Ermenegildo Zegna NV Q3 FY2024 earnings call

• Q3 DTC was impacted in Greater China, wholesale was softer due to Thom Browne door rationalization. ZEGNA brand had double-digit growth in Americas and EMEA. • Important store openings included Zegna Monte Carlo, Beijing Shin Kong Place, Honolulu, Ala Moana, and New York Meatpacking District. Thom Browne had a multi-category installation in Hong Kong. • Thom Browne was nominated for CFDA Designer of the Year. • Golden Week performance was ahead of expectations but below last year; Zegna had higher quality traffic, Thom Browne had initial positive signs, Tom Ford had minor impact. • Strategic actions: Streamlined Thom Browne wholesale, focused on DTC; appointed Haider Ackermann as Tom Ford Creative Director; planning for 2025 with careful planning, brand investments, and talent attraction.

In the first nine months, the Zegna segment contributed €944 million, with the ZEGNA brand up 5% organic. The Thom Browne segment was €220 million, and the Tom Ford Fashion segment was €214 million. In Q3, total revenues were €397 million, down 7% organic. The Zegna segment had -1% organic due to textile and minor third-party brands, but ZEGNA brand had +3% organic growth driven by DTC at +4%, with EMEA, Americas, and Japan showing double-digit growth. Thom Browne had Q3 revenues of €53 million, -27% organic due to wholesale streamlining and Greater China challenges, but Japan and Korea had positive growth. Tom Ford Fashion had Q3 revenues of €65 million, -11% organic due to wholesale issues, but DTC had +3% organic. Textile was negative, -15% organic, due to lower B2B demand from luxury goods brands.

• 2024 full year: Zegna wholesale expected to be flattish organic, with some negative points including conversions. Thom Browne wholesale down ~35% year-on-year. • 2025 outlook: Prepared for both scenarios, planning to invest in brands, marketing, and openings, with hopes to start 2025 in a better shape.

• Market uncertainty: Continued uncertainties in the luxury sector, especially in Greater China. • Wholesale challenges: Door rationalization at Thom Browne, timing issues in deliveries affecting wholesale performance. • Consumer confidence: Subdued consumer confidence in China, which could impact performance.

Q: Oliver Chen on China consumer confidence and Americas performance A: Gildo discussed China's progress with ongoing transformation, higher spending clients, and Uber-Luxury made-to-measure; Americas had solid double-digit growth.

Q: Anthony Charchafji on October trading, H2 margin, Thom Browne wholesale guidance A: Gildo commented on October trend being slightly better than Q3; no specific EBIT guidance, but Thom Browne wholesale expected down ~35% year-on-year.

Q: Chris Huang on ZEGNA DTC clusters, comp store growth, China spending outside A: Gianluca discussed nationalities driving ZEGNA DTC growth (Europeans, Americans, Middle Eastern), comp store metrics not reported, and China spending outside being minimal but growing in Japan.

Q: Ben Rada Martin on China retail evolution and price policy A: Gildo talked about China retail store transformation and strategy; Gianluca discussed moderate price increases to offset costs, balanced price architecture, and mix opportunities for Zegna.