Ermenegildo Zegna N.V. 2026 Q3 Earnings Call

Thank you. Thank you, operator, and good morning, good afternoon, everyone. Thank you for being with us. As usual, our call is led by Gianluca Tagliabue, Group CEO. I will start commenting our third quarter revenue performance. Gianluca will then share his closing remarks and take you through some of the quarter's key moments. The new Zegna campaigns dedicated to Su Misura and the Falcon jacket, and the Spring/Summer 2027 fashion shows of Tom Ford and Thom Browne. But first, let's go to our revenue results, key highlights on page 10 of the presentation. As always, when commenting on revenues, I will refer to the organic performance, which excludes foreign exchange impact and therefore better reflects the underlying business dynamics.

In the third quarter of 2026, the group reached EUR 434 million in revenues, up +8%, showing continued strength in the DTC channel, which grows 11%, with all regions contributing positively to this performance. Going now to page 11, and I will comment Q3 performance by brand, starting with Zegna. Zegna brand continued to lead the group growth, recording EUR 284 million revenues, a +13%. A performance which has been driven by a very solid DTC channel across all regions. Thom Browne reported EUR 45 million of revenues, down 7%, reflecting a more challenging consumer environment in Greater China and the ongoing professionalization of the wholesale channel. TOM FORD FASHION, EUR 70 million in Q3, up 5%, with both DTC and wholesale positively contributing to this performance.

And finally, on textile, revenues were up 5%, while other revenues, which as you know, mainly related to ready-to-wear garments produced for third-party brands, was negative 14%, that off a very small base. Let's move now to page 12, the revenues by geographic areas. I will start commenting EMEA, which in the first 9 months of the year represented 35% of group revenues. EMEA revenues were up 6% in the third quarter, supported by double-digit growth at Zegna, partially offset by the negative wholesale performance at Thom Browne and TOM FORD FASHION. The Middle East showed a strong sequential improvement in the quarter, with a double-digit performance in Q3. The Americas. Americas represented 31% of group revenues in the first 9 months. In the third quarter, this region recorded a 14% growth, led by double-digit growth at Zegna DTC, partially offset by decline in the brand's wholesale channel.

Also, TOM FORD FASHION solidly contributed to the region's growth. Moving now to Greater China region, which accounted for 22% of total revenues in the first nine months of this year. In the third quarter, GCR revenues increased by 6%. Zegna DTC continued to deliver solid growth in the region, despite the increasingly challenging environment. Partially offset this performance by a negative performance at Thom Browne and TOM FORD FASHION. Finally, the rest of APAC, 20% of group nine-month revenues, reported a +5% growth in the third quarter. Zegna and TOM FORD FASHION delivered a positive performance, while Thom Browne revenues remained broadly in line with the prior year. I will skip to comment on page 13. Let me just highlight that in the first nine months of 2026, DTC for the group accounted for 85% of branded revenues, three percentage points higher than the prior year.

From 82%, we moved to 85%. Now let's go to page 14 of the presentation, and let's deep dive on Zegna brand performance. In the third quarter of this year, Zegna DTC revenues grew 16% with, as I said, a very good performance across all regions. The Americas, once again, outperformed the average of the revenues improved sequentially and delivered double-digit growth, while GCR also remained on a steady growth with the Chinese cluster accelerating in the quarter to a double-digit performance. In terms of retail network, Zegna closed four net doors during the quarter. In the wholesale, revenues were down 8%, reflecting our continued strategic focus on a retail-first business model and on delivering a more exclusive customer experience. We confirm that we expect the Zegna brand wholesale channel to be down in the low teens by the year-end.

Now, page 15, Thom Browne revenues by distribution channel. In the third quarter, Thom Browne DTC revenues declined 7%. This performance has been impacted by a more challenging environment in some key markets, in particular in Greater China region. The slowdown in the quarter also reflected the first full deliveries that were not optimally balanced, in particular in terms of fabric weights, as well as some deliveries shifts. In terms of retail network, the brand opened one door next during the quarter, including the new store at the Shanghai Plaza 66. The wholesale channel for Thom Browne reported 11% organic decline, reflecting the ongoing streamlining of the channel. For the full year, we expect a trend broadly in line with the first nine months. Let's move now to page 16, TOM FORD FASHION revenue analysis.

For TOM FORD FASHION, DTC revenues grew by 4% in the third quarter, supported by positive contribution from Americas, EMEA, and the rest of APAC. DTC performance was also in the quarter, has been also impacted by different cadence of deliveries compared to the last year, a timing effect which will be neutralized in Q4. In terms of retail network, TOM FORD FASHION, those network remain unchanged during the quarter on a net basis. Wholesale revenues were up 9%, reflecting the positive reception of the fall-winter collections among our wholesale partners. For the full year, we confirm we expect to have a low single-digit growth for this channel. Page 17, not much to add. As usual, you can find here our group store network. With this, I'll hand over to Gianluca Tagliabue for his remarks.

Thank you. Thank you, Paola.

Good afternoon, good morning, everyone. Let me also welcome you to the call. Paola said we are pleased with our third quarter revenue performance, driven in particular by the ongoing solid momentum of the Zegna brand, which showed a very good DTC performance across all regions. These results reflect the successful execution of a strategy that we have been pursuing consistently. The momentum we first built in the Americas and in the Middle East is now increasingly extending to Continental Europe and to GCR, broadening the foundations of our growth. This is evident not only in the brand's performance across regions and customer nationalities, but also across product categories and client segments. Zegna brand is growing with existing and new clients across all categories, led by Su Misura, luxury leisurewear, and the continued strength of our footwear offering. Zegna brand is unique. Its uniqueness is rooted in three pillars: legacy, family, craftsmanship.

By staying true to its identity and uncompromising positioning while connecting with distinctive communities, the brand is increasingly attracting both loyal as well as new customers across markets. And within new clients, we see a promising pattern of new clients returning for a second purchase. Our recent fall-winter Su Misura campaign from father to son, was not only a commercial success, but even more importantly, a compelling expression of the brand vision and strategic direction. Another important milestone was the September fashion issue of the Financial Times, How to Spend It, featuring the first joint interview with our Zegna brand's Co-CEOs, Edoardo and Angelo Zegna, alongside our Executive Chairman, Gildo.

Set at the original Villa Zegna in Trivero, the story fully captured the essence of the Zegna legacy, a unique heritage, a strong sense of continuity, and a shared vision for the future. Moving now to TOM FORD FASHION, I want to start with the recent spring-summer 2027 fashion show held in Paris at the end of September. That was Ida Zakarinman's fourth collection for the house. I believe that Ida and the entire TOM FORD FASHION team are defining the evolution of TOM FORD FASHION identity in today's landscape. TOM FORD FASHION is continuing to evolve towards a more intimate interpretation of the elegance seduction. Leatherware, tuxedo, evening wear remain enduring codes of the house, while new expressions are taking shape, notably a stronger tailoring proposition, including tailoring for women.

We are now focused on translating the TOM FORD FASHION creative momentum into increasingly tangible results, strengthening its positioning in the U.S. while broadening audience global. Product is clearly an important part of this journey. We are continuing to refine the collections across both menswear and womenswear, and we are encouraged by the performance of womenswear, which outperformance albeit from a smaller base. At the same time, we see further opportunity to sharpen the proposition across seasons. We are also continuing to strengthen our retail footprint. TOM FORD FASHION has just opened a beautiful new store in Costa Mesa, California, with two more openings in the U.S. coming shortly. One in San Diego, the second, Bal Harbour, Miami. Let me now turn to Thom Browne. Q3 was a challenging quarter for the brand.

As planned, we did not have the contribution from the ASICS collaboration, while the sharp deterioration in consumer demand across Asia, starting with China, created an additional headwind. In DTC, July and August were the most challenging months. September and October so far have shown some improvements, but we remain cautious given the continued volatility in the markets. At the same time, we are seeing encouraging signs around the brand. The highly acclaimed New York Spring 2027 fashion show held in September, together with the launch of the Thom Browne Bose Headphones collaboration, helped slightly improving momentum in the recent weeks. Our priorities are clear for Thom Browne, a highly selective approach to new store openings, a stronger in-store product proposition in terms of category mix and range.