significant changes in overall demand globally, with some improvement noted, particularly at the Zegna brand.
Share Buyback Program: None
Despite strong net profit growth and improved margins in the Zegna segment, the company faces challenges such as declining EBIT in Thom Browne and Tom Ford segments, and higher cash absorption. The cautious outlook on China and flat EBIT guidance temper optimism. The Q&A highlighted risks, particularly in China, and management's reluctance to provide detailed guidance. Given these mixed signals and the company's market cap, a neutral stock price movement is expected.
The earnings call highlights a mix of positive and negative elements. While there is growth in the U.S. and EMEA DTC channels, significant declines in Greater China and wholesale revenue, along with economic uncertainties and tariff impacts, weigh heavily. The lack of a share buyback program and management's unclear responses further contribute to a negative sentiment. Despite some optimistic guidance, the overall market reaction is likely to be negative due to these challenges, especially given the company's market cap.
The earnings call summary indicates challenges such as declining wholesale revenues, operational difficulties, and a negative trend in China. Despite some positive aspects like DTC growth and increased gross margins, the Q&A session highlights concerns about the U.S. market and unclear management responses. The market cap suggests moderate volatility, leading to a predicted stock price movement in the negative range (-2% to -8%).
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