Ermenegildo Zegna Stock

Good afternoon, good morning, everyone. Thank you for joining the Ermenegildo Zegna Group First Half 2026 Financial Results Call. Please note that today's material and presentation are available under the zegnagroup.com website. Before we begin, we need to point out that the team will make certain forward-looking statements during the call. The group actual results may be materially different from those expressed or implied by these forward-looking statements. Also, these statements are subject to a number of risks and uncertainties, including those described in our SEC filings. Please refer to the forward-looking statements' cautionary statements included in Page 2 of today's presentation.

I'll now hand over to Paola Durante, Chief of External Relations and Sustainability.

Thank you. Thank you, operator, and good morning, good afternoon, everyone. Thank you for being here today with our conference call on first half 2026 results. I will briefly comment on our financial results, which highlights you can find on Page 3 of the presentation. And then I will leave the floor to Gianluca, Gianluca Tagliabue,our Group CEO, for some final remarks. Of course, before opening to your questions.

On Page 3, we skip commenting on H1 revenues since they've been already fully analyzed during the July call. So let's move to of the presentation to deep dive on the main metrics of our reported profit and loss starting with gross profit. In the first half of 2026, gross profit reached EUR 668 million with a margin on revenues of 67.6%. Gross profit remains supported by a favorable channel mix even that DTC revenues generated 86% of branded group revenues, up from 82% in the first half of last here. And as you know, B2C gross margin is higher than the wholesale one. This positive effect was partially offset by adverse foreign exchange movement. As a reminder, ForEx movement in the first 6 months of this year reduced top line growth by 3 percentage points. Selling, general and administrative. SG&A expenses amounted in the first half of 2026 to EUR 531 million, with an incidence on revenues that has slightly decreased to 53.8%. This has been primarily driven by improved operating leverage and lower impairment cost and it happened despite ongoing investments in the expansion of the DTC distribution network.

Finally, on marketing. Marketing expenses reached EUR 68 million, remaining broadly stable at 6.9% of revenues, reflecting our brand's disciplined approach in supporting the equity through focused and selective investments. Let's then move to Page 5, where we report adjusted EBIT for the group and by segment. As you know, adjusted EBIT is the main metric used by management to analyze business performance at group and segment level. In the first 6 months of 2026, adjusted EBIT landed slightly above EUR 74 million compared to EUR 69 million in the first 6 months of last year with a margin of 7.5%. Looking at the results by segment. The Zegna segment, which includes Zegna brand, the Textile division and the third-party brands generated an adjusted EBIT of EUR 107 million, which corresponded to a margin of 14.8% compared to 14.3% in the first 6 months of last year. The 50 bps increase in margin has been largely driven by operating leverage in the DTC channel benefiting from higher revenues per square meter and improved DTC KPIs, including the sell-through. Adjusted EBIT for Thom Browne segment was negative EUR 8 million compared to EUR 4 million positive in the first 6 months of last year. The decline reflects the adverse impact of foreign exchange movements, which for Thom Browne has been more severe than the group's average. Inventories and bad debt reserve evolution in line with the business trend and the cost related to talent acquisition and other investments to support the brand transition towards a retail first culture.

Moving now to Tom Ford Fashion segment. The segment recorded Tom from fashion recorded EUR 12 million of adjusted EBIT loss compared to a negative EUR 19 million in the first 6 months of last year. This improvement is primarily attributable to revenue growth, which allowed for greater absorption of fixed costs, together with an ongoing cost discipline. Let's move to Page 6. Here, you find summarize our reported income statement for the first half of this year and last year. I will comment here on profit specifically in the first 6 months of 2026, profit reached EUR 28 million compared to EUR 48 million last year which, as you remember, included the positive effect from the remeasurement of the Thom Browne put option liability that remeasurement that did not occur this year. More specifically, the sum of financial income and expenses, foreign external gains and losses in the first half of 2026 moved from a positive EUR 6 million -- sorry, to a negative EUR 23 million from a positive EUR 6 million in the first half of last year. This difference mostly reflects the just mentioned remeasurement of the Thom Browne noncontrolling interest put option liabilities that is, I remind you, denominated in U.S. dollar. The value of the put option was reduced in the first half of last year, also reflecting the sharp dollar depreciation. This generated nonmonetary and nontaxable income for EUR 28 million in the first half of 2025.

As a reminder, in fiscal year 2025, the total positive impact from the Thom Browne put option was EUR 37 million. So only an additional EUR 9 million income was recognized in the second part of '25. Commenting now on income taxes. First half 2026 income taxes resulted in a higher effective tax rate equal to 39% versus 30% in the first 6 months of last year mainly due to the already mentioned tax effect on nontaxable income. Tax rate for the group is normally higher in the first part of the year. Therefore, also in this year, also in 2026, we expect the tax rate in the second part -- in the second half to be lower than what we reported in the first 6 months. As already said in the past, commenting our results, a normal tax rate for the group is around 28%, 30%. Moving now quickly to Page 7, CapEx and trade working capital. CapEx in the first 6 months reached EUR 64 million. The EUR 10 million increase compared to last year was mainly related to higher investments in production, including the new shoe production plant in Parma which should start to operate by the end of the year. Very happy for that. Trade working capital stood at EUR 420 million at the end of June compared to EUR 442 million at the end of June last year. The reduction has been mainly driven by lower receivable as a result of the streamlining of the wholesale business.

Finally, on free cash flow and cash surplus, Page 8 and Page 9. On Page 8, you can see that we generated EUR 19 million of free cash flow this year compared to a EUR 23 million absorption in the first 6 months of last year. This thanks to a stronger cash -- stronger cash generation from operating activities, which, of course, was driven by higher EBIT and also by an improved trade working capital. And finally, on Page 9, our net cash was EUR 60 million at the end of June, increase higher than the EUR 52 million at the end of December 2025. And with this, I finish my brief comments, and I leave the floor to Gianluca.

Thank you, Paola. Before we open the floor to your questions, let me leave you with a few final thoughts brand by brand. In H1, the results once again reflect the excellent work that the Zegna brand team is doing to strengthen the brand. The consistency and discipline behind the clear strategic vision continue to translate into solid top line growth while also supporting the margin expansion. This trend continues to be supported by the brand's ability to both increase its market share among the loyal customers as well as attract new clients, all while remaining highly consistent in its positioning.

Indeed, the very solid momentum has continued through July and August. As you may have noticed, we launched our fall/winter campaign today fully dedicated to Su Misura Make-to-Measure, which is also featured on the cover of this presentation and in several major publications. The campaign is a tribute to our legacy and to the craftsmanship expertise and personalized approach that have distinguished Zegna brand for generations because Zegna Su Misura suit is not just the suit. It's a legacy that will be carried forward across generations. Regarding Tom Ford fashion, this fall, we unveiled a powerful marketing campaign that, in my view, effectively conveys the brand's evolution and its increasingly sophisticated expression of elegance and seduction. Marketing is a strategic area where we are prepared to selectively deploy additional resources to further strengthen brand awareness and high. In the past weeks, Tom Ford Fashion has continued to perform well with healthy momentum as awareness and engagement continue to build.

Now let me focus on Thom Browne brand. As you know, the brand's deep transformation is ongoing as it moves away from a wholesale-driven model into a retail-oriented go-to-market approach and culture. This transition is taking place in several phases. We are completing the reduction and upgrading of the wholesale network. And to be honest, the process has been taking longer than initially anticipated. -- partially due to a challenging macroeconomic environment. In 2025, we also began evolving the brand's leadership team. Sam Lobban, Thom Browne's new CEO, is building the organization with a stronger focus on DTC and a more customer-centric culture. As part of this effort, he has been reshaping the senior leadership team. We are confident that Sam, together with Tom, of course, are bringing the brand towards the right direction. Transformations of this nature require time and may temporarily weigh on results. The operating performance in H1 this year reflects both the decisions we have taken and the actions we continue to implement to strengthen the brand's long-term foundations.

The success of ASIC collaboration confirmed that the Thom Browne brand continues to resonate with consumers. However, while brand desirability is essential, it is not enough on its own. We are working with Sam across all the key levers of the business, including collection merchandising, open-to-buy planning and assortment, marketing, go-to-market execution, in order to ensure that both existing and prospective customers are engaged can find the right product offering and continue to build a relationship with the brand over time. The more recent marketing campaign of Thom Browne, which went out in the last few days, I believe, offer evidence of the brand intention to widen its customer base. Fashion operates on long lead times, building a stronger brand and a more sustainable growth platform requires patients, disciplined execution and consistency. As we did a few years ago with the one brand strategy of the Zegna brand, our focus for Thom Browne is exactly this, building a stronger brand with foundations able to deliver sustainable and profitable growth for the long term.

Looking ahead, we expect Thom Browne ground H2 26 EBIT to return positive in the semester, bringing full year EBIT close to breakeven. In H2, ForEx, we'll have less negative impact. Our comparison base will become less demanding and we have implemented actions to support gross profit and to control costs. Let me conclude now with a comment on our Parma factory, which is a strategic project that we launched a couple of years ago. We are now completing this important investment, which is much more than a manufacturing facility. It is a center of excellence, bringing together craftsmanship innovation and operational capabilities in a unique setting surrounded by a wonderful neutral environment. As we have done since the group's foundation, we continue to invest in the Filiera, our distinctive and unique Italian integrated supply chain to support the group development for years to come. We look forward to welcoming you in Parma next year. And with that, let's open the Q&A.

[Operator Instructions]

Your first question comes from the line of Robert Krankowski with UBS.

I have only 2 questions. So my first one is on the Zegna segment margins in the second half comparatives are becoming somehow tougher in the second half of the year, but you mentioned that July and August were still very solid. So should we expect the patterns 2024, '25 when the EBIT margin was better in the second half than in the first half to continue? And the second one, and I appreciate the call about the profitability rather than current trading, you mentioned already that the trends were very solid in July and August. So should we think that there was some level of improvement compared to your commentary from July when there was a bit more volatility and anything to call out related to China because we hear a bit more mixed things, and I think the comparatives are getting a bit tougher.

Thank you, Robert. Okay. On the first and the second, I'll leave Gianluca to make some comments. So the first 1 is on Zegna segment, EBITA, H2 versus H1 or clear.

Let's talk about the full year. In Zegna segment, we expect the adjusted EBIT margin in the region of the 15%, driven by all the positive trends that we have mentioned -- and if I need to label it in one word, it's about high-quality growth. So that's what we see for the year for the Zegna segment around that mark.

And for the comment compared to July, of course, that in July, there was only a few weeks of the quarter. Now we have a little bit more weeks still an important month to go, but I'll leave Gianluca, if you want to give a sense of if we are more confident or different from July. This is what Robert maintained its question.

So Paola, I say, of course, the quarter is missing still the important month of September. We just delivered important drops of product for Zegna and also recently for the winter of Thom Browne. So the comments cannot be completed, they are definitely partial. Let me give you some highlights by brand on DTC, of course. Overall, we continue to see a substantial solid double-digit positive trend for Zegna DTC with good performance across all regions and across all nationalities and we continue to support with confidence the business.

Tom Ford is seeing a good trend across markets. And Thom Browne has seen a visible deceleration in Q3, partially expected, I mean, being Q1 and Q2 positively impacted by the new store openings and by the ASIC launch, which was across March and April, the big numbers. As I said before, we are in a transition phase on Thom Browne. Sam with Thom are building the new team. We are carefully assessing the store network, and we are investing on all the retail functions, departments activities. And this, as I said before, is taking some time, but we are really confident that under some leadership, we are moving in the right direction.

You asked the third question was about GCR, we are reading, as I think you are reading some question marks and volatility on the market. We see that volatility we don't comment for the other brands, of course. But it's important to have in China like everywhere, very consistent brand strategy. And this is what we are doing with the Zegna brand. And in China, I think we have found a unique position that we believe is allowing us to get market share. It is a journey. Things needs to be done, but we are confident that we have undertaken the right steps in China, and we are seeing some good momentum in terms of market share gain on the Zegna brand, which is continuing to do well also in July and August. In any case, the softness that we are seeing reported in many personally reports and many news is, in effect, it's the factor that is probably impacting the most Thom Browne performance in the market over the summer. So I would bifurcate China in these 2 ways. Zegna performing well and an impact on the Thom Browne performance.

Your next question comes from the line of Adrien Duverger with Goldman Sachs.

I will have 2, if possible. The first one is on the wholesale channel. Could you please comment on the performance of the channel and the trends you're seeing for the second half of 2026? More specifically, what are you seeing with the order book and if there are any timing issues to be aware of? My second question is on profitability. With the solid set of numbers today, is there anything that we should be aware of in terms of phasing of costs or investments for the second half? Also, if you can please comment on -- your thoughts about the consensus. Do you continue to expect margin at the group level to be broadly stable year-on-year? And are you -- given these numbers, are you more confident on the full year '27 EBIT guidance?

Adrien, thank you so much. So on wholesale?

Wholesale, I think, Adrien, we commented in July, and I go back to those comments, probably with some slight adjustments, but we expect wholesale not to be a driver of growth to continue to contract. We expect brand by brand at Zegna in the low double digit due to icon protection because we are very selective on distributing through third parties, our recognizable items and great attention improving the network of distribution. Tom Ford, probably, we said was slightly negative. I think we could be between slightly negative and stable -- probably stable leveraging on what you were asking about order book, probably we could be in the stable area.

And Tom around negative. As I said, we are cleaning the environment. At this point, since the numbers are not as big in absolute term, I think it's important to talk about absolute because more than percentage. So if I -- if you remember, in 2024, Thom Browne had EUR 129 million, EUR 130 million of wholesale business last year went to EUR 77 milion. So a decline roughly of EUR 50 million. We expect this year the decline in absolute terms to be in order of magnitude, much lower, so kind of a -- of the absolute decline of last year. So I think at this point, the percentage of the business to sale is less impacting the overall picture, but we still see a decline which, in absolute terms, will be probably 50% of the absolute decline of last year.

In terms of profitability, Adrien is asking if we have some phase in different phasing and about 2026 consensus.

As you remember in the call at the end of July, we said that we felt comfortable. We believe that the consensus at that time was reasonable and that time was around EUR 190 million

It adjusted.

Adjusted EBIT. Now the consensus moved to slightly up to EUR 295 million adjusted EBIT. And we still confirm it is reasonable, even if, of course, a bit more challenging. There was a grade of EUR 5 million, but we still believe that, that target is reasonable. And the same thing I would say on the guidance of 2027, so that we confirm in the same dimensions that we have said over and over in the last calls.

Can I just confirm what '27, you said you were looking for an EBIT at the lower end of the range. Is that still the case?

Correct. It's correct. That's correct.

It's between 250, EUR 2.2 billion and EUR 250 million in the lower range of the guidance, yes. Thank you, Adrien. Thanks.

Your next question comes from the line of Anthony Charchafji with BNP Paribas.

It's Antonio at BNP. The first one would be on Thom Browne profitability, so being back to profitability in H2 to be back even -- can you please help us understand the moving part at Thom Browne brand in terms of margin. If you can help us quantify the impact at the gross margin level, specifically -- and also interested to know if there is a risk of inventory write-down that could impact the gross margin for Thom Browne.

My second question would be on marketing. I mean out of the out of the EUR 68 million spent in H1. Just curious to know the percentage that was allocated to the Zegna brand specifically? That would be my second question. And yes, maybe my last question is below the lines below EBIT. So it's a bit for housekeeping. If you can help us understand the expectation on the financial expense and FX impact below the EBIT. So if you can give any indication on a full year basis so we can realign correctly.

Thank you Anthony. Yes, absolutely. So on the Thom Browne and just to help enter understanding the second part and the moving parts of the second part of the year, Thom Browne profitability.

So the -- Anthony, so we said that we expect on ground adjusted EBIT to be close to the breakeven. I tell you which are the moving parts, and they are spread across gross margin and OpEx. There are 3 moving parts. So the lower currency headwind, if you remember, the headwind on Thom Browne was 5 percentage points compared to almost 3 percentage points at group level. So especially being particularly exposed to Korea and Japan in proportion they suffered from that headwind, which will be lower in the second half of the year for both for external, as well as internal factors like price adjustments.

The second part, it's a better and more focus open to buy management and goes into the topic of inventory management. So we are optimizing the open to buy, we have started optimizing open to my starting from fall/winter '26 onwards. So we have -- we will have a benefit from that part in terms of also inventory burden. And then there is the tight cost control, which is happening and will continue through the second half. So those are the elements. Of course, what we have said before, building the team is the fact that at a certain point gets to an inflection point. I think it will be more next year, but we start having a deceleration of cost increase. So these are the moving parts on Thom Browne that let us believe about a second part, which is accretive to the bottom line.

In terms of marketing, how much is related to Zegna, you can assume that more than 2/3 is around 70%, 75% is Zegna segment related. And in terms of the lines below the EBIT to help modeling EBITDA full year in terms of net profit.

So as for as we have seen for the EBIT also for net profit, we normally generate more profit in the second half than in the first half. In full year, '26 profit after tax will not be too far from last year despite the fact that in 2025, we have recognized, as Paola was mentioning, financial income and FX gains related to the pooled option remeasurement that will not occur this year as such. So to give you a sense of direction should not be too far despite of this material last year financial income and FX gain that overall in the full year was a positive impact in the range of EUR 37 million. Nonmonetary and nontax ...

And nontaxable. And as I said, that during this petro which 37-sorry, EUR 37 million, EUR 28 million occurred in the first part of the year. So the first part one that we reported had a higher base of comparison. And the second point is that the tax rate, as we said, that as normal in the second part of the year for the group is lower. So it will...

And also one point as a positive -- less demand in base of comparison. If you remember, last year at the end of the year, we had also the impact that was recorded of the Saks group credit write-downs, which, of course, this year, we are not expecting.

Your next question comes from the line of Oliver Chen with TD Cowen.

As you think about Americas, what's happening there in terms of the key brands and is the wealth effect being a positive driver. And your comments on China are also very encouraging. Do you expect a lot of those trends to stick in terms of the consumer sentiment is somewhat volatile in China, but the Zegna brand has executed clearly really well. And second question on Thom Browne. The wholesale network taking longer. Why is that true? Why is that happening? And what have been your learnings in terms of that happening? I know the brand continues to evolve and has a special artistic place in the fashion universe as well.

Thank you, Oliver, as always very interesting. The first one is on U.S. and Ciara, I understood mainly really focused on Zegna brand and the second one on Thom Browne. Gianluca?

I don't enter too much in the breakdown by nationality because I think we'll do it at the end of Q3, but I give you a sense that we are not seeing a significant difference in trends by nationality by markets. We keep on seeing positive performance with in America, of course, driven by the Zegna solid positioning but also on for this is doing well. And overall, with the North American consumers, we are -- we keep on seeing also in July and August, a very solid double-digit growth. So no material difference in the trajectory on America.

On China, I think, as I said before, there is in the marketplace, volatility, probably Zegna is moving, as I said, at a different pace because it's -- it's gaining market share. And I think that the recipe there is really the focus. I think Angelo and [indiscernible], and the team overall have picked their battles and the battles were and are the untapped opportunities of Zegna brand, which was underrepresented in triple stretch, underrepresented in make-to-measure, underrepresented in some other categories. And I think that part is playing a game and broadening the picture, I think that what encourages us is that overall America, GCR, Europe Zegna brand is seeing a growth of number of consumers and is seeing a growth in volumes in the first half of this year because, of course, we are losing some volume in some categories. But the categories that are key for us, whether it's shoes and not only triples, but also 232 and the other models, knitwear, 5-pocket pants, those are categories that are solidly growing, eyewear, fragrances. So this, we are seeing, of course, all our strategy is top of the pyramid, but this is creating a very positive snowball effect in the lower tier of clients and the number of clients is growing. So it's solid. It's not picking the top of the pyramid and squeezing the level. So I want to make it sure that it's clear.

On Thom Browne, why it's taking longer? That was the question?

On Thom Browne, it's taking longer because I think the fact that we are reshaping entirely the senior leader team, it's a point that probably the team was very well versed in wholesale driven model and the team like teenagers at a certain point, you need to change habits, patterns. I think we probably needed to change the team almost entirely, almost entirely, and infuse capabilities on the retail side. We are working, as I said before, on open-to-buy assortment, and that's another direction. We are also with Sam changing, but it's early to say some components of our future assortments.

So definitely, it's taking some time. I think I'm not putting any excuse, I think it took some time also to make the turnaround of Zegna. We probably were optimistic in the change of the of the revamp and relaunch of Thom Browne , but I reaffirm that we are still positive, and we believe that Sam is making the right changes and the right intervention in collection merchandising, in marketing. And the goal is overall to widen the base above and beyond the lowers and the niche of the brand. And we believe that we have the elements, investing on the preppy-americana codes. Creating further options for new clients to come into the brand, and this will be probably in the next collections more visible, not yet out there. So I just tease that we are working on both marketing and collection in order to welcome more people into the brand. The brand as ASIC showed has appeal, we need just to create more options for people to come in.

And one follow-up. Tom Ford clearly has really strong awareness. As you think about product and Tom Ford, the women's ready to wear the day, where the lead there out or where and made to measure. What should we focus on in terms of where you are with the path ahead and the most -- the biggest opportunities within product and Tom Ford.

Well, there is short-term opportunities long -- midterm opportunities. I'm not saying long term, midterm. In the short-term opportunity, we still have a lot low-hanging fruit is more in the apparel. I think we are creating more opportunities for higher frequency of use in women, in daywear. We are using the Filiera capabilities to have higher, and that's growing quite nicely the make to measure in Tom Ford. We launched in the first half of the year, women tailoring that it's a unique offer proposition in the marketplace because if you want to have a women tuxedo or a women make-to-measure, Tom Ford is the best option in the marketplace.

We launched the leather outer, which is an iconic offering for Tom Ford also on make the measure, amplifying colors and materials. So I think these are the low-hanging fruits. of course, the midterm goal and the untapped opportunity is getting a solid platform on women bags. The team is working on that. We are not yet there, and we are aware. And -- but this is the opportunity we see up there and where we need to keep on working.

Your next question comes from the line of Chris Gao with CLSA.

I have 3, if I may. So my first question is a quick 1 regarding tourist demand. So just wondering how to tourism among your key nationalities look like heading into July and August. Any comments on that? And my second question is regarding your Chinese demand guidance. If going back to earlier this year, remember, the guidance was largely flattish this year, but since our GCR performance was already 7% organic in the first half and your comments on GCR trends during the summer is still solid. So would you consider lifting the guidance for your Chinese demand for the FY '26? And how should we also look into the FY '27?

My last question is regarding your space contribution by brand in '26 and '27. So since we're approaching the end of 2026, do you have any changes of your space contribution plans and also, you mentioned some like 10 store closures of Zegna stores in China over time. So what would be the progress by the end of '26 if we may ask?

Chris, I hope we get all your questions because there were many. And so in terms of nationalities, I would say, Gianluca has commented on the current trend, and I will leave the comments to what he said also in terms of nationality. And particularly for Zegna, he mentioned that.

We are focused on the current demand. Focus on touristic model.

Yes. I would say -- I wouldn't really add much more, please. But one thing that -- I mean, you might remember is right. In July, we commented that there was a little bit of softness in Europe due to tourists, which was probably related to World Cup, and it was actually the case because August saw an improvement, but I wouldn't go much more in details. In any case, you know that for us, tourist are, yes, important, but less than for others. In any case, I would stop on this comment for Tourist.

While on the Chinese demand, you -- I think you said you asked if we change our guidance for year-end because it was a flattish -- of course.

Well, Chris, in the first half, we finished the first half at plus organic plus 6%, plus 6.8% organic wise. We keep on having on Zegna, as I said before, a good trajectory on Thom Browne, a soft trajectory. Overall, as I said before, we don't see a big change in pattern. So we keep on having a positive performance on I would say, positive performance. So probably the flattish care result, very cautious, cautious outlook. Although, of course, we are very attempt in monitoring the evolution also from a consumer mood about the new taxes and offshore investments. So that's the lingering question mark whether in the coming months, it may have an impact. But so far, you will stay in the positive territory.

Absolutely.

Space, we said that Zegna, as you mentioned, we closed -- we are going to close, and that's not only this year, but we will take more because we are not closing just for anticipating the closure by the lease, we are expecting the lease expire. So it will be little by little the reduction of some stores in China. Overall, the picture of space will be next year more affecting Tom Ford than any other brand.

In the positive sense.

On the positive sense. On Zegna and Thom Browne will not be material. We have on Tom Ford instead 4 openings from now through January, which are material. I recall them are 3 in U.S., which is the house of the brand. It's Costa Mesa, which is a beautiful location in the mall. in October, we have San Diego, which will be, again, around October and Ala Morali, again, same, more or less September, October. And then finally, we will have in January, end of January, the flagship in Paris, which will represent the new house of the brand because it will carry a new store concept, the new store concept.

Your next question comes from the line of Jean Danjou with ODDO BHF.

I have 2 questions. The first one is, could you be a bit more precise on the tax rate full year 2026 and then the second 1 is on the medium-term margin for the Zegna segment. You seem to be on the verge to be at 15% in 2026. Obviously, the brand has a lot of momentum. It's evolving positively on the leverage side. How much more can you get on the margin on the Zegna segment. Would it be reasonable to look at the margin of Brunello Cucinelli to get a sense of where you could go on the Zegna segment medium term.

Thank you, Jean. On tax rate, as I commented, Tax rate -- normal tax rate is in the region for our group in the region of 30%, 28%, 30%, we don't expect this year to be different from that at year-end, of course. So and in terms of Zegna -- but the new segment, I'll leave it to Gianluca.

We -- as we have said many times, we want to reach 15%. Of course, now we need to look behind the 15% goal. And of course, the sweet spot for us is to be between the 15 and 20. Of course, you said you mentioned Brunello, which is in that range. We do more or less, it's the same mechanics, the same markup and the same size curve, which means obsolescence of inventory. And so I think that is the number we need to move towards the 20%. That is our -- that is our journey, the next journey, which will take time. It's not 1 year, 2 years, 3 years goal, but we clearly have not finished the upgrade of our margin on the Zegna segment.

And next, maybe last one.

Your final question comes from the line of Maria Meita with Bernstein.

I have 2. First, a clarification on Zegna. Do you have any store openings planned for the second half of the year? And then second on Tom Ford, given the strong progression to date, but also your ongoing investments, you mentioned marketing. When do you expect the brand to break even?

Thank you, Maria. I'll leave to Gianluca at the store opening for the second part of the year for Zegna.

.

We just opened will see reality which -- we did a couple of important openings in China, and this goes back to what was mentioned before by Chris. Of course, we are reducing the size of present creator change in China, but we are reinvesting in fewer, better doors. The example has been in the last couple of months, we opened a second store in Shenzhen Bay in Shenzhen. [indiscernible] we opened a very meaningful, and we are proud of the store in Harbour City, Hong Kong per Madrid -- we opened Madrid, -- in the remainder of the year, we don't have material openings. We will have other next year, Zegna and others, but we will disclose more in the upcoming calls.

We are definitely, as I said before, important openings on Tom Ford in the next 4, 5 months. Those are the big openings that we have to accomplish. Zegna has done these 3 important openings in the last few months.

And for Tom Ford when it would be breakeven.

let's start from 2026. We expect the journey of talk forward to regain a more interesting level of P&L in the second half of this year. In the second half of last year, Tom Ford recorded a positive adjusted EBIT. And we believe that this will be the case also in the second half of this year. Therefore, we expect an adjusted EBIT for full year '26. Tom Ford in the region of a few million negative, and that is the outlook for this year. I would pose for the time being on this, and it's one step at a time.

Great. So I think we reached the end.

One second, we forgot to mention that we are going to open the new [indiscernible] Morris store in the second part of the year.

Yes. The second -- yes, we are opening the [indiscernible] Morris store that new store I.

It will be a nice store that we open in Morrise in December. And of course, you mentioned San Diego also for Zegna -- sorry, Alice, I interrupted you.

Now I think we reached the end. Let me just remind you that our next release will be on October 22. Our silent period will begin on October 1. Thank you, everyone, for attending today's call. And if you need any further clarification, of course, do not hesitate to contact us. Have a nice rest of the day. Ciao, everyone.

Ciao to everybody. Thank you.

This concludes today's call. Thank you for attending. You may now disconnect.

Good afternoon, good morning, everyone. Thank you for joining the Ermenegildo Zegna Group First Half 2026 Preliminary Revenues Earnings Call. Please note that today's material and presentation are available under the zegnagroup.com website.

Before we begin, we need to point out that the team will make certain forward-looking statements during the call. The group's actual results may be materially different from those expressed or implied by those forward-looking statements. Also, these statements are subject to a number of risks and uncertainties, including those described in our SEC filings. Please refer to the forward-looking statement cautionary statement included at Page 2 of today's presentation.

I'll now hand over to Paola Durante, Chief of External Relations and Sustainability.

Thank you. Thank you, operator, and good morning, good afternoon, everyone, and welcome to today's call. As usual, Gianluca Tagliabue, Group CEO, will share the call, while I will begin with a brief comment on our second quarter revenue results before handing over to Gianluca for some final comments on key events of the quarter that you can see also highlighted in the opening page of the presentation and for some closing remarks.

I remind you that, as always, when commenting on revenue trends, we will focus on organic performance, which excludes foreign exchange impacts and, therefore, better reflects the underlying business dynamics.

Let's skip the first pages and move directly to Page 12 of the presentation. In the second quarter of the year 2026, our group revenues reached EUR 517 million, up 11%, marking a sequential acceleration compared to the previous quarter. Zegna brand continued to outperform, recording EUR 324 million revenues with a 17% growth also in sequential acceleration driven by a strong DTC channel performance across all regions.

Thom Browne reported EUR 65 million in second quarter revenues, up 3% organic with a positive double-digit growth in the DTC channel, partially offset by the ongoing rationalization of wholesale. On TOM FORD Fashion, the business reported EUR 89 million in second quarter revenues, plus 7% organic with a solid performance of the DTC supported by the very good reception of the spring/summer collections.

And finally, on second quarter textile performance that was down 3% is largely due to different phasing of deliveries. I will not comment much on other revenues, which, as you know, relate to ready-to-wear garments produced for third-party brands because this is now a marginal business and so changes are really not meaningful.

So let's move now to Page 13 of the presentation where we look at the revenues by geographic areas. Starting with EMEA. EMEA, which in the first half of this year represented 33% of the group's revenues in the second quarter was up 2% organic with DTC, direct-to-consumer up solidly across all the 3 brands, counterbalanced by the reduction in the wholesale, which reflects the group's strategic decision to prioritize a retail-first business model. Also the Middle East turned positive in the second quarter.

The Americas, which represented 31% of group revenues in the first half, recorded a very good 22% growth, making another quarter of sequential acceleration, supported by double-digit growth across the 3 brands in the DTC channel. Greater China Region, which in the first half of this year accounted for 24% of total revenues. In the second quarter, it was up 9% organic with further acceleration compared to what we achieved -- what we reported in Q1 this year. And finally, the rest of APAC, which contributed to 12% of group's H1 revenues in the second quarter reported a 19% organic growth with all markets contributing, especially Korea and Japan.

I will skip really commenting Page 14 of the presentation since we will look in details at the trend by channel for each brand. Let me just highlight one number. In the first -- in the second quarter, sorry, of this year, DTC accounted for 86% of group's branded revenue. You know that branded revenues exclude the textile and other revenues, which are by definition and by nature, B2B businesses.

So let's go to Page 15, and let's concentrate on Zegna brand revenue by distribution channel. In the second quarter, Zegna DTC, which was -- which reached 90% of the brand's H1 revenue sequentially accelerated compared to the previous quarter and posted 18% organic growth, a growth entirely comp driven with all the regions contributing to this performance. The Americas continued to be very strong.

Revenues in Greater China Region improved sequentially and the rest of APAC continued to strengthen. Europe also performed good, very good. And the Middle East, as I said, improved sequentially during the quarter and a return to a positive growth despite the disruption caused by the war. The brand's network remained unchanged. In the wholesale channel, revenue was down 3% organic as we continue to focus on the direct-to-consumer model based on exclusive customer experience. We confirm here the indication of a low double-digit decline by year-end.

So moving to Page 16 and commenting Thom Browne. In the second quarter, Thom Browne reported a solid DTC momentum, plus 16%, driven by the Americas, Korea and Japan. Thom Browne DTC performance was also helped by space contribution. In terms of retail network in the quarter, the brand opened 3 net DOS, including Chicago and Vancouver. The wholesale channel reported a minus 29% organic performance, reflecting both the decision to streamline the channel and the conversion of the distribution in Hong Kong. We confirm that by year-end, this channel wholesale, which I underline, is increasingly less relevant for the brand in the first half was only 17% of the brand revenues will be negative in the minus 30% area.

Let's now move to Page 17, and let's talk about TOM FORD Fashion. DTC revenues for TOM FORD Fashion grew 13% organic in the second quarter, which was led primarily by the Americas. Also Rest of APAC in the quarter outperformed. This performance was exclusively driven by the comp store sales growth, which is a further proof of the client appreciation of the spring/summer collections. In terms of store network, TOM FORD Fashion closed one boutique during the quarter.

Looking at wholesale, the wholesale was down 3%, reflecting, also in this case, the group's retail-first strategy. The performance in the quarter benefited from some anticipated deliveries of the fall collections, which have been driven by better -- good production timing. By year-end, the channel should be down low mid-single digit, and this is a confirmation of what we already said in past calls.

Moving now to Page 18. As usual, here, you can find a summary of the group store network. And with this, I completed my hopefully short presentation, and I will hand over to Gianluca for his important remarks.

Thank you, Paola. Good morning, good afternoon, everybody. Let me share a few final remarks on some important brand initiatives and on our business. First, as Paola also mentioned, I would like to celebrate once again the extraordinary event that Zegna brand hosted in Los Angeles this June, which we call the La Villeggiatura.

In Los Angeles, we told another chapter of the Zegna story. This time, the story was rooted in the Italian tradition of Villeggiare, which means to spend the summer in a villa. We brought to life the Zegna family summer villa inspired by a time in the '70s when the entire family would spend the summer together in a house, always open to relatives and friends. This is what we did in Los Angeles.

At Chateau Marmont Hotel, we welcomed friends of the brand to discover exclusive collections, and we invited them to experience the runway presentation on the Malibu Pier while living the Zegna legacy. Those were memorable 5 days, delivering results in terms of coverage, recognition and client interest that exceeded our expectations. I want to express again my sincere congratulations to the entire Zegna brand team, starting with Edoardo and Angelo Zegna and Alessandro Sartori for the focus, creativity and quality brought to this project and for the outstanding execution that made these results possible, all underpinned by Gildo's vision, guidance and unwavering encouragement to keep the -- to keep the bar always high.

But VILLA ZEGNA Los Angeles was not the only major initiative the brand pursued in the quarter. At Art Basel in June, the Zegna brand continued to champion art as a force for responsible progress through its support of artists who engage directly with communities, society and the environment. This initiative reflects a belief that has long been part of the Zegna brands and overall of our group's identity that business, culture, people and nature can create lasting value when they evolve together, just as our founder envisioned more than a century ago with the creation of Oasi Zegna.

As you can see, everything Zegna does is part of a coherent vision. Every ingredient is already there, written in the Zegna family book. We simply have to open it and bring to life its values, culture and way of living. That's how we express what makes Zegna unique, an authentic Italian lifestyle that goes far beyond products. Let's now return to Italy, where we proudly welcomed Thom Browne for his first ever show during June Men's Fashion Week in Milan. This debut was a powerful expression of the brand's tailoring heritage and commitment to craftsmanship.

At the same time, it demonstrated Thom's ability to continue to evolve its iconic creative codes, introducing a broader color palette and exploring a sophisticated range of fabrics, textures and techniques. We were very pleased with the show, which attracted significant positive attention from industry, media and clients. At the same time, Sam Lobban, the CEO of Thom Browne, is making progress on the brand's objective to drive a stronger retail-first culture across the organization. This includes investing in talent at every level, ensuring that the brand's creativity and merchandising stories are effectively brought to life in the stores. There is still important work ahead, but we believe that the team is moving in the right direction.

Moving now to TOM FORD Fashion. The recent '26 Met Gala and the Cannes Film Festival in May marked 2 defining moments for the brand. Through a curated celebrity presence at both events, the creative and marketing teams contributed to enhance global visibility while driving significant earned media coverage. Combined with increasingly focused collections and with improved CRM capabilities, these efforts are supporting the development of the retail business, as shown by recent sales performance in the directly operated stores. Lelio Gavazza, the CEO of TOM FORD Fashion, and his team continue to work actively across all these levers, marketing, merchandising, CRM, selected new openings to drive future growth of the business. Indeed, we believe that TOM FORD Fashion's ongoing success will come from a combination of comparable store growth, new space contribution, development of existing clients and acquisition of new ones.

Today, our priority is to selectively expand the retail network while deepening our relationship with existing customers. Over the medium term, the focus is also to drive comp store growth also through new customer acquisition. Before taking your questions, let me conclude highlighting that the strong performance we saw over the last quarter is the result of actions we began implementing years ago and which are bearing the fruits now. We know we have much more to do as important projects remain underway. These projects will continue to require resources before delivering sustainable value, but they are strategic and relevant for our future. As we enter the second half of the year, let me offer a few general observations on what we are seeing across our business. While we are only a few weeks into Q3, and therefore, we have yet limited visibility, what we are seeing today is that the underlying DTC trend of the business remains very solid. That said, it is important to recognize that Q2 benefited from some specific initiatives that are not expected to be repeated in the same way in the remainder of the year.

For instance, VILLA ZEGNA Los Angeles and the ASICS launch for Thom Browne. The momentum we see -- we continue to see reflects the work undertaken over the past several years to strengthen the Zegna brand. While at Thom Browne and TOM FORD Fashion, it reflects the early progress of the initiatives we have put in place, fully aware that we are still in the early stages of the journey and many things remain to be done.

As a final remark, our commitment to investors remain unchanged. We remain focused on delivering our 2027 targets. The second part of the year might be a bit more challenging in terms of comparison. However, we are confident that 2026 full year consensus is reasonable.

With that, we will now open the Q&A session.

Thank you, Gianluca. And please, operator, if you can open the Q&A session.

[Operator Instructions] Our first question is from the line of Adrien Duverger at Goldman Sachs.

I have 3, if possible. So the first one is on the performance throughout the quarter. Could you please comment if there is any material difference month-on-month? And also if you can comment on the last few weeks and if you have seen any change in the consumer environment?

My second question would be on China. So I see there's quite a strong acceleration for 2 quarters in a row now. Could you please comment a bit more on what you are seeing in the region, particularly in terms of the DTC trends? And are you seeing any difference in performance between Mainland China and offshore spending?

And my last question is on profitability. With the strong set of numbers today, is there anything we should be aware of in terms of phasing of costs for 2026? Do you also reiterate your comments that full year '26 margin should be broadly stable versus '25? And maybe lastly, does that give you a bit more confidence regarding your '27 EBIT guidance?

Thank you, Adrien. Many questions. So I'll leave Gianluca to start with the performance by -- in the quarter.

So the quarter had a solid performance across all 3 months, probably with a bit of acceleration in May and June, I would qualify also in these 2 months above our own expectations. In terms of China and to give you also some color, so for instance, in Zegna, I think that there are some elements of the offering since June like the Linen has been positively received. So I think that just to give you some colors on a month by month.

China, China sequentially improved, as you noted. I think it's all about the consistency of our execution. We said that we were focusing on the key factors in China, namely some areas of underperformance, made-to-measure Triple Stitch. And I think we are seeing some -- starting to see some traction there. We continue to see positive signs and a good brand momentum of the Zegna brand.

Looking forward in China, I call out we will have important -- a couple of important openings, probably the most important one is in Hong Kong, Harbour City, we just opened an interesting and important second store in Shenzhen, MixC Bay.

So while we focus, and I think we said last time, we will have some pruning on the footwear footprint. We keep on investing in China in fewer, better doors. So this is the message I'm giving on China.

I think the question was also, if I understood well, on the cluster, but I would say there is no really difference between the results in China and the cluster. So also the cluster has been accelerating in the quarter.

Remember always that our Chinese consumers spend almost -- well, I'd say, 90% locally. So to us, cluster and geography for Chinese are very overlapped.

Profitability.

So as we said before, so we keep on investing on what is strategic. So that's why we believe that the consensus is reliable and feasible, both for the full year as well, I think commenting also on the first half because there is some cost incidence on first half. So that's why I believe that the consensus that is out there on the marketplace is reasonable for both H1 as well full year '26.

Next question.

Just to give a color about the cost, I think that there are 2 directions of costs where we are investing, of course, supporting our brands, the 3 of them from a marketing standpoint and so on and investing in group initiatives to start creating a group layer that will then trigger some synergies and better group management going forward.

If there is no follow-up from Adrien, I would go to the second set of questions. Operator?

Our next question is from the line of Natasha Bonnet at Morgan Stanley.

Congratulations on the good set of results. Just the first question, obviously, the Zegna brand performance is quite impressive. Which categories and regions drove the outperformance? And then my second question would be, can you break down Q2 by volume price mix? Is mix still the biggest driver in Q2? And are you seeing an increasing number of new clients to your brands?

So in terms of mix for the Zegna brand, I would call out Su Misura, so made-to-measure is definitely outperforming. It's not just formal, it's across the board. The luxury leisurewear side is performing extremely well and the shoes. So those are the 3 drivers of growth for the Zegna brand. In terms of KPIs or mix, so AUR is the driver, is the main contributor to the DTC growth.

And it's not just a pure price increase. It's a mix thing. It's -- the driving force are the SECONDSKIN part of the collection, [indiscernible], of course, made-to-measure, as I said before. On TOM FORD, it's the success of leather outerwear, which, by the way, going back to made-to-measure, is now also available on a made-to-measure format. So I think all the most elevated part of our offerings are the ones that are being more credible in the eyes of the consumer. And in terms of new or existing and loyal clients, I think there has been one new element that is becoming more and more solid throughout the year.

Of course, our strategy has always been the top of the pyramid as we have called out several times, and it's continued being so. So the events, the CRM and so on and so forth. But this is generating a side effect also bringing in new clients. I'm not saying new clients from the bottom of the pyramid, but new clients. Most of the times, these clients come in also for high-ticket items. So we are seeing also an increase of client base, namely on the Zegna brand, which you called out was the driving force of the growth, which is a new part of the equation for us is welcoming new clients into the brands.

I think there was a question on Zegna also what was the region driving the growth. But I would say, Natasha, all the regions have been really important to the Zegna performance.

Yes, probably looking at what is happening in the marketplace, probably I call out the fact that Middle East as being positive in Q2 for us, so -- which talks about the resilience of the brand and the resilience of our customer base, namely the local ones, which have more than offset the shortfall of tourist demand in that market.

Your next question is from Oliver Chen of TD Cowen.

China and the Americas, really nice momentum there. What's happening on traffic relative to ticket? It sounded like you had nice contributions from both in different ways. Second question, when you mentioned new customers and TOM FORD, what's underlying that opportunity now versus prior? And third, as we think about new customers more broadly, how is that interplaying with how you're thinking about marketing spend and marketing spend composition?

Thank you, Oliver. The first one was traffic versus ticket. Are you referring to the 3 brands or Zegna only? I didn't get if it was specifically Zegna...

Zegna would be helpful and China and Americas.

China and America.

Yes, slightly positive. I think that the main driver, as I said before, is the AUR. Oliver, by the way. The main driver has been AUR. So positive traffic, as I said also and conversion. So -- but the biggest driver has been AUR and traffic driven also in China by the revamp, some good momentum that we start seeing around the brand.

New customer for TOM FORD.

The part of the collection that is growing the most is women. And that's an area of focus for the overall team, starting from design and merchandising. The women's side ready-to-wear is the one that is probably giving a bit more momentum. And of course, the untapped opportunity is on the daywear side of women because the evening and ceremony related is strong historically, but the daywear side of the collection is the area that is -- we see more opportunity. And again, going back to what I said before, the made-to-measure, which is sitting on the basis of our unique supply chain capabilities, we started in TOM FORD to offer made-to-measure on tailoring for women, which is a unique proposition in the marketplace, taking advantage of our short lead times and sleeve units capacity. So I would say that women is definitely an area of TOM FORD and somehow enlarging the client base.

Yes. Just wanted to underline or to specify when Gianluca first -- in the previous question was referring to new customers, we were talking -- he was talking mostly about Zegna. So that was a comment that was really on Zegna new customers that there is this snowball effect even if we are concentrating on talking to our community. What we have seen is actually that this brings also new customers to the brand.

Last part was about TOM FORD...

Yes. No, no, in fact, just to clarify with Oliver. And in terms of talking about new customers, Oliver was asking about the marketing spending, how is -- what is our thought there?

Well, marketing spending on Zegna continues with the same cadence that we have done in the last 6, 12 months, so which is amplifying the message, especially through the right communities, events, creating unique experiences. On TOM FORD, you will see probably in the next 3, 4 months, adding into then the opening of the store in Paris in January, we will amplify a bit more the message, increase a bit the volume of our marketing spending to both increase awareness and consideration for the product. So that, I think, is the only change of direction in terms of intensifying a bit the marketing spending on TOM FORD because we believe that it is the moment to do so.

Okay. And on your comments, Gianluca, on Los Angeles, which was a great event. What's happening with what we should model with that benefit in terms of a more normalized Americas growth rate? The Americas numbers have been outstanding, but curious about what might be a run rate in terms of longer term of that region.

Well, of course, Villa is meaningful, but it doesn't move the needle of Zegna or the group in North America. So to give you a sense, Villa generates revenues that are the size of a midsized store in a year, more or less, give or take. So -- and the Villa, although being very successful, generates revenues that are recorded over the months since they largely depend from products that are not ready to buy, but need to be produced on order.

So if your question was, is the Q1 or Q2 inflated by the Villa, I would say, to a very limited extent. So we will benefit the revenues of Villa partially in Q2, of course, because there was a part that was ready to buy, but then there will be also in the -- I would say, Q3, there will be the manifestation of revenues of some products to be delivered.

Okay. Last question on AI. We're doing a deeper work here, as you know. What are some of your call-outs for how you're using artificial intelligence across the organization or key priorities and/or any benefits you've been seeing on that front?

We have defined our battlefield on AI, looking at how ready we are on the underlying data and how easy for us is to capture low-hanging fruit. So we have defined 3 main areas of intervention on AI. One is on operational planning, which means use AI to make the right demand planning, especially on continuative items because it's the part that requires more statistic because if it's seasonal product, you have no -- not enough data behind.

So one is operational planning, demand planning. The second is supporting AI in the interaction with the clients. So the engine of CRM, making the right proposition to a customer either directly on the web or through our customer adviser. These are streams that are underway. And the third is on the internal productivity, all the, call it, back-end functions, we are chasing opportunities to improve efficiency by adopting either software that are AI -- with an AI engine or developing algorithm to support better productivity. So these are the 3 areas where we decided to put our bet.

Your next question is from the line of Anthony Charchafji at BNP Paribas.

I have just 2. The first one is a clarification on the Middle East performance. So you said that Q2 turned positive. For some reason I had in mind that it was -- I mean, the region was already positive in Q1. But yes, just a clarification on this point, yes, sorry about this question. The second one would be on VILLA ZEGNA in Los Angeles and to know a bit the cost in terms of -- as you're doing more of those events and they are getting more and more costly, as I understand, just to know if the Zegna brand particularly was prioritized in H1 and you reduced investment on the other 2 brands.

My last question, Gianluca, maybe it's on the top line when we see that we have higher AURs and better mix, I mean, with more uber-luxury sales, the made-to-measure, more sales with personalization. I mean I understand that those are quite helpful in terms of margin, like basically maybe 20%, 30% more ASP and in terms of cost, not much addition. So curious to know why we should still see consensus number in H1, which would imply basically your margin down 30 or 40 bps.

On the Middle East, let's qualify. You're right in Q1, it was positive. So probably turned positive is not the proper language. But of course, in the first quarter, we had just 1 month of disruption, which was March. And instead, we expected to have a longer disruption in Q2, which actually didn't materialize. So probably this is the better framing of the situation.

Just to clarify what we said also in Q1, the quarter was positive because January and February clearly was growing nice -- very nice double digit that the region was growing. And then we said at that time, you remember in April, we said since the war started, we were down double digit. So what we have seen today is that the second quarter, which has all the months impacted by the war is actually positive, slightly positive.

So it turned positive compared to March. Yes. In terms of the VILLA ZEGNA cost, this is information we don't disclose. Of course, as you pointed out, we are intensifying. These are costs that belong to the marketing line, and that's why we said we are investing. And that's why we are saying, let's stay cautious on the consensus despite, as you point out, we have a better mix. We have -- but we have 2 elements that are bringing us to be prudent on the consensus.

One, as we said before, especially in the first half, we have FX headwind, which hopefully should be less material going forward in the second half. And we have these investments. These investments are -- on Zegna are the experiences and Villa is the pinnacle of the experiences. On TOM FORD, as we said before, we are going to pump up the volume in a way because we want to make sure that the fashion part of the business is more visible on the marketplace. When you call then about made-to-measure, there is a surcharge, it's true, but also the cost of those products is higher. Make you an example, just to make you sure the cutting of the fabric is much higher because it's a cut one by one. So there are accessories or finishings of the garments that are richer.

So there is a lot of -- the equation is not higher price of made-to-measure, higher margin. And also the mix. Of course, the mix is helping the growth, but typically, the mix comes with more sophisticated fabrics or more elevated leather, like is the case of the SECONDSKIN. So it doesn't immediately translate in increased gross margin percentage.

And let's move to the other question.

Our next question comes from the line of Chris Gao at CLSA.

Firstly, congrats on the great numbers. So I actually have 3 questions. The first one is about APAC. I have a quick follow-up. For the broader APAC, GCR has been performing really well and also sequentially improving. I remember earlier this year, your Chinese cluster guidance is about flattish this year. So do you think actually it is likely to do better than what the market expected at the beginning of this year, right? So would you -- going to raise the guidance of the Chinese cluster? And also among the other APAC market, can we have a sense how much Korea contributes to the mix of Zegna Group and Zegna brand? And how much of this growth from the other APAC segmentation is driven by local and how much from tourists? So this is about the APAC.

And the second question is about wholesale. So we see the wholesale channel decline in the second quarter is actually much narrower than market expectation, especially for Zegna core brand and TOM FORD. So just wondering if there is any updates for the full year guidance of your wholesale channels for each brand? And how should we look into the second half?

And my last question is about the concentration rate of your top customer spending. So we can see a very positive acceleration of your growth and historically, you have mentioned like roughly top 5% of your consumer contributes around 40% of your Zegna core brand revenue. Is this contribution ratio going higher this year, thanks to the strong DTC performance that you have been seeing in -- across regions?

Thank you, Chris. Thank you so much. On APAC, GCR and Korea, I leave Gianluca to comment on the performance by region and clusters.

Let's start -- Chris, so let's start from rest of APAC, which represents slightly north of 10% for us. So we are aware that we are probably underrepresented in those markets yet. And we are working to improve there. What we are seeing definitely is a good momentum on Korea, which remains strong off a small basis, but remains strong. And in Korea, the demand, we are happy to observe that is very much driven by locals.

In Japan, we are improving, and there is a combination of improvement on locals and tourists, which are roughly 30% of the business. Korea is much less. In terms of GCR, we observed a sequential improvement. We want to be cautious because, of course, we are seeing some volatility. We are aware that we will have some openings, we will have some closing going forward. So I think that while we are happy about comp results, we need also to be cautious that going forward, we will have, as I mentioned before, some important openings, but we have also some concentration of the footprint in the logic of fewer better doors.

In terms of wholesale, I think Paola in her speech remarked the guidance, which is on Zegna brand, it's low double-digit decline by year-end, which is more than what you can observe in the first half because we are intensifying our icon-protection strategy. So it's a question of protection on -- so it will become more intense. In Thom Browne, we have seen in second quarter 29% decline, and that is more or less what we expect for the full year in the region of minus 30% at this point, but this part is becoming less and less impactful because it's 17% of the business at this point is wholesale.

And TOM FORD, we expect a low mid-single digit, which is not far away from what we have seen so far. So there will be a continuation with a stronger decline in the next months on the Zegna side because we want to make a further step on the protection of the icon products.

There was a final question on the concentration rate, the 5% generating 40% of our business, which, first of all, it's not something that we provide, let's say, update quarterly or half year. But more than that, Chris, it's very important. Our strategy for Zegna brand is to talk to our community, to talk to our top of the pyramid customers. This, as Gianluca was saying before, is today generating a snowball effect, and we see many other new customers. And this is what we look, or what we consider, and these are the KPIs that we look at. So I would concentrate on these KPIs more than on the one that you mentioned.

Our next question comes from the line of Maria Meita at Bernstein.

I have 3. First, I know you opened quite a few stores for Zegna in the U.S. recently. Would you be able to tell us how much space contributed to growth in the region or overall? And then could you maybe walk us through the dynamics of new stores a bit more? How many new clients do you have coming in versus existing clients? How long does it take for the stores to reach sort of brand average? Anything basically that you could tell us?

And then second, in the existing stores that you have, what would be the selling actions that you implemented at Zegna that had the highest impact in terms of sell-through and maybe retail space productivity as well, even though I know it's not -- it's only a revenue call.

And then finally, it's a quick one. Su Misura obviously, you're sort of -- you're doing more activations with VILLA ZEGNA and you're saying that Su Misura is driving some of the growth. Is there a target to go above the 10% of sales, which you have now for Su Misura for Zegna or the group? Or you're just sort of waiting to see which performs better?

Thank you. And just one quick one. Can you repeat briefly the second one because I don't think we -- I personally don't think I got it completely or just don't want to answer something not right.

Yes, sure. For existing stores, are there particular selling actions that you implemented at Zegna, so let's say, more collection drops or maybe specific products that are sort of -- that have had the highest impact on sell-through of these items or retail space productivity over the past half year?

Okay. Thank you. Yes, very clear. Okay. On the first one, on the space and how many new existing clients in the U.S. for Zegna, Meita, I would like to a little bit, let's say, not to answer, but I don't think all these details is something that is, let's say, important to share today. What is really important, and then I leave also Gianluca to comment is the success of a strategy that has been implemented over the past years, very coherently, very focused. And this is working, of course, with also merchandising strategy, CRM strategy, the team locally that has been very successful and is working very well.

All this is today bringing to these results and in a market that continues to remain solid, but I would say maybe we are outperforming. So this is what is important to understand. And then I leave it to Gianluca, if he wants to comment a little bit more on the U.S.

No. In general, as we said before, DTC growth for Zegna overall is comp. So all the growth is comp. And so this applies also to U.S. It's not meaningful, the space contribution. In terms of product, I think as Paola was mentioning, more than a single product. It's the overall consistency and go-to-market execution that is really working well. Any month or there is a drop.

Of course, any drop has its own story. Once it's a story about Linen, once will be a story about SECONDSKIN [ notebook ]. So -- and then there is the underlying support of made-to-measure, which I come to comment later. So I think it's more than a single product story. As we said before, the Zegna success is going beyond products. Of course, then we have products that are well appreciated and we are obsessed to have well-done products, outstanding materials with a fantastic identifiable silhouette designed by Alessandro. But all this is the overarching story is the consistent execution, go-to-market, intimacy with clients, I think. And of course, there is the made-to-measure success, the Linen success, the Triple Stitch success.

We will have further products coming up in fall, iconic products. So the LEGO building house, as Edo likes to mention that we are building products that are recognizable and it's the execution that is making the difference. In terms of made-to-measure, I think we are, at this point, trading higher than 10%. And I think that our next phase will be overall in the brand, which means retail and wholesale, everything altogether, we should get to -- the next target is to get to 15%.

Yes. The question on existing stores and what has been the highest impact in terms of sell-through is -- if it is our drop strategy, which actually is -- continues to work very well and to drive. I think there is also a strategy of concentrating of fewer bigger stores because what is true and what we see more and more is that even if a store is bigger and so has more product, the sell-through is actually higher. So it's much easier, let's say, to have higher sell-through in a larger store than in a smaller store. And this is a strategy that we have started and we are adopting for -- successfully for -- in particular for Zegna brand, but also for the others.

Okay. I don't know if we answered to all your questions. Okay. Operator, are there any other questions?

Your next question is from the line of Daria Nasledysheva at Bank of America.

This is Daria from Bank of America. Can I please ask three? So within DTC revenue at Thom Browne, what was the split of comp and space, please, considering 2 new stores and Hong Kong conversion? The next one is regarding recent trends in July. Are you seeing stable trends or any acceleration slowdown on a year-over-year basis? Aware you were talking about solid underlying, but also aware of the comp difference for the second half, just to help us a little bit with modeling and how to think about it? And when it comes to profitability and you're being comfortable with consensus, can I please ask and clarify if you're referring to the absolute value of EBIT or to the margin?

Thank you, Daria. Yes, I'll leave it to Gianluca for Thom Browne, the incidence of space versus comp, the contribution of space in the DTB DTC.

The space part for Thom Browne in the first half has been the majority of the driver for the 16% organic for Q2. So I think this is -- but still with a positive -- meaningfully positive comp basis. In H2, if we look ahead, the space will be less of a driver for Thom Browne DTC. So I think this, I suggest that needs to be taken into consideration going forward because we will have less of a lift in space from Thom Browne in terms of EBIT when we talk about feasible consensus, we talk about absolute numbers.

Did we answer to your earlier questions, Daria?

On the July point, because you were talking about solid underlying, which probably implies the 2-year stack. Just how should we think about acceleration or slowing compared to what you have shown in the first half, particularly for Zegna brand? I know you answered for Thom Browne, but if you can have on Zegna, that would be helpful.

Thank you. Yes. Sorry, I had it written and I forgot to mention to Gianluca, my fault.

So early to make a final judgment. As I said before, we are happy about the DTC trend that we see still solid. What we are seeing as the only difference, if we can put a comment is that we see some softer European trend in these 3 weeks. Then it's a question of the weather, it's a question of the World Cup, we'll see. That is the only color that I would call out. For the rest, we are observing in the first days, Americas is still very solid. We are seeing Middle East very well, recovering with resilience. We see Asia in line with the GCR with some positive signs and the rest of APAC still strong. So I would say that overall are the same features with some softness in Continental Europe.

I don't know if there is any follow-up.

There are no further questions at this time. We've reached the end of the Q&A session. I will now turn the call to Alice Poggioli, Group Investor Relations Director, for closing remarks.

Okay. So hi, everyone. Thank you for attending today's call. I would just like to remind you that our next release will be on September 3 for H1 results. The silent period will begin on August 1. So do not hesitate to contact us for any further clarification. Have a nice summer. Ciao.

Have a nice summer to everybody.

This concludes today's call. Thank you for attending. You may now disconnect.

Good afternoon, good morning, everyone. Thank you for joining the Ermenegildo Zegna Group First Quarter 2026 Revenues Call. Please note that today's material and presentation are available under the zegnagroup.com website.

Before we begin, we need to point out that the team will make certain forward-looking statements during the call. The Group actual results may be materially different from those expressed or implied by these forward-looking statements. Also, these statements are subject to a number of risks and uncertainties, including those described in our SEC filings. Please refer to the forward-looking statements cautionary statement included on Page 2 of today's presentation.

I'll now hand over to Paola Durante, Chief External Relations & Sustainability.

Thank you. Thank you, operator, and good morning, good afternoon, everyone. Welcome to our first quarter 2026 revenue call. Today, I'm joined by our group CEO, Gianluca Tagliabue, who will lead our call shortly. I will begin with a brief comment on our Q1 revenues before handing the floor to Gianluca.

Let's therefore move directly to Page 7 of the presentation. As always, I will comment on revenue -- on organic revenue trend because they better reflect the underlying business dynamics, excluding foreign exchange impact.

So in Q1 2026, the group reported EUR 470 million in revenues, which is up 7%, marking a sequential acceleration compared to the previous quarter. The performance was boosted by the DTC channel, which was up 14% at group level with remarkable results across the 3 brands -- all the 3 brands.

Growth was positive in all regions, led by Americas with a nice 17% growth and the positive GCR, Great China Region, at plus 5%.

So let's turn to Page 8, where I will focus on the performance by brand. Zegna recorded in the quarter EUR 310 million, up 11% in sequential improvement compared to Q4 last year. And this improvement has been driven by a solid DTC performance, which was solid across all regions.

Thom Browne, EUR 58 million revenues in Q1 reported a 3% decline, which is a combination of a strong DTC performance, which was up double digit, which has been offset by the contraction in the wholesale channel. Tom Ford Fashion, EUR 68 million in revenues, plus 5% organic, also in this case, boosted by DTC.

Very quick on the textile performance was plus 3%, which reflects an ongoing soft demand in the sector. I will not focus on other revenues that you are an increase in marginal business. So quarter-on-quarter percentage are not meaningful.

Directly on Page 9, I will look at the revenues by geographic area. EMEA first. EMEA in the quarter represented 33% of our group revenues, up 1% with DTC solidly up above -- across, sorry, all brands. And this strong DTC performance has been counterbalanced by the decline in wholesale.

The Americas in the quarter represented 29% of group revenues and recorded, as I already mentioned, a 17% growth in acceleration boosted by double-digit growth across all the 3 brands.

Greater China Region, 26% of group revenues in the quarter and reported a positive plus 5% increase, with a positive contribution from DTC at all brands.

Finally, Rest of APAC, which for us is a smaller region, 12% of group revenues, has reported 8% growth driven by particularly Korea and Japan that has been solidly positive in all -- across all the 3 brands.

Page 10, not much comments here. Just a couple of numbers, if I may. The first one is -- which I would like to underline. The first one is the DTC channel performance in the first quarter, plus 14% at group level and the fact that DTC now accounts for 85% of our group branded revenue. As you know, branded revenues exclude the textile and other revenues, which are by nature of BTB businesses.

Wholesale performance continues to reflect the decision -- our decision to improve the quality of the network and to protect our icons.

So let's now move to Zegna brand, Page 11. In the first quarter of 2026, Zegna DTC revenues, which accounted for 88% of brand revenues sequentially accelerated compared to the previous quarter and posted a 14% organic growth. This performance was led by continued strong double-digit growth in the Americas and in EMEA, EMEA particularly with strong contribution of both tourists and locals.

Rest of APAC and Greater China Region improved sequentially with the Chinese cluster that has turned positive in the quarter. At the end of March, the brand reduced its network by 3 directly operated stores.

Looking at wholesale, the Zegna revenues were down 5%. The performance is a reflection of the decision to reduce the brand exposure to this channel to protect exclusivity and iconicity.

Thom Browne, Page 12. In the first quarter of this year, Thom Browne reported a 20% DTC growth in acceleration, also thanks to the successful launch in March of a limited edition of sneakers in collaboration with Asics. This launch boosted revenues worldwide and drove both existing and new customers to the stores. It has been an important driver of the brand's Q1 performance, DTC performance, but not the only one. In terms of store network in the quarter, Thom Browne opened 2 DOS.

On the wholesale, as you see, the wholesale channel reported a 59% decline, which is a continued reflection of the decision to tighten control over distribution and enhance the quality of the channel. This performance though has been also partially impacted by a different timing in deliveries, with some shifts from Q1 to Q2 2026 versus last year.

Therefore, first quarter trend should not be taken as a proxy for full year. As already anticipated in our previous call, we expect that Thom Browne wholesale in 2026 will be down double digit, but less than what we have seen in the first quarter this year.

Tom Ford Fashion, let's move to Page 13. Tom Ford Fashion recorded a plus 9% growth in DTC, which has been driven by a consistent growth -- a consistent performance across all the regions, in particular in the Americas that is the most important market for the brand, also benefiting from the success of the new spring collection. This good brand, very good brand momentum has also been further supported by the show in Paris that you remember was a successful show in March this year.

During the quarter, Tom Ford Fashion opened 2 DOS, directly operated stores. Wholesale declined 3%, just a normal reflection of our decision to focus on the DTC channel.

Page 14, you can see -- you can find a summary of the group store network, so not much to add. But before leaving the floor to Gianluca, let me today take a moment to highlight our main 2025 sustainability achievements. Full details of that and on our sustainability report, you can find on our website.

In 2025, we reached some important goals in sustainability. I'm not going to rank all, but let's say, I would like to highlight 4 of them. The first one is that, at the group level, 42% of top priority raw material has been sourced by -- from traceable and lower impact sources. This is a very good result, I would say, and actually we aim in 2026 to reach to grow further this percentage to 50%.

We also reached last year the Gender Equality Certification for the Italian entities of Zegna brand and also we have been included in the A list recognition in the CDP climate.

Last, but very important, let me mention also a project that goes beyond sustainability, but it does embrace our legacy unique know-how. In 2025, our internal academy, we call it the Accademia dei Mestieri trained more than 50 Mestieri people that has -- which has a distinctive expertise and we prepare them to pass their knowledge on to future generations. A very important project which is really part of our legacy and of our -- included in our values.

And with this, I hand over to Gianluca for his final remarks.

Thank you, Paola.

Before we move to the Q&A, I would like to share a few final remarks. Let me begin with a brief update on the main recent projects and events across our 3 brands.

I would like to start today with Thom Browne and comment on the recent Thom Browne-Asics launch. As Paola already mentioned, in early March, the brand introduced a 3-color limited edition sneaker, which resonated strongly among both existing and new clients. And this was a relevant contributor to the DTC growth in the quarter. This successful launch reflects not only a strong creative project, but also a solid go-to-market execution.

Now we aim to leverage this momentum and the launch has helped recruiting new clients. Our goal is to make them or at least a portion of them, Thom Browne repeat clients. We see jersey and knitwear as the expected second purchase items in the journey to make them loyal customers of the brand.

We will soon launch a high summer capsule with a focus on colorful knitwear, jersey, shirts, a project that will promote a retail-first and merchandising-driven approach to support Thom Browne DTC revenues.

On the other hand, as Paola mentioned, while wholesale performance in Q1 is not indicative of the full year trend, we continue to streamline this channel in order to improve its quality and further focus on Thom Browne DTC.

Moving now to Zegna brand. The brand vision is clearly defined and the team continues to double down on it with strong coherence. At the end of March, during Art Basel Hong Kong, a flagship event within our Basel of which Zegna is a global sponsor, the brand successfully hosted a Founder's suite in the city.

Founder's suites are smaller scale villas, Zegna Villas built on the same concept, intimate by invitation-only spaces, where our most important guests, the friends of the brand, are immersed in the Zegna legacy through highly personalized experiences. This includes special collections that are exclusive to the event and not available in the regular stores.

Guests learn about Zegna's legacy and history in a physical space, when the brand international community naturally comes together. Building on this same philosophy of immersive and highly curated brand experiences, Zegna engagement journey will continue in the months ahead.

In June, the brand will further scale this approach in the U.S., hosting Summer '27 fashion show in Los Angeles alongside the Villa Zegna experience. The decision to locate the next fashion show and Villa in Los Angeles reflect both the growing relevance of the U.S. market for Zegna brand and the city's role as a global center of cultural influence.

Finally, on Tom Ford Fashion, we already commented during the last call on the success of the most recent fashion show, which further confirmed Haider Ackermann's ability to interpret the Tom Ford coach for fashion and its DNA in a way that is at once unique, contemporary and deeply personal. Under his creative direction, the brand has defined its path and articulated a clear bridge between its past and its future.

We are now working to translate this momentum and brand energy into in-store revenue generation. The positive Q1 results in DTC confirm that we are moving in the right direction, but we are fully aware that there is still work to be done and that we have to work to further build on this progress.

The brand has opened in Q1 2 stores in Mexico, entering a market we see as offering a strong potential. Early feedbacks have been encouraging from these stores.

Before concluding, let me add some comments on the situation in the Middle East and on current trading. As you know, the group operates 16 DOS in the Middle East region, alongside a limited number of franchisee stores. All our stores are open and operational, and our teams continue to work with dedication and a strong sense of engagement in an environment that is obviously complex.

Over the past weeks, we have implemented immediate actions to contain inventory levels and adjust discretionary costs. Thanks to our people's connection with clients and the strength of our brands, in particular, Zegna brand, the revenue decline in the region, although down double digit, is more contained than the decrease in average malls traffic.

Considering Middle Eastern cluster, so the rest overall, which includes Middle East clients spending locally and spending abroad, since the beginning of the conflict, the impact is even more limited being substantially flat to last year. This demonstrates the relevance of the strategy we have implemented over the years in the region, with investments that laid the foundation for this relative resilience.

While the current situation requires close monitoring, our long-term conviction in the region remains unchanged. Middle East continues to be a key market for the luxury goods sector and a strategic area of focus for our group to which we remain committed.

On current trading, first of all, it is important to underline that we are only 1 month into Q2. So any indication is, by definition, partial.

Looking at DTC performance for Zegna brand, we are seeing trends broadly in line with Q1, excluding the Middle East. In the Middle East, April continued to show a double-digit negative trend, but at a lower rate than what we hear from the market and the competition.

On Thom Browne, we are very pleased that the Asics collaboration is now almost sold out across the regions. As expected, the revenue trend, therefore, will normalize in Q2 by adjusting the Asics effect. While we continue to see positive signs, we are also mindful that we need to further build and strengthen this momentum in the coming months, also leverage on the new clients that the collaboration brought to the brand.

On Tom Ford Fashion, I would say that, the spring/summer collection has been well received and April continues to confirm this good trend. These early months of the year reflect the outcome of a vision and the long-term strategy defined in the last years and executed with discipline. We are aware that important work lies ahead, and we remain fully engaged in delivering on our commitments, knowing that the overall context remains challenging.

With that, we open to the Q&A session.

Thank you, Gianluca. And operator, can you please open the Q&A?

[Operator Instructions] Your first question comes from the line of Chris Huang with UBS.

It's Chris from UBS. And first of all, congrats on the very strong results. I will stick to 2 questions. The first one, I just wanted to come back on the Chinese consumer comment you made on the Zegna brand. I think, Paola, you mentioned that it was back to positive territory in Q1, which was very impressive. So could you maybe kind of elaborate a little bit more on what you have been doing in the region? And following that positive start of the year in Q1, would you expect this positive momentum to continue throughout the rest of the year? So that's my first one.

Secondly, can we just talk a little bit about Thom Browne. I think obviously, Q1 was a very strong quarter, boosted by the Asics collaboration. Are you able to quantify how much incremental revenues that collaboration brought to the brand in Q1? And also, if you could very helpfully break down the like-for-like versus space component. I mean, if we look simply at the number of stores, probably like-for-like is in the range of low to mid-teens, if that's correct? And what does that mean for the H1 margins?

Thank you, Chris. Okay. I'll ask Gianluca to comment on the Chinese market and on Thom Browne.

So Chris, so yes, you're right, talking about cluster, cluster end market for its -- it's very similar, knowing that most of the demand is local. So Chinese cluster for Zegna, yes, did turn positive in the quarter. So we see this as a positive indication. When you look at the full year, we stay cautious because we see there's not as a steady every week same performance. So we see some volatility in the results. So we cannot yet say, we are entirely into a stable growth momentum. That's why we reaffirm that we are still looking in the planning, probably in a cautiously way still looking at Greater China more as a flat environment on a comp basis.

We are seeing within China big momentum in Hong Kong. And we will also take advantage of this momentum with an important opening along the year with Arbor City in Zegna. Less of a strong momentum in Mainland China, still, we see the Tier 1 cities holding much better than the second-tier cities. So this is in a nutshell, the environment of what we see in China. Of course, I think that what has been said in the last sessions Ermenegildo in several moments, we have been executing in China on the same ground. We were later. I think finally, we see some signs of traction, yes.

Asics, you asked on Asics. Asics is not the only driver of the plus 20% growth in DTC is an important contributor, but definitely, it's a big contributor also the rest. So it's not that taking away Asics, we go to 0. It's an important contributor, but substantial growth comes from non-Asics. In terms of space and comp, when you say low to mid, I think you are not making properly the right calculation. So in terms of comp, Zegna and Tom Ford are -- the vast majority is comp. The vast majority is comp. On Thom Browne, there is probably an equivalent component of comp and space.

Second?

Your next question comes from the line of Natasha Bonnet with Morgan Stanley.

This is Natasha Bonnet from Morgan Stanley. I have 2. Just first of all, can you remind us on the contribution from pricing this year? I believe it's mid-single digits. And then maybe if you could break down how volume and mix and pricing have trended in Q1?

And then my second question on the Zegna brand specifically, what are you seeing in terms of new versus existing clients in Q1, especially in the U.S.? And anything to call out in terms of performance by product categories?

Thank you, Natasha. Sorry, the second question, just to clarify, okay, the contribution by category, but the first part of the question on Zegna was on?

New clients and...

Yes, new versus existing clients.

New versus existing, sorry, I didn't get that. Okay. Price, price mix, volume, I leave.

So by brand, and then I will deep dive on Zegna. Zegna, the big driver is definitely AUR with a low mid, as you said, price component. So there is a bigger component of mix, big component of mix, whether it's elevated luxury leisure wear or the component of Triple Stitch noble floor -- but there is definitely a mix component that is elevating the AUR.

On Thom Browne, Tom Ford, the AUR is less of a topic. It's also volume, the driver. In terms of new existing, we are seeing an increased number of new coming into the Zegna brand. I think that all the -- I think the brand momentum, whether it's one product or another, the brand overarching momentum is attracting new clients to the brand.

Across all regions -- it actually.

So I think we are seeing more new and what we are working a lot is also the retention. For instance, I make you an example because we always think of new through the Triple Stitch. It's not only that. We launched in Q1 the collection of fragrances that is also another entry door to the brand.

The Memorie which is, of course, a brand that well resonate -- product story that well resonate in the brand because it talks about the story of the brand. So we are opening new doors to come into the brand and Memorie, that is fragrance collection is a perfect example of that.

And in terms of price to price mix, also Su Misura and all their personalized collections also through the Villa Zegna and are also an important contributor.

Yes. Su Misura is definitely growing a lot. We have always mentioned this. So the Zegna spaces, whether are the suites, which are temporary location that we do outside of the stores for a week where we present our unique collection, whether it's Villa, which is the pinnacle of that temporary location. We present collections that are unique, can be bought on ready-to-wear, typically are bought on a make-to-measure basis, but they carry an intrinsic higher price. So that is a big driver and unique differentiating factors of the brand.

We are working to make the make-to-measure also a bigger component of business also on Tom Ford and Thom Browne, of course, starting from a lower base. But for instance, we launched a new collection of Su Misura, make-to-measure on Tom Ford in the recent months. We opened 2 women tailoring. We are -- we opened leather outerwear on Su Misura on Tom Ford. So that business of Su Misura, which intrinsically carries a new higher AUR is definitely a driver.

Going back to the last point, which is on new versus existing, I talked about Zegna. I think it's important also to remark on Thom Browne-Asics, which has been an important driver to engage with new customers or reengage with customers that used to buy at Thom Browne. And we -- this has been an important hook.

So when we talk about Thom Browne in the first quarter, driven also by Asics, the numbers. But definitely, this is a legacy for the remaining quarter. We need to work as a team to make sure that the new clients also prospects because we basically sold out the product. So there is someone that didn't find the product. We can engage them, bringing them back and use this as a driver, as a way to bring them back into the Thom Browne brand.

Next question, please?

Your next question comes from the line of Bhumi Kanabar with Jefferies.

Can I just confirm that when you include the Middle Eastern cluster, it was flat versus last year. But then when you're talking to locals double digit down.

Bhumi, it was difficult to hear the beginning of part you are talking. So can you repeat?

Yes, sorry. So just a clarification to the first question. Can you just confirm what the Middle Eastern cluster did year-on-year when you're including tourists and locals? The second one, can you just talk about how much Su Misura now is as a percent of Zegna branded sales versus as a percent of Tom Ford and Thom Browne sales and where you hope that will get? And then just...

Bhumi, unfortunately, it's very difficult to hear you, and I'm sorry, but...

If I rephrase, I think she was asking more clarity about the Middle Eastern cluster.

Yes, the cluster on Middle East, the first one.

And then personalization in each brand, I think.

Gianluca is much better in understanding.

You asked about the incidence of personalization in the different brands. Am I right?

Yes, yes.

Okay.

Okay. Middle East cluster on the clarification that we comment...

We said that the Middle East cluster, so all the residents in Middle East year-to-date, starting -- not year-to-date, sorry, from the date of the conflict have been flat.

Yes. Year-to-date is positive, clearly.

Year-to-date is positive because January and February was very positive. So this is what we said before. And this implies basically that they have purchased less locally and they purchased more abroad. And this abroad is partially going mostly to Europe. This is a nutshell what we see on the Middle East residents.

Personalization, we don't really provide details by brand, but you know that we say that in terms of Su Misura for Zegna brand is around 10%, growing, but around that level. And this is the number that we can report.

And on the other 2 brands is minimal so far. But as we said before, we are working to increase the collection, to increase the capacity of the network to sell Su Misura. So that is a ramp-up potential for the 2 brands.

Next one.

Your next question comes from the line of Chiara Battistini with JPMorgan.

I have a couple, please. First one on the performance in EMEA at group level. I was wondering, I know you mentioned the wholesale drag and DTC outperformance. I was wondering, if you could give us a bit better color in terms of quantifying how much DTC was actually up in the quarter in EMEA? And possibly, what was the EMEA performance, excluding the Middle East in Q1? That's the first question.

And second question, and I know this is a current trading update, but I was wondering on -- not even without a specific indication, but really, how should we be thinking about the operating leverage that I guess the Zegna brand should be seeing tracking on the mid-teens growth in terms of how much margins we should be extrapolating -- margin expansion we should be extrapolating versus the level of the investment. So any indication on how to think about margin progression in H1 given the strong performance would be very helpful.

In terms of your first question, Chiara, what has been EMEA performance, excluding wholesale, I would say that has been very solid double digit for all the 3 brands. And in terms of Middle East in the quarter, EMEA Middle East is basically not much different.

Let's give you this. So if you see that our overall group at 7.4%, you exclude Middle East from this year and next year, it goes up slightly, but not even 1 point.

On the operating leverage, given Zegna performance, I think the question was on Zegna for the rest of the year, I'll leave to Gianluca.

I think that so far, let's not enter into revised outlook. So we confirm what we see out there in terms of consensus, which is floating between EUR 185 million, EUR 190 million for adjusted EBIT.

Let's remember, that's the reason why we set there saying that we have in margin percentage, which is moving sideways to last year, excluding the hit by Saks, because we have 2 factors. We're investing heavily in IT, in one group, in creating the backbone across the brands of same system, same processes. So this is a moment of investment for the group.

And second, we have currency headwind. We have seen in Q1 5 points. We don't expect 5 points for the year. It will be somewhere close to 2 points. So we have anyway headwinds on currency. We don't want to push the price lever too much. And therefore, part of that will impact the bottom line. And therefore, that's the reason why we are cautious in saying that we will enjoy too much of operating leverage.

We want to continue growing at our pace, setting the ground for long-term foundation. And of course, IT is one of those and not stretching too much the price lever, it's another thing.

Next?

Your next question comes from the line of Maria Meita with Bernstein.

I have 3. First, at Tom Ford, what is the split between womenswear and menswear today? And then on womenswear specifically, I know that Haider Ackermann has been focused on ready-to-wear specifically in his first collections. But I was wondering, if he's now working on that iconic leather goods sort of model the next bag that will be popular at Tom Ford.

And then finally, it's a longer-term question. But today, how confident are you in your 2027 guidance? Because consensus from what I see is below both top line and bottom line? And what levers do you plan to achieve the results in your guidance?

Thank you, Maria. So I'll leave to Gianluca on the split men's and women, Tom Ford, the 70-30. So this is 70 -- men's and women, but on the leather goods and our plan on Tom Ford Fashion, I ask Gianluca to comment more. It's part of the journey. As Maria said, we started ready-to-wear, and we are also going to reinforce the leather goods part.

I think we are definitely ahead on the leatherwear rather than leather goods. I think that, we are seeing good momentum on leatherwear, mostly men, but also some good results on the women's side. Definitely, that is one of the driver of the growth. Another one is knitwear, which is becoming more and more important for the brand. Of course, then there are the iconic parts, which is Livio and tuxedo and so on and so forth. We recognize that we are still looking for iconic pieces on the women bags.

On shoes, we are seeing some good results. I think that we are still working hard on the bag definitely is one key work stream for the group in the months to come. And that is, if you look at it from the other side, still potential. We see the opportunity to find a good platform there and make an offer that is Tom Ford in the DNA. So that is what all the team from design to merchandising is working when we feel we have all the stars aligned, then the amplification of the message and marketing will come.

But I would say very important to the work that has been done on the brand. Overall, this is really the starting point.

On ready-to-wear, I think we are seeing -- that is the driver of the growth so far.

2027 guidance, how confident we are that...

We confirm that the targets that we have stated and we declared -- stated are valid on -- and we said on the lower part of the range. I remember we put a range on revenues and the range in EBIT. So we are still comfortable on that lower part. Of course, why we said lower part, because from when we set the guidance, which was 1 year ago, March of '25, the currencies have taken definitely a swing.

And therefore, it would not be realistic to say more than the lower part of the guidance. But we are still focused on delivering on that lower part of the range. Of course, then there is -- we are still with a big question mark of what will be the outcome in the next months of Middle East. But we are still seeing that lower range as our goal for.

Okay. Next?

Your next question comes from the line of Chris Gao with CLSA.

This is Chris Gao from CLSA. So firstly, it's still about a -- follow-up about the current trading. So just want to be more precise. So how do we see the 2Q to date trend compared with March exit rate? And this is the first thing. And also, if you have more clarity on the DTC and Zegna co-brand, it could be highly appreciated.

Also, on the GP margin trends for the first half, so how should we think of this? Definitely, we believe you have strong support from your outstanding DTC sales growth, right? So while industry-wise, there are still headwinds from foreign exchange and input cost volatility from geopolitical tensions. So how should we think of the first half GP margin trends? I understand this was a revenue call, but just any preliminary color could be highly appreciated.

And then my second question is about the new customer accretive contribution comment that management made just now. So we're very happy to see there are more new customers contributing to the growth. So I just want to confirm, one, if it is also the case among the Chinese cluster?

And also among these new client acquisitions, do you see these new clients are more from Zegna friends are more into the DOS or more are categorized as aspirational customers. So I just want to understand the profile of these newly acquired customers.

Thank you, Chris. Yes, you said 3 questions. I think there are a little bit more than that, but let's start with the current trend and the exit rate, a few comments in particular on the DTC and Zegna, and I ask Gianluca to provide some color.

Chris, so to give you some color on how we enter Q2. So on DTC, we finished Q1 with a plus 14%. We said that, excluding Middle East, of course, where the performance is negative compared to last year, DTC overall is trending in line with Q1.

So we don't see a major difference. The performance in Middle East is double digit down, but substantially less than what we hear, it's the minus 50% that is out in the market in terms of traffic. So we are experiencing a double-digit decline, but much more muted than what we hear out there at a minus 50%.

There will be a difference, as we said before, the decline of Thom Browne wholesale in Q1 is not to be replicated in Q2. We have said that will be the overall full year growth will be much less than that in the range of between 20 and 30.

DTC Thom Browne also.

And DTC Thom Browne will be adjusted for the partial growth contribution coming from Asics. What was the other? On margin, I think not today, we are not talking about first half or second half margin because today, we want to focus on revenues.

In terms of new customers and DOS, and we are seeing growth everywhere. We continue to experiences a growth on France and DOS, thanks to the personalization, the elevation of the offer.

As I said before, we are seeing more and more new clients coming in from the different DOS that I mentioned before, also in China. Before I didn't mention another entry door is also the 232 that is the new platform of shoes that we put on the side of the Triple Stitch. So we don't have one arrow only, and we have multiple weapons to bring new clients into the brand.

So I think we see a stable and healthy pattern of growth across the different clusters. We are not banking only on new. We are not banking only on France.

Maybe the only thing that you already mentioned previously is the fact that in first half, the impact from currency will be higher than in the second part.

Yes. We had 5 points in the first quarter. I think hopefully, we will -- at this point, we will -- the headwind will stabilize. We expect on the full year probably close to 2 points on the year.

Next?

Your next question comes from the line of Adrien Duverger with Goldman Sachs.

I know you've commented on the consumer environment across regions, but could you please provide a bit more color on the performance by cluster? My second question would be on the wholesale channel. What are the trends that you're seeing so far in the first half of '26? How is the confidence across your partners? And what are you seeing with the order books?

And then the last question is just a quick follow-up on your comments on margins. So you've reiterated your guidance for margin to be sideways ex tax for the full year. Could you help us frame the phasing for investments between the first half and the second half, please?

Thank you, Adrien. So first on performance by cluster.

Adrien, so cluster, North Americas continued very solid on a double-digit basis. So we keep on seeing good momentum and walking away from the cluster for a moment since we are talking there, we are banking on this by keep on expanding the network there. We are opening Scottsdale and San Diego with Zegna. And taking aside Zegna for a moment, we are investing also on Tom Ford, it's Bal Harbour, it's San Diego and it's Costa Mesa, Southern California.

So cluster for Zegna good, market important, and we continue investing in that market. As I said before, the Chinese cluster turned positive in the quarter. And in terms of European, European are solid double-down growth and double-down growth.

Double digit.

Double digit. Double-digit growth, European cluster. And what we see, again, moving away from the cluster a moment, something that probably is positive for the brand in Europe as a market, not as a cluster, we are seeing good growth of locals and also farms, which probably I've seen some mixed reports elsewhere.

We are seeing also good momentum coming from farms in Europe. As I said before, the Middle East cluster was positive double-digit in Q1, of course, becoming flat from March -- beginning March onwards. This is the answer on the cluster.

On wholesale, I think, it's a strategic self-inflicted limitations we are putting ourselves. We could definitely open the gate for more and more revenues. We are -- on wholesale, we expect still the business to go down. As I said before, Thom Browne will not be minus 58, will be halfway there, what has been the performance of Zegna brand. And Tom Ford, it will still be -- Tom Ford probably single-digit negative in the year, and we expect Zegna to be around low double digit in the year for wholesale. It's not a question of order book. It's a question of strategic decision to contain the distribution on some products. We could easily open the gate to have more than the business we are doing on wholesale.

In terms of margin, as I said, it's sideways as we stay there for the time being. So we don't provide more details than that today. As I said before, I think that the consensus that is out there is realistic. Of course, with a big question mark about the volatility on Middle East. But I think that in the consensus, it is baked somehow some disruption from Middle East.

Next?

Your next question comes from the line of Anthony Charchafji with BNP.

It's Anthony Charchafji from BNP. On China, the momentum is improving at Zegna, it's a market that is more skewed to tailoring, but also your shoe business is still and was still very resilient last year. Would you be able to share what category outperformed between tailoring, shoes and outerwear? And also, by clientele, it's also a market skewed to top spender Zegna friends. Did the growth with this top cluster improve and is catching up with the American and European Zegna friends growth?

My second question is on the store closure in China for Zegna. Given that you are planning to close 10 stores in 2026, I'm curious to know, if the first closures are seeing positive effect in the remaining store nearby, so basically a neutral impact on top line.

My third question would be on Zegna DTC between price mix and volume. In the recent year, the growth has been driven massively by price and mix with rather subdued volume. I'm just curious to know, if you have a date in mind or a year in mind where you expect volume to kick in at some point.

And my last question is on Zegna wholesale. You decided last year to decrease the quantity of iconic product to your partners such as the Conte, the Triple Stitch and the Hubert luxury collection. Given that you guided Zegna wholesale down low double digit, is there any shift to have in mind from wholesale to retail store, basically your retailer performance being a bit boosted by a shift to your iconic product?

Anthony, so let's start from China. China is not definitely skewed to tailoring market. So it's not that we are banking on tailoring and it's not tailoring the driver. I think that the category there that are driving the growth are luxury leisure wear, all the different categories of luxury leisure wear. Shoes is definitely both on the Triple Stitch on the 232. The personalization, we have had a very good, partially taken in Q1, partially will be seen in Q2, good campaign of make-to-measure. So I think it's not tailoring the driver of the stabilization of -- or plus 5 actually of GCR. It's -- so the rest.

In terms of cluster, I think there the comment I made before about the balanced growth across cluster is the same for GCR. We are seeing good momentum for new clients, as I said before, on the different entry door that are Triple Stitch, 232 fragrances, and we are seeing good results also on the loyal big spending clients. So I think that what is true for the brand as a whole is also holding true for Zegna in China.

In terms of price mix, of course, we said price low single digit. AUR driven by mix are drivers. On Zegna, probably also the number of ticket is up.

Yes, absolutely.

Also, the number of ticket is up, definitely in some areas with some softness in traffic, but the execution and especially the conversion is driving the growth also in the number of tickets.

As it refers to Zegna wholesale, yes, it's a decision to contain the distribution of iconic items, the ones that you mentioned. Of course, we are taking advantage of some step back in wholesale distribution in our DOS, whether it's existing DOS or opening DOS.

In U.S., for instance, some new openings that we have, as I mentioned before, I mentioned before, Scottsdale. Scottsdale could be a door that is also taking advantage of some business that today is not in our DTC network.

Of course, we all know that there are some clients, especially in the U.S. that have been going through difficulties, and we pay the consequences last year on our credit. Definitely, we're very careful in feeding that business in a very solid way.

And therefore, there is a very deliberate decision to focus and channel business that was in wholesale into our stores. So in any single location, whether it's Costa, whether it will be in Florida next year, whether it will be San Diego. So there are definitely locations where we are opening, and we don't have retail stores where we want to catalyze the business that today is held somewhere else.

Yes. There was a question on the positive impact from closures in China, of course...

That is definitely our everyday goal for the store, any time we close a location to have retention plan, Yes. So I think that so far, you cannot retain 100% of the business because it would be illogical. We have realistic goals of retention in any door we close, and we are holding to that plan. And some of the DOS you have.

Maybe just a follow-up on the first one on the Zegna friends or the clusters, something we didn't mention is that Zegna plans for Zegna are growing double digits also this quarter. So it's true that we have also new clients, but also our existing clients, both DOS and Zegna friends are doing very, very well.

Next?

Your next question comes from the line of Oliver Chen with TD Cowen.

The Zegna brand has been impressive. Which regions or geographies drove outperformance just at the core Zegna brand? And then, as we think about China, China tourism overall, how has China tourism been relative to your expectations? And third question on the Middle East, you've done better than peers based on strategies you've undertaken. What have those strategies been in terms of lesser traffic issues relative to competition?

Thank you, Oliver. Okay. On the Zegna brand, what regions drove the sequential acceleration, the performance?

Oliver, we never talked about -- I was there last week. So Latin America, Mexico is booming. Brazil is booming percentage terms. So it's definitely not the biggest market, but we always talk about America. And we need to also point out, of course, U.S., but also Mexico and Latin America are doing extremely well.

As I said before, Europe, Continental Europe is doing particularly well for us, both locals and foreigners. Until end of February, Middle East was booming. So I think -- and Japan and Korea, which we always mentioned, it's not our forte per se, but we are seeing good traction on Japan and Korea across the 3 brands. Therefore, also driven by Chinese tourists. We are not seeing a lot of Chinese back on the West side in Europe. So the driver of success in Europe for -- on locals is Middle Eastern, South Americans, is North Americans.

In Milan, in London, in Paris, in Madrid. Madrid is becoming a very important city for us. We are opening a new flagship in Madrid in the second half of the year, which is becoming a very important destination for South America, which is a very fertile ground for the brand. So I think this answers to your first question. The third, I forgot.

The Middle East, what has drove our better performance versus competition, what we have done, of course, it's a success that started years ago, the relations that we have with our customers.

I think it's about resilience of the -- I think that our brand, we always said we are marathon runners. We are not sprinters. We might not grow so fast, but we run steadily. I think that our intimacy, the relationship that our teams have with the customers, the fact that they know their lifestyle, we are not transactional. And therefore, I think that this keeps the business more resilient and steady in the good and bad days.

I think we are reaping the effects of very long-term relationship with clients, the strategy that we have built. So I think this is the reaction of having also in difficult times, a good resilience and the fact that probably being a client -- a brand of destination, these clients also visit us elsewhere. So maybe they don't visit us in Middle East, they visit us elsewhere.

Thank you. Are there no questions?

There are no further questions at this time.

Okay. Alice?

Okay. Hello, everyone. Alice speaking. Thank you for attending today's call. I would like to remind you that our next release and conference call will take place on July 23 for H1 preliminary revenues. The silent period will begin on July 1st. But if you need any other further clarification, please do not hesitate to contact us. Have a nice rest of the day. Ciao.

And hopefully long weekend. I don't know who will have a weekend tomorrow. Thank you also from myself.

And myself. Ciao.

This concludes today's call. Thank you for attending. You may now disconnect.

Hello, everyone, and thank you for standing by. [indiscernible] preliminary revenues call will be beginning in just a few minutes' time. We thank you for your patience, and will begin soon.

Good afternoon, good morning, everyone. Thank you for joining me managed Group FY 2025 Preliminary -- revenues Call. Please note that today's material and presentation are available under the Zeniagroup.com website. Joining us today, the Zegna Group leadership team, including Gildan, the Group Executive Chairman; and Gianluca Tagliabue Group CEO.

Before we begin, we need to point out that the team will make certain forward-looking statements during the call. The group actual results may be materially different from those expressed or implied by these forward-looking statements. Also, these statements are subject to a number of risks and uncertainties, including those described in our SEC filings. Refer to the forward-looking statements' cautionary statements included on Page 2 of today's presentation.

I will now hand over to Jodoaniel.

Good morning, and good afternoon, everyone. Thank you for joining today's call on our group fiscal year 2025 results. Before we run through our performance, I wanted to take a moment to stress our deep appreciation to our colleagues in the Middle East for their dedication, professionals and commitment during this complex period. On behalf of the group and of the Zegna family, I want to affirm our support for them and for all our friends and partners across the region. The Middle East remains an important region for our group. And although in the short term, we are adjusting our activities to reflect the situation we expect the region to continue to play an important role in our business over the longer term, in particular, thanks to the resilience of our customers.

Let me now turn to the business update, starting with the recent Tom 4 fashion show, which, as you know, has taken place earlier this month. deacon third runway show presented in Paris March 4 has been widely acclaimed Hyder has further demonstrated its ability to ensure the brand codes and DNA in a way that is unique, contemporary and deeply personal.

The selective elegance of Tom Ford is craftmanship and tailoring heritage this iconic letter pieces reimagined with Modernitewer all powerfully affirmed in this collection, which also added innovative midware garments. I found the oil collection very confident and consistent in 1 word, very strong, and I want to extend my approach to either and to the entire team who worked alongside him to bring these shows to live.

We all know that fashion shows are important, but they only translate into results when they are supported by strong production, commercial and marketing execution. We're confident Aleris in the Don fashion management team, supported by JalgaTariabua and the old group are working to build on this success. I was also very pleased to see the promising start of recently launched on Brown sneaker in collaboration with ASIC. First presented during the 4 winter '26 fashion shows the brand hosted in San Francisco, ahead of the Super Bowl. These limited sneakers were officially launched worldwide on March 2.

The launch was supported by several high-visibility pop-up events including services in London, Isetan Tokyo and Plaza 66 in Shanghai. The collaboration is achieving strong refinance ahead of our expectations, not only in terms of social media visibility, but more importantly, of revenues. This collaboration will be a way for the brand to attract and retain new customers. Sam Laban and his team are focusing on these critical KPIs, aiming not only to ensure the commercial success of the collaboration, but also to drive meaningful acquisition of new customers.

There is a journey of our clients, especially these new clients, should undertake Jersey and even more so knitwear are important, a second purchase for them. I'm most excited that in June to Branis Milan during the Manso fashion week for the first time. Moving to Xenia, as you know, at the beginning of this year, Xeapresented its 4 Winter '26 show Emilie family closed. The Leavens collection was simple but deeply rooted in our history. cloths never just garments, the carry memories. They move across generation, preserving experience and storage over time. This cancer of memory as living legacy continues to inform many of the initiatives we are developing across the world.

Finally, looking ahead, Xenia will present its -- in March, we introduced memory, a fragrance collection that translates moment from the founder Life in to send rather than being conceived as a traditional power film launch, memory distills more than a center of the history into chapter is shooter in a place gestures or object from Emerging deli world. The collection is currently available in selected Zena location with a progressive global rollout continuing through Beyond this launch, we are also very proud that Xenia has been announced as the main sponsor of the Italian Pavilion and the 61st international execution, La Viena 1 of the most important platforms what temporary are worldwide.

The Italian Parisian will present Contecon Toto, a project by Artis Caraco created by Cecilia and Siani with whom we have developed a meaningful dialogue over the past decade. This initiative alongside our global partnership with Abaza reflects how Zena increased operates not only as a luxury brand, but is a culture platform connecting fashion, contemporary art and landscape, continuing a vision that has been part of the company since our founder, first imaginated Asian Finally, looking ahead, we present Spring Summer 27 passion sanes by Creative Director, Alessandro Satori, together with the launch of Visen.

Following the experience we create in tubing, Los Angeles will allow us to showcase our collection without -- within 1 of the most dynamic markets of our group. The City restaurants, not only as a global fashion hub, but also as a cash or capital will influence extend far beyond this quarter. Together, this initiative flagstone vision. -- building a brand that moves seamlessly between fashion, culture and landscape while remaining deeply rooted in the values of its founder.

And now let me hand over to Zandu. Thank you.

Thank you, Gil. Good morning, good afternoon to all of you. Let's move to Page 7 of the presentation where you find full year '25 results highlights. The revenues for full year '25 have already been disclosed in early February, and we confirm that at EUR [indiscernible] billion minus 1.5% year-over-year on a reported basis and plus 1.1% in an organic basis. In '25, the group reached a 67.5% gross margin and adjusted EBITDA of EUR 163 million, which does include EUR 10 million of provisions related to losses on trade receivables for a Global Chapter 11 procedure. Thus, of this $10 million bad debt provision, the adjusted EBIT would have been EUR 173 million.

The group also reached $109 million of profit, up 20% from $91 million last year. More at the end of the year, the group had net cash surplus of EUR 52 million. Let's move to the following pages to comment more on these results. Page 8. In full year '25, gross profit rose by 90 basis points to 67.5%, driven mostly by channel mix, with DTC that reached 82% of branded revenues versus 78% last year. And as you know, DTC gross margin is higher than the wholesale one.

Moving to SG&A. SG&A in full year '25 reached EUR 1.034 billion with 53.9% incidents on revenues compared to $51.8 million last year. This increase in the SG&A incidence is linked to the following factors: -- the investments in talent, systems and organization across different functions and brands looking at the long-term vision for each of the brands. Store network expansions in particular for Tembra and Ponomore it has been impacted by the negative operating leverage caused by the streamline of the wholesale at Tom brand.

This SG&A line of EUR 1.34 billion includes also EUR 10 million provisions related to the losses on trade receivables owned by Saks Global. Moving to the marketing expenses. In 2025, they were $121 million, equal to 6.3% of revenues, in line with the prior year and our indications of a fair midterm marketing on revenues incidence of around 6%. Let's move to Page 9, where we report the adjusted EBIT of the group and by segment. As always, this is the main performance metric used by the management to analyze the performance of the business at group and at segment level, and you can find the reconciliations in the appendix. Let move to the analysis by segment.

Zegna segment, which includes the brand Zegna brand, the Textile division and third-party brands business generated an adjusted EBIT of EUR 197 million, and a margin of 14.4% versus 13.9% last year. This result in EBIT reflects and includes $3 million of provisions in relation to Saks Global because these provisions are not in the adjustments are affecting the adjusted EBIT, without which the adjusted EBIT for the Zegna segment would have been $200 million with 14.7% margin.

Some brown segment has been the most hit by the reduction in revenues driven by the wholesale streamline and achieved $1 million of adjusted EBIT. This performance includes [indiscernible] provisions in relation to SAP. Comfort Fashion segment reported a loss at adjusted EBIT level for EUR 16 million generated in H1 one in the second half of the last year, Tonopah recorded a positive adjusted EBIT performance. Full year '25 results for [indiscernible] include EUR 5 million of provisions in relation to Saks Global.

On the positive side, corporate cost decreased mostly due to lower insurance costs. Moving to Page 10. You can see here summarized our reported income statement. A brief comment on taxes. As you see, the effective tax rate decreased to 22% compared to 30% last year. due to nontaxable income in EUR 25 million related to the remeasurement of put option liabilities, mainly the 1 on the remaining 8% stake on Tomra. As a result of the above, we reported group profit in full year '25 at $109.5 million, up 20% versus in 2024. Based on this result and in line with our dividend policy, the Board of Directors proposed a dividend distribution of EUR 0.01 per ordinary shares which equals to a total dividend distribution of approximately EUR 32 million.

Let's now move to Page 11, where we comment on CapEx and trade working capital. Cash up for CapEx in 2025 reached $103 million revenues, of which about 60% are related to store network. -- and the remaining EUR 40 million to investment in production, including the shoe factory we are building close to Pharma and in IT. As we have already anticipated, 2026 is going to be important here in terms of CapEx since the investments related to the new shoe factory in Parma, which will be completed by this year. And for this reason, we expect CapEx in 2026 to be closer to the 7% mark. Trade working capital reached $408 million at the end of December 25, equal to 21.3% of revenues compared to EUR 460 million and 23.6% of revenues at the end of 2024.

This was the effect of an improved inventory management, control of trade receivables and ForEx impact. Looking at free cash flow at Page 12, let me highlight that the group generated EUR 82 million of positive free cash flow compared to $10 million in the prior year. This despite the already mentioned CapEx of $103 million paid and $150 million for lease liabilities and right-of-use assets. Finally, on Page 13, you can see that thanks to the positive free cash flow and the inflow from the sale of treasury shares to Temasek for EUR [indiscernible] million. The group reported at the end of December, a positive cash surplus of EUR 52 million versus $94 million of net financial indebtedness at the end of 2024.

Let me conclude again with a brief comment on the impacts of the current situation in the Middle East. As you know, Middle East is a relevant region for our group and for the Zenabrand in particular, revenues for the region represent a mid-high single-digit share for the group's total. All our stores in the area are open and operating. At this stage, it is difficult to fairly assess the potential import of this conflict on 2026 results as it will largely depend on the duration and possible implications for the global economic outlook. As our Executive Chairman also said, we continue to work toward delivering our 2027 targets, knowing that the overall outlook has become increasingly uncertain due to this factors.

Now to Paolo for your questions.

thank you, Mr. Did. Thank you, inundloperate we open up for the Q&A session.

[Operator Instructions] Our first question today comes from Chris Han with UBS.

It's Christian UBS have 3. Firstly, starting with the top line momentum. And I think at the previous conference call in Q4, you were saying that excluding the Chinese New Year timing impact, things are not seeing any meaningful change on a sequential basis versus Q4. So I'm just wondering if you can give an update on the latest trends you're seeing by different regions, nationalities, whatever you can provide. Secondly, on the margin, it seems like Zana segment, excluding the tax impact for the year, ended around 14.7% EBIT.

If I look at the latest consensus people are modeling around 14.1%. So are there any reasons why you believe that given the pickup in theory for like-for-like growth in 2026, you shouldn't be able to do a margin that is higher than what you did in 2025. That's my second question from the Zyngas segment. Last not least, I think FX moved a bit over the last few weeks. And I think part of your caution on 2026 margins was coming from the fact that FX is not supported.

So I'm just curious to know if the recent moves of FX makes you feel a bit more comfortable in meeting the 2027 targets in terms of profitability.

Thank you, Chris, and thank you for the 3 questions. I think the first 1 is for Mr. Gildo and is related to the current trend and an outlook or a comment across all the regions. Of course, let's say, I anticipate that sales information will be more given at the end of April when we release the Q1 numbers, but very happy to provide a comment on the current trend.

Thank you, Paola. Overall, the year started well with a trend slightly better than Q4 '25 in DTC -- this notwithstanding the uncertainties we are facing in the past few weeks with the world in the Middle East. We saw a good performance in 4 fashion thanks to the new spring/summer product and the continuation of a good trend also in Cambron, in particular in recent weeks after the launch of the Tom Brown is Niger. Maybe a comment on China, where we are seeing some sequential improvement in the region. However, we remain cautious and we continue to assume a flattish performance for the year. But we are satisfied with the performance of Chinese New Year slightly ahead of expectations so that we -- now what we have to do and we'll adopt the focus to our strategy to enhance the quality and efficiency of our DOS network in the region.

On the other 2 major regions, in particular the Americas, United States and Latin America, remain very resilient, and we see a continuation of a good growth as we did last year. And I would say that also Europe looks pretty resilient. -- beside the conflict in the Middle East. So overall, not a bad situation of the first 8 to 10 weeks of the year.

Okay. The second is for Gianluca, and it is related on the Zena segment's EBIT performance.

Chris, so I think you pointed out an important angle that is, of course, that the profitability of Exenia segment EBIT margin in the second half, if you exclude the Saks Chapter 11 provisions would have been close to 15%. So we are pleased of that step. We know the Zena segment deserves stronger profitability still. We are working on it. But on the other side, we also know that we have projects critical to support the long-term trajectory of the brand, and we don't want to chase short-term quick results. So we are -- so we have served with pleasure the fact that we'll get there. and linking to also your last centers, it's true that in the recent weeks when we talked early February, the dollar was $1.18 and now it's 1516and the renminbi was at 10% and now is below 8%.

So we are seeing some inflection point on currency, which should favor us -- but still, if we compare 26 to 25%, we are still in the mindset of having a couple of points almost around 2 points of headwind from currencies. So this is still a fact that will impact the group will impact also the Zena side. So having 2 points of headwind from expected on currency definitely will be a dragging factor in the profitability. And that's why also I linked to 1 of the statements that I did last time that we want to see -- we are expecting to move sideline on the profitability for the group in 2026, taking aside the onetime provisions of SOX. So I think I put together the second and third question.

SP1 Perfect. Maybe just to clarify. So the commentary on Q1 DTC momentum, you're referring to an acceleration versus the Q4, which was 10% at group level. Is that correct?

It's correct -- it's correct.

The next question comes from Adrian Diverge with Goldman Sachs.

A ahead. on Luna. -- guess the first 1 would be -- sorry, again, on the current environment. Have you seen any changes in consumer behavior in the last few weeks? I mean I guess the real question is, have you seen any second order impacts in other regions. And within the Middle East, are you taking any specific initiatives to maintain our relationships with the clients there? Then my second question would be on the resilience from the higher spending cohort. Have you -- have you continued to see like an increase in our proportion this year compared to Q4? And if so, have you seen any differences by different geographies?

So in terms of current environment, if we have seen any headwind, any negative after the war.

No. As I said previously, not with the reception of the Middle East, in which the store have been initially closed and then open, but there is less traffic and there is less energy surely. And so customers are fully down quite a bit. I would say that we are scoring better than what we've heard -- and so the short the brand is very well placed in that part of the world. The event that we did last year, I mean, surely has created an incredible resonance of our brand. And I think that many of those customers, you probably are -- will be buying hopefully, outside the area and are the top resilient CASA that we are talking about.

So overall, with the exception of that particular area, I think that the rest is continued the expected growth.

And the question on the third 1 was also related to which cohort and in particular, if the high spenders are continuing to drive the growth.

No, we have a program around the world of personalization. So I think that we are becoming more unknown to do that. extremely well and appointments and store events that goes beyond the Milani. So I think that, that could be good flow of business of product that also you don't find in the store, so that helps keep the resilience of those customer high.

in terms of relationship or what we are doing with the Middle East customer was also asking if there is something particular that we are doing so far. I think in terms of relationship in the Middle East?

No, I don't think -- we have a good partner there, the actual 2 part. One is anti-earfor Agenia and the other 1 shall look for Tom Ford. And so I think that we are following the happening very closely and -- we know that they are trying to keep the model as open and as active as ever. And so that's -- the partnership with logo is important. And to support them with the merchandise and with some local promotion.

SP1 And also the relationship that our client adviser has with all our customers, they continue is something that clearly help in this situation.

And I think we answered to your questions.

And can you a follow-up with a quick question on pricing maybe in terms of what you're seeing for the pricing environment this year and if there is more opportunity to continue to drive higher pricing, both from a like-for-like and mix?

As we said last time, we continue doing low mid-single-digit price increase on a like-for-like. We continue having an evolution of the mix upwards, that is our -- both as Judas saying, through exclusive collection but also in the store in ready-to-wear, we keep elevating the offer. This is, of course, [indiscernible] but also on the other brands. So I think the rule of thumb stays with mid- low mid-single-digit price increase in order to offset the cost factors.

No, sorry, 1 addition, but Cigna is the drop strategy of coming up every several weeks with new deliveries and with product that looks different from the previous delivery brings an incredible excitement to the store. I think that color is a driving force I think accounting product and not only the deepest itch, but also other categories are meeting more and more the desires of customer -- so I think that the outreach is very, very important and to keep the interest of the store high. It's extremely a priority in times where, overall, you see a little bit less traffic.

And I think that the possibility to apply the same rules to brown and Ford is very, very important. I think that the excitement that Hydro will bring with the new collection is important to not only to retain Caracas, but to attract new customers. The possibility to have some brown or Milan. We know that to round is to strengthen the press in Europe, in particular in the retail. And I think that having a short Milan will enhance his brand awareness and his exposure to the local. So I think fine to expect the flow for the customer, but I think the key is work well with the local and have staffing the store that created this relationship that may change so strong in the States and in other parts of the world.

Thank you, Andrew. The next one.

The next question comes from Sara Assistive with JPMorgan.

I have a follow-up question on the situation in the Middle East. And notably, I was wondering in terms of the shipments of the merchandise to the Middle East have reduced or suspended shipments to the region or it's still business as usual from that point of view? And also a clarification on rents in the Middle East are they variable or fixed -- that's my first question on the Middle East.

The second question on to fourth profitability improvements in H2 calculated actually excluding the tax provision, the profit release went back to positive territory. So I was wondering if you could expand on the margin drivers for Tomo in H2? And whether that comes mainly from gross margin -- and finally, can you remind us, I think you are highly exposed to the local span rather than to reason. But can you remind us how much of your sales come from torpenses?

How much spend I didn't get that's the third question. Okay. So Kara, maybe you can help us going through the floor because I don't know if we fully understand all of them. But in any case, the first on Middle East in terms of shippers and rents. And I'll leave it to Jan Luca to comment.

Now, we are at the tail of the spring summer shipments. We have basically most of the collection already delivered before the end of February to the market. So we will have some tail of summer still to be delivered, and we monitor the situation, but this is the situation so far. So the product has been shipped until late summer deliveries to the market. In terms of costs, I think some relevant stores have variable with some fixed, but we are well above the fix. So I think I would say it's more skewed to the variable than effect like typical Western European street side store. So we have more variable than fixed, the rent the tone for the...

The second part, I think that we have -- we said we have built the infrastructure of Tom Ford at this point. So we have come to a point of wealth -- and I think we are -- we have been starting enjoying some good results in the second half and some scale. -- on gross margin, there has been also some step-up on gross margin linked to the effort that we are doing in terms of full price sell-through, with the team, with the merchandising team with Lane. And so I think it's a combination of the 2 things, quality of gross margin and the inflection starting to see some slowdown in the growth that we have we have done in the last couple of years to build the structure, both headquarter and market level for Tom. So I think this is the in actual -- the situation of the second half of [indiscernible].

The last question was on the level of tourist car I didn't get if it's in general or you ask a certain area?

No, no, I think you have a very high exposure to local consumption, but I just wanted to make sure about your tourism exposure at group level is.

It's minimal because well, if you take Greater China, it's mostly local. So if it's America, it's low double digit than nonlocal. Of course, in Europe, you have Europe, not Middle East, Europe, you have 30%, 40%. So I think that is the -- our client base is, of course, for the intrinsic nature, especially on Zen, but also for an oral, which are skewed to 2 men's, that is a big component of locals. So that is a big component of low-cost. There is a big component of the top of the period. That's why as Jill was saying, of course, we see the uncertainty in front of us, but we enjoy also the resilience of our customer base.

The next question comes from Anton Bauch with BNP Paribas.

It's Antoine BNP Paris. Two questions. The first 1 is that in 2026, not asking for a forecast, but within your portfolio, would you expect a lot of difference between the top line growth of the 3 brands, especially now that maybe there should be less impact from wholesale adjustments. Yes, so maybe an update on wholesale and we run the most exciting prospects at least 2026.

My second question is about the gross margin. What are going to be the moving parts notably channel mix. I'm not sure I understood the impact of FX when you said a couple of points. You said was it about like minus 2 impact on the top line? Or was it an impact of basis points on the margin. And finally, on the middle just to understand, so the exposure to the Middle East is mid- to high single digits. Within that, how much are people who are not originating from the Middle East. And then also the sort of opposite question, which is -- what's the percentage of Middle Eastern consumer spending elsewhere, notably in Europe to get an idea of the -- if I deduct and then I add the link to the cluster.

Okay. Thank you, Anthony. Antoine sorry. So in 2026, -- the comment I asked Jan Luca to comment on the different expected growth by brand, and I think there was also a question on start from on sale.

Well, first, I reiterate the fact that on the DTC, the 3 brands -- all the 3 brands are growing very well. And all combined, we are growing more than the trend that we have shown in Q4. So that performance is well balanced on the 3 brands. So that is to take out the DTC. On wholesale, we have said and we reiterate that wholesale is not going to be a driving force. We'll continue to contract in a different intensity by brand. then I would expect to decline by mid-teens, considering both our intentional icon protection and some still wholesale conversions.

Tom Fort should be possibly negative single digit, and this is mostly related to sell-in to the wholesale partners in the Middle East region. Tom Brown will still be solid double-digit negative, although less than last year and of course, much less than last year in absolute terms. So at this point, the business of Tomra wholesale is smaller and the reduction, and therefore, the impact in absolute terms to the business is becoming smaller and smaller, and the decline in absolute terms will be much less than last year.

So this is in total. And linking to your second point of the 2-point FX impact, it was related to revenues. Of course, then how this translates into the bottom line, you have, of course, also the OpEx deflating. So it's part of that. It creates an impact much lower of course, then 2 points the FX, 2 points were related to top line.

What was the last question?

There was a few questions on gross margin. If it was driven mainly by channel mix and then the impact on ForEx. This just Yes. This is your answer.

Well, the impact of the channel mix is definitely an important driver of the step forward. On the gross margin, the second driver that we are working heavily with the team of Toronto for this stepping up the incidence of full price sell-through. That is the second big driver of improvement for Tomato Ford.

The last question was on Middle East.

Yes. So the National many are not local.

It can be empirical. It's an important part that we have people either traveling or less than there temporarily, but we don't have a specific number. So that's why also we expect to see some of them elsewhere. That is also an outcome of this because we see, of course, there are some residents locally there, but they move to loan not wise. So we have been seeing people, same customers there and elsewhere. That is also part of our safety together with resin because our clients are moving. So especially the ones that we have been serving in the Middle East.

Thank you very much -- very clear. Are -- and if there is -- there are other questions, yes.

The next question comes from Oliver Chen with TD Cohen.

Gildan John Luca. Regarding Tom Brown and Tom Ford, a lot of great initiatives. How is profitability at both moving relative to your targets? And what's realistic for us in terms of modeling those profitability profiles this year and then longer term at both of those -- and then on the second question, consumer confidence and sentiment. We continue to see a really robust environment in the Americas. So I just love your thoughts on that as it applies to China and the Americas kind of different, what's happening.

Okay. The first one, I'll leave it to Jan Luca on the Toronto for profitability in 26 and longer term and on U.S. thereafter.

jSo if on the EBIT of TombrancoFor. So first, to give a quality perspective, both are enjoying growth in, as I said before, in DTC, and it's not just only for space, but it's come to our current trend on those 2 brands. part is the success of the new collections on top forward. There has been -- and that is a very strategic, important initiative. All the initiatives put together by Sam and the team is around making the most of the use of the merchandising drops.

And so for instance, in the first month, that has been put together drops in the Zen-like way around denim. -- around ASCs. And these are -- especially the 61 is very instrumental to capture names of new clients that don't know the brand. So these are leading indicators for something improving in both the brands. In terms of profitability on Tom Brown, -- of course, we have seen a second half that has been tough with the streamlining of the wholesale business and negative EBIT in the second half we do not expect a loss of Tomra on the opposite to make it sure we expect to go back to a reasonable profitability on tomo. -- and still injecting talent in the organization, but we want to go back to decent profitability.

And on forward, we expect an EBIT performance to be better in 26 than 25 million with a substantial improvement.

Longer term and Tom round needs to go to a double digit, of course, EBIT margin, there is no way that it doesn't go back there. And so for the same with the test of royalties to be paid to the IP owner of the brand. So both brands enjoying journey towards a scale that is much higher than the 300 million that we see today, [indiscernible] of dollars. -- enjoying scale, both at this point, they are ready to enjoy that scale and go to a profitability that is needs to be double digit.

Perfect. And on consumer confidence in the U.S. and the U.S. market overall, I'll leave it to Gill to comment.

No, I would say the confidence remains pretty good across the states. We don't see any negative. We planned another good year as it was last year. in all 3 brands, in particular Genia and Tom Ford. However, also with Sombra, we are building a stronger retail network that should help. We have a couple of openings for both Tom for angina across the year that will materialize and give us an ever more homogeneous and stronger network distribution across the country. Maybe a word on Sax Group since it's a strong wholesale of ours. I think that it seems they are moving according to plan.

We have shipped spring summer, and we decided to produce full winter. And so we keep our offering across, but we do believe that the Saks Group, we remain an important partner of ours in the future to move ahead together. So we were reassured by the validity of the plan. And surely, we supported them after having been hit last year, I think that we decided to support our front beginning and I think it will happen. And other important thing is Latin America. Latin America, we are 1 of the leader in luxury because the brand is known has been known -- I'm talking about for many years and the fact that we have relaunched our stores in the past few years, and we have good network, in particular stores in Mexico and Brazil with a similar level product that we first word, I mean, it's mix that customer, more local, which before it was buying all over the world.

And so I think that it's quite incredible, the growth, the percentage that we had in Latin America in the past 2 years and it will continue. So surely, our attention will be not only in North America, but also in South America, in particular in these 2 countries.

You'll know in China are you seeing SP1 Are you seeing encouraging traffic and traffic and conversion? Like how would you characterize the environment? -- what.

I'm traveling with Palo tomorrow, so I can be more specific about I'd tell you, as I said before, we have seen some signs of improvement here and there. I would say, in particular, in Hong Kong, I think Hong Kong and Macau have seen a more encouraging improvement compared to PC, but as I said, Chinese New Year, we did our plan. And I do believe that we touched the bottom, and it would be a gradual recovery. However, we remain prudent for '26. And if things will improve, we should share with you, for the time being, we remain cautious. -- on '26. We plan to des courses, but we see some signs -- some small signs of improvement.

John Luca, a follow-up on SG&A. Can that line item grow lower than sales? Or what should we know in terms of any nonrecurrings or the forecast on the SG&A side? And then lots of excitement on Tom Brown. I'm on the ASIC wait list as well. Nice job.

Definitely, the step-up in profitability needs to come from SG&A leverage -- this year, of course, if you go back, we reduced EUR 50 million more or less than the sale of Tom Brown, and that has not come together with a relevant drop of SG&A because it's SG&A-light business. So since we said that the drop going forward of our sales in absolute terms of Tomra is smaller, that dragging factor should not be replicated. So definitely, our journey towards improved profitability growth definitely through improved SG&A. And the other factor has been we invested in the last 18, 24 months in the structures of Penford, especially. And therefore, as I said before, we are coming to a sort of inflection point in the growth.

So those are 2 factors that should help us phase out from the deleverage on SG&A..

Can we ask the operator if there are follow-up of all other questions.

Our next question comes from Sasha Bonnet Way Morgan Stanley.

Natasha -- the first is just coming back on to the Middle East. I know you said it was about mid-single digit, high single-digit percentage of your sales. Could you sit in my country, is the UAE? Is it fair to assume that it's the majority, so over 50%? And then if you could split spending just between local Xpax and tourists, also the lease, I believe, at Velan last year, you said that you had plans to open more stores in the country in the region, sorry. Can you let us know what those plans are for this year.

And next -- my second question is, previously on the EBIT margin for 2026, you had guided to a moving sort of sideways in 2026. At consensus has $188 million with [indiscernible] million margin, do you see that feasible at this stage? And then my last question would just be just a clarification on current trends. You said since the start of the complex in March, you haven't seen any changes in trends in the rest of the world, right, excluding the Middle East, everywhere else is still on trend.

Thank you, Natasha. Okay. So I think the question on Middle East and the inserts the most important part I anticipate this, but I can leave you look at the comment a little bit more. There was a question on local expert and tourist, which we said we don't provide this kind of details.

Of course, the biggest impact is in UAE because it's the biggest by far market for the group there. And so when we talk about decline in the region, it's basically the decline in the in Dubai and Abu Dhabi because those are the 2 big markets where we see revenues coming from. The second was if we had openings, we have one opening. We have at the end of the year, around the end of the year, we have planned an opening in Abu Dhabi. We have already disclosed the growth we -- we have or we are not changing the plan.

So we are going forward with the opening because it was already planned, and we continue the execution of that store. -- those 2 stores.

2026 EBIT consensus.

What we have said is we said that the EBIT margin is sidelined. So we have -- if you take out the accrual of SAC, we had more or less 9% this year. So we are moving sideline. The percentage is that 1 -- of course, the absolute becomes a variable depending from the revenues. And so far -- so we have -- we are we are seeing revenues in the range of the EUR 2 billion. But of course, it's subject to the length and the impact of the disruption in Middle East in the next months or weeks.

And in terms of current trend, the last question from Matachewaif we have seen any difference after the war apart from Middle East.

I already commented no. We are quite impressed by the resilience the rest of the country. And so we'll -- we are on. It means that we are doing the right things, but the good thing is not only with Xenios expected, but they are the 2. We are doing well with the 3 brands, I repeat. -- even after the contracted a few weeks ago. So let's be positive to continue the trend because we think we know what we are doing. And there is an extremely clear strategy for each brand I think we finally have 3 good organizations. I think the new -- nobody asked about the new governance. I'm going to volunteer to say that. I think he's working on I'm joining not the rest.

I'm working harder probably now than before. But besides that, I think that the new team is proceeding very well increasing value and doing the right things and in making sure that the 2 brands that we have -- that we expect as growth, which are component on for are well supported by headquarter and by the leadership of Gianluca supporting the other CEO. So I think that is good. I'm glad that we did corregiously what we did last year because we are better placed with the organization than we were before.

No.

I'm good. Actually, 1 just thing on the Middle East. What's the split between retail and wholesale, if you can share?

Retail wholesale Middle East Vena is basically entirely retail. We have already also taken over Qatar. So there is a small portion in an yes, that is the most relevant wholesale business we have on Zen. To for actually steady is 100% wholesale and -- and Tom ran is not really relevant. So I wouldn't.

See, when we say slim franchising, and we still have that on for to brown logo. It's not that we sell specialty surgeons -- is somebody else runs the stores for us.

Comfort, we have a franchising monobrand stores.

Thank you to you. Thank you, and next one.

The next question comes from Chris Dow -- please go ahead.

Thank you. Luca Paula Christal from CLSA. I have a couple of quick follow-ups. So firstly, it's about Chinese demand. We are very happy to see and about expectation current trading in 1Q and also ending tax guidance for the full year, flat year-over-year. So just wondering that if the current improvement that you see from Chinese it's more from the new consumer recruitment or existing consumers? And also, maybe could you please share more that which price points of Setco brand are seeing more of the acceleration that's from 4Q '25. This is the first question.

My second question is regarding the sales density in China compared with the global average of senior core brands. So basically, where are we now? How does the substance in China look like compare global average. So because we know that there will be a couple of store optimizations in the midterm for Zegna core brand. Also, we will also continue with proton innovations, strong engagements with our core community. So do you have any preliminary color that how the midterm satiety recovery in China will look like? So this is my second question.

And the third question is a quick follow-up on Japan, South Korea. Maybe that is not the biggest clusteral regions, but still actually people also cares about the demand trends. basically, how do you see the demand moving in 1Q 26 of Japan and South Korea and also the outlook?

Okay. So Chris, long questions. Of course, there are some details that we might better discussed after we provide the Q1 results in end of April. But in any case, on -- the Chinese demand, the question was the current improvement is also from new demand from new consumer or if we can.

It's pretty balanced. It's pretty balanced. We are seeing both new clients coming in also through the postage that we remember, it was 1 of the areas of untapped opportunity in China. And so we see new customers coming in as well as the execution of the brand elevation that is bringing in Terance or doors. So I think we are working on both sides of the customer spectrum -- so this is on China. So there is not 1 angle only. It's both. The second was.

Yes, I will increase also the personalization because we opened the Cabot in China and in the rest of Asia, and we want to make those productive. So those are enhancing the possibility to have potential new customers that want privacy in what they buy, they want to find products slightly different than refined in the stores. So I think that this is something that we expect improvement this year in particular in China.

The second part was on sales density in China, but I would like if you comment on the call end of April. And then on Japan and Korea, if you see some improvement.

I confirm that they are growing well, both Rest of APAC in general, it's going well. And specifically for Xenia and Tom Brown. And for this smaller, it's much smaller in that area versus on ground, but those brands are in the current trading, they are performing well.

But I think that there is an opening of the inter shop of Tom brand shows very good results. And I think that also the Ginza so often, we see good traction also with the local. In the past few years, there were lots of Chinese, now less Chinese and more local. And it seems also Korea is coming back after a couple of years of slowdown and starts Asia or also, I would say, we see some improvements in that part of the world. And actually, we have sent in our organization, we put attention to make it happen because there is a room for growth for all the 3 brands.

Our final question from the phone lines today comes from Maria Matter with Bernstein.

I have 2. First 1 is actually a follow-up on current trading because we have been speaking to your peers this week and a couple of them mentioned weaker-than-expected tourist trends in Europe. I was just wondering if you're seeing the same thing for this quarter? And then the second 1 is on marketing. Obviously, you've managed to maintain marketing spend flat the pile activations and the 2 brannon that are ongoing. And I was wondering how you were seeing marketing spend for 2026 as well.

Okay. The first 1 is current trend in Europe. And the second 1 is the marketing spending because we hear you a little bit far. -- if I'm not right, please correct -- the first question is what we are seeing in terms of current trend in Europe, the -- the second 1 is marketing spending, how we allocate the market is spending -- in '25 and the budget for 2026.

So Listen, in Europe, Bologan I were traveling quite a bit across the major European capital, and we see a good trend. We don't see any different trend as compared to last second half of '20 or '25, and we see a good resell we still see good traffic by force. It's -- so no major differences from what we saw in particular in Q4. We have some new resource stores that in winter, they did fairly well. We did some events in particular, what we resumed to do tranches in particular, taking advantage of our made-to-measure service. And so as planned, I would say, no particular worries on that side.

Hopefully, we will see for the summer enough for us. So that's the thing to watch. But so far, okay.

Marketing I think we said that we are heading into 2026 with an incidence of around 6% of marketing spending on revenues. That is our through an then it could be slightly more, slightly less, but that is our normal lending spot.

We have market initiatives that we said are important. We move from sport in a way to more culture at -- and I think this initiative in particular with the art world, I mean, are from Vienna to Arasu to what's his name the Aspen Yes, the trend Yes, free -- the -- I think that will help us nurturing netting customers that should be resilient, but I think it's a good way to share some values that are related also to the world of in -- and so I think that environment and ours, I mean, are something that we are putting money into the marketing budget for this year.

And I emphasize every time we do a show, we create an event. And so I think that this would be additional business that we can create that is resilient.

Thank -- are you if you can have any follow-up question, Maria. I think -- thank you, Maria too.

We have no further questions on the phone line. So Paula, I will hand back to you.

Thank you. So thank you to all of you for the many questions today. So as usual, if you have a follow-up, we are here, Rich and myself, Alicia first of all, -- and we will join person because we have our call on April 30 for the first quarter results and our silent period starts on April 1. I wish you a little bit in advance, but at ease to you all -- thank you.

Thank you, everyone, for joining us today. This concludes our call, and you may now disconnect your lines.

Hello, everyone, and thank you for standing by. The Ermenegildo Zegna Group FY 2025 preliminary revenues beginning in 1 minute's time. We thank you for your patience.

Good afternoon, good morning, everyone. Thank you for joining the Ermenegildo Zegna Group FY 2025 Preliminary Revenues Call.

Please note that today's material and presentation are available under the zegnagroup.com website. Joining us today, the ZEGNA Group leadership team, including Gildo Zegna, the Group Executive Chairman; and Gianluca Tagliabue, Group CEO.

Before we begin, we need to point out that the team will make certain forward-looking statements during the call. The group's actual results may be materially different from those expressed or implied by these forward-looking statements. Also, these statements are subject to a number of risks and uncertainties, including those described in our SEC filings. Please refer to the forward-looking statements' cautionary statement included at Page 2 of today's presentation. I will now hand over to Gildo Zegna.

Good morning and good afternoon, everyone. Thank you for joining today's call. Our first call as Executive Chairman and [indiscernible] Tagliabue as Group CEO. Very exciting indeed.

As you know, in November last year, we announced a new leadership structure, a positive step forward for me and for our group, having appointed Gianluca Tagliabue as Group CEO; and Edoardo and Angelo Zegna, my two sons, members of the forth generation of the family, as co-CEO of the ZEGNA brand.

This decision marks an important milestone to further strengthen our group and smoothly prepare the next generation of leaders who will carry forward our legacy, just as we have done for over a century and will continue to do so.

By 2025, also is an important year for our business performance, particularly for the ZEGNA brand. The group total revenue were EUR 1.9 billion with ZEGNA brand reaching EUR 1.2 billion. These results were driven by the strategic DTC channel. In Q4, both the group DTC and ZEGNA DTCs delivered a sound 10% organic growth. With ZEGNA particular, this result have been led by Americas and EMEA with also China slightly improving, although remaining volatile.

The ZEGNA brand strategy over the past years has been clear and coherent. In 2025, we delivered consistent and strategically aligned milestones from the fashion show in [ Mirati ] in Dubai, to the Airbus partnership from the launch of the Villa Zegna collection to [indiscernible] ZEGNA Miami. And last but certainly not least, the recent beautiful for winter '26 fashion for Milano, Family Closet, where the brand opened the doors of the Family Closet. Taking pieces from the family wardrobe including mine as well as those of my grandfather. Because it closet is much more than space, in which we keep our [indiscernible] protected. For us, it is a shine when the beauty of cherished item is celebrated.

In the Family Closet, [ Alessandro Sartori ] represented timeless collection. This is designed to remain alive for generation to come because only memories can define identity and give the unique meaning they are over lifetime. Something only ZEGNA heritage and mastery can create.

This show was acclaimed by press, buyers and clients is one of the best these menswear fashion week. The fashion show was complemented by [ Villa Zegna Milano ], our private club. An invitation-only temporary store reaffirming once again in Milan, the strength of this format, which allows ZEGNA guest to experience our family heritage century old textile excellence and leadership in craftsmanship and [ Sumisura ].

Travel to people, starting with [ Sartori, Edoardo, Angelo ], and who conceived this concept and continue to deliver strong and consistently improving results. I just want to emphasize that unless we had our [indiscernible] from textile down to the clothing chain, we could have never have achieved these results. So a bravos also to all factory people and the know-how of our tailors and artist done in the factory.

Let me now comment on to Fashion which in '25 was a year in which we further shape the evolution of the brand's fashion business. The first collection designed by [ Hyder ] which is the winter '25 collection, received very good results, as noted during last earnings call.

In the past weeks, we have been introducing the spring '26 collection the second buyer that is, as we speak, also receiving a real positive response in the store. But above and beyond this, the team led by [indiscernible], is working to cement TOM FORD is a true brand of influence in the high-end fashion industry.

We know that our churn is not yet complete, but the team is built. The plan is set, and we now have to execute together. Our priority for '26 will be to reinforce the brand momentum and resonance and to expand its high-end customer base.

Moving to TOM FORD. In '25, we continued on our part to reduce the brand exposure to the wholesale channel. As you know, we appointed [ Sam Lavan ], CEO, to transform the company into a retail-first organization. I am pleased to see the initial although timid results of this strategy.

Q4 DTC delivered good growth, even if still driven by new openings. We all know these results are not yet where we want them to be, but they confirm that we are starting to take the right step.

Our focus for 2026 will be to deliver sound DTC comparable store sales growth to sharpen our collections and marketing strategy. This will allow us to evolve our customer base and continue elevating the quality of our wholesale partner.

And lastly, I want to comment on our Filiera. It continues to be our state of the laboratory, where we test, refine and develop fabrics that represent the absolute pinnacle of the luxury world and where our craftsmanship know-how continues to set us apart. We remain the custodian of this heritage while strengthening it further because we know it is what makes us different from any other player in the history.

The [ Trofeo ] fabrics, our accounting fabrics born in 1965 interpret today and presented the ZEGNA fashion show is a further evidence of it.

Looking to the year ahead, I believe we all agree that we must face a new normal. And by new normal, I mean, award more uncertain and less predictable.

In this context, agility, coherence, vision, speed, together with talent will make the difference. We know the road may not always be linear. But we must face it with determination, prudence. And with the same coverage that has always distinguished my family and our group. The courage to be pioneers are remaining through to who we are.

As the main shareholder of the Ermenegildo Zegna Group, our family and I personally are fully committed to growing it and to making it even more solid for the generation to come. This is the undisputed goal for Gianluca, Edoardo, Angelo, Lelio [indiscernible] and myself and for the entire leadership team.

Thank you. Good morning and good afternoon to all of you. Before commenting on the full year '25 revenues. Let me begin by expressing my gratitude to the Board, our shareholders and above all to Gildo for the trust shown in my regard. It is an honor as well as a clear responsibility to step into my new role, and I will carry it out with the utmost respect for our unique century long heritage.

In my new capacity, we'll work closely with the CEOs of our brands, Sam, Lelio and [indiscernible] to ensure that we can fully leverage the group's strengths in an integration and accelerate our ambitions.

At the same time, I will continue to oversee our manufacturing platform of finished products and corporate functions. [indiscernible] has been a mentor to me and I know he will continue to stand by my side and buy all of ours to continue guidance and safeguard our unique legacy. So thank you, Gildo.

Let me now move to Page 8 of the presentation. As always, I will comment on the organic performance, which excludes foreign exchange impacts and therefore, better reflects the underlying business dynamics.

In 2025, we reached EUR 1.917 billion in revenues, plus 1% versus last year and EUR 591 million in Q4, up 4.6% organic. In the last quarter of the year, ZEGNA brand reported EUR 362 million, plus EUR 7 million, driven by the DTC channel that has been landed at plus 10 for the brand. Thom Browne brand reached 91% at plus 1.4% organic and TOM FORD fashion reached EUR 98 million, up 1.5 points. Let me now move to the following pages for a deep dive.

Turning to Page 9, we comment on the performance by brand in the quarter. ZEGNA brand recorded [ 362 ] in revenues plus 7% growth, driven by the solid sequential acceleration in the DTC channel, specifically in Europe, Middle East and Americas. Thom Browne reported [ 91 ] in Q4, plus [ 1 ], also in this case, driven by a good performance in DTC, driven by new openings. TOM FORD fashion landed at EUR 98 million revenues, plus [ 1% ] organic with the DTC channel growing faster.

Finally, we observed textile growing at plus [ 1% ]. Moving now to Page 10. We see revenues split by geography. Europe, Middle East and Africa represented 36% of total revenues in full year '25 and was up plus 7% in Q4 and with a solid performance in the DTC channel, in particular, at ZEGNA brand, which offsets a negative impact of the wholesale channel rationalization.

The Americas, which accounted for 30% for the full year revenues recorded plus 16% increase in Q4 despite the challenging comparison of the last quarter of last year. This performance was underpinned by the strong DTC momentum at ZEGNA brand, which continues to deliver outstanding results thanks to the robust brand momentum and the team fully capable of executing our strategy. In the ZEGNA brand continued to grow sound double digits in U.S. as well as with the U.S. consumer cluster.

Moving on to Greater China region. In full year '25, the region accounted for 23% and of total revenues. So it's as of the incidents compared to the time of listing of our group in 2021.

In Q4, GCR reported a revenue decrease of minus 10%, a sequential softer performance compared to Q3, which is only due to Thom Browne and TOM FORD and to the wholesale channel. Across this and this case of [indiscernible] across the three brands, whose quarterly performance was influenced by different delivery time.

ZEGNA DTC specifically improved in the quarter, while still being negative. We expect China to remain volatile throughout the year. And as you know, we planned accordingly to the budget of 2026.

Last, rest of Asia Pacific in Q4 reported plus 5% growth, driven by sequential improvement at both ZEGNA and TOM FORD fashion, specifically in Japan and Korea.

Moving to Page 11. Let me go quickly through it since we will comment on the trend by channel for each brand. I will only highlight that the DTC channel at group level reported plus 10% growth in Q4 and sequential acceleration compared to plus 9% in Q3 and in full year 2025, accounts for 82% of group's branded revenues, which, as you know, excludes textile and other revenues, which are B2B businesses.

Let's move now to Page 12, where we deep dive on ZEGNA brand revenues by distribution channel. In Q4, ZEGNA DTC revenues grew 10%, accounting for 88% of full year 2025 branch revenues. As we mentioned, we saw an acceleration of performance in the last quarter, notwithstanding the solid base of comparison across regions in Q4 of last year. As we mentioned, the Americas and Europe, Middle East and Africa continued to report solid double-digit growth. Great China region revenues remain negative, but with an improved trend compared to Q3, revenues from the Chinese cluster improved sequentially in the quarter to a mid-single-digit negative.

At the end of December, the number of ZEGNA [ DOS ] was unchanged compared to the end of September.

Moving to wholesale, where the brand revenues were down minus 17% in Q4 and accounting now for 12% of overall revenues for the year. The performance reflects the deliberate actions put in place by the brand to rationalize the distribution of iconic ZEGNA products and to increase direct control on the distribution channels. Moving to Page 13.

Thom Browne revenue split by distribution channel. DTC revenues for Thom Browne were plus 11% in Q4 in sequential acceleration driven by Americas and Japan, supported by some relevant store openings, such as New York [ Madison ], Los Angeles [indiscernible], Palm Beach and Ginza Tokyo. In the quarter, Thom Browne had one net lost closure in Asia.

As broadly discussed during the year, the brand is continuing its activity to defocus from the wholesale channel, reducing volumes injected, thus the wholesale channel reported a minus 14% in the quarter and minus 40% in the full year.

As already anticipated, we will continue to see negative performance in the wholesale channel also in 2026, thus, at a significantly lower degree than the 40% seen this year.

Let's now move to the last but not least, TOM FORD fashion revenue split by channel, Page 14. In Q4, TOM FORD fashion reported DTC growth of plus 5%. This performance reflects a sequential deceleration versus Q3, as already indicated in our prior call since the higher base of comparison and the decision to place significant emphasis on [ Hyder ] first collection in Q3, which has been supported by strong commercial and marketing activation.

Let me also anticipate that the brand has started the year positively, benefiting from the very good reception of the spring collection. At the end of December, the number of ton for fashion dose was unchanged compared to the one-off September. The wholesale channel reported minus 4% in revenues in Q4, in line with our strategy to strengthen our control on distribution.

On Page 15 -- Page 16, you'll find a summary of the group's store network, which is now composed of 282 directly operated store for ZEGNA, 123 [ DOS ] for Thom Browne and 66 for TOM FORD.

Before opening to the Q&A, let me conclude with a brief comment on [ SAC ] Global. [ SAC ] Global filed for Chapter 11 bankruptcy protection on January 13. [ SAC ] is an important partner for many luxury brands, including our group. We are closely monitoring the situation [ SAC ] works to stabilize its operations and to negotiate terms also with respect to past due receivables with all vendors, including ourselves.

At this stage, these discussions remain ongoing, their outcome is still uncertain. Our group has the financial and business strength to absorb this extraordinary event considering the limited incidence of [ SAC ] Global on the ZEGNA Group revenues. Paola, now I defer to you [indiscernible] session.

Thank you, [indiscernible]. And please, operator, can you open the Q&A session?

[Operator Instructions] Our first question comes from Chris Huang with UBS.

It's Chris from UBS. First of all, congratulations on the very strong results at the ZEGNA brand DTC. So I'll actually start with my first question on ZEGNA brand DTC. I was throwing some calculations and looking at the comments you just gave on Chinese consumers, it does seem like the brand, excluding Chinese, accelerated to in Q4 around high teens percentage growth year-over-year. Can you maybe confirm if that is the right understanding? And also connected to that, what is the move you are seeing year-to-date in 2026.

Of course, if we put aside China due to the different timing of Chinese New Year, but I just wanted to understand a little bit more. Any color you can give on the start of the year for other markets?

Second question on FX. I think we've been hearing some of the other peers reporting so far in Q4. So with the current rates in mind, can you help us a little bit on what kind of FX impact you are expecting for 2026 on an EBIT margin level, how much of a headwind we should expect.

Okay. Thank you for the questions. I think there are both for Gianluca, even if maybe on the first one, I'm sure that also Gildo wanted to add some color on the start of Villa. The first 1 is on the calculation ZEGNA DTC as ZEGNA DTC as Chinese [indiscernible] is on the high teens as calculated and then on the ForEx.

You're good in math, Chris.

Yes, I think it's the right calculation. In terms of ForEx, we have seen 2.6% headwind on currency this year, it's the delta between reported growth and organic growth. We are seeing something similar for the year. So that is our budget if we expect currencies this way. Of course, part of that can be mitigated by hedging. Of course, we have hedged specifically very much so spring '26. We are already well covered on full '26, but of course, this will fade out. So there will be definitely an impact also from currency.

That's why I think if you remember, I talked about March '26 moving sidelines because inevitably, if this is to 3 points will have partially an implication on the numbers, still partially covered by hedging, but not entirely.

And any color on the start of the year, excluding China, that Chris is saying, we know that the Chinese New Year is having an impact.

Okay. So Chinese New Year, I don't need to remember, but last year was 29th of January this year is on the 17th of February. So comparing January to January, we are against the peak season of last year. So if you isolate if we isolate the effect of the calendar of Chinese New Year, we don't see a trend significantly different in DTC, of course, from the one of Q4 2025. .

Any color by market.

No. We see signs in America. America keeps big our #1 market in terms of percentage growth, followed by the Gulf area. And I think European is doing pretty well. So we just are past January and in January is following the trend of Q4. So, so far, so good.

If we answer, can you share us the second -- thank you. Operator?

Your next question comes from Anthony Charchafji with BNP Paribas.

It's Anthony from BNP Paribas. First question would be on ZEGNA Retail and the productivity that is now quite close to 20,000 per square meter. I think you're targeting close to high single-digit improvement per year. Can you just remind us the key drivers here? And also remind us the rollout of your new perfume for the ZEGNA brand and what impact could it give for full year '26.

My second question would be on the profitability indication probably for this year. if I may, the consensus is at around EUR 173 million. And if you see some upside or not given the strong DTC?

And my third question, and I'm a bit sorry to ask about [ SAC ], but really curious to know your exposure at group level. You have a few shop in shops for especially ZEGNA and TOM FORD, I think. And on top of revenues, maybe an indication on the inventory exposure and if there is anything to flag in terms of potential provision or how we should model this?

One, yes. So the first question is on vena productivity and the key drivers for this year and also going forward. So for sure, it's for Gianluca as much as the [indiscernible] rollout, which has just happened in any case, so very early. Sorry, the second question, did you ask consensus '26 or '25 million?

EBITDA '25, okay? And tax exposure, I think they're all really for Gianluca.

So the ZEGNA DTC, you said it's on the 20,000 per square meter. So we are -- of course, that is one driver of for -- not just for 2026, but for the 3 years.

And the drivers so far will continue to be mix and price, price mix together. Of course, we have been elevating the offer successfully, and it's keep on growing. So for instance, now we have launched a new version that is the number version of Triple Stitch, which goes in the same direction. We are intensifying the density of the collection of more will come through the year.

So mix will continue being the driver of our growth, together with events, which means the activations that we are doing above and beyond the stores. The Villa Zegna is a perfect example, but there are some that are less visible, which are suites or drag show. So that world of elevated offering elevated moments is the main driver of our increase of productivity.

ZEGNA brand from a client perspective, you see this reflected in the growth, which is very positively double digit on ZEGNA brand still in 2025 and will be continually doing so next year, while we not only foster the already existing ZEGNA brand, but as we have exposed in some of the recent meetings, we are targeting what we call the doors that are the clients that are slightly lower the threshold of ZEGNA brand, that we want to then elevate and bring them into the threshold of the ZEGNA brand, which I recall is some clients that are spending EUR 50,000 per year with us.

In terms of consensus, the one that you mentioned, I think for 2025, EBIT is reasonable. Of course, pending the effect of a bad debt accrual that is linked to [ SAC ] Chapter 11 evolution. So if you isolate that, yes, it is reasonable. We need to take into consideration which is something we cannot do today because we are monitoring the evolution, and we will continue doing so right until March, when we publish the numbers, what is the situation and the needed by the tool that we have to book, which is, of course, something that is extraordinary and it's affecting the exposure.

You mentioned inventory. I think it's not an issue of inventory. It's a question how much we need to accrue in terms of bad debt. Inventory is not an issue because, it's more on the credit side.

I think I also answered on the [ SAC ], we cannot comment more than this because it's all in floods, and we are having clear conversations with them. And I think more than this, we cannot comment.

I don't know if the question any was also on the fact overall revenue exposure or if -- but in any case, I think it has been said, but it's in the low mid-single-digit.

The impact of -- so the overall magnitude of [ SAC ] Global in the different dimensions at NIM. [ MBG ] represents a low single-digit incidence on our group's revenues. So that's why we faced the situation with -- looking forward with optimism that we can offset the impact of the situation.

Thank you. Operator?

Our next question comes from Chiara Battistini with JPMorgan.

It's Chiara Battistini from JPMorgan. I have a couple of questions, please. The first one on the U.S. that strongly accelerated in Q4. I was wondering if you could keep that a bit more on the color on the drivers of this acceleration, especially between new customer acquisition versus the returning customers that you're trading up? And then also whether you could share some details on basket size and conversion and ASP tools are evolving, especially in the U.S.?

And then the second question on the wholesale numbers at group level for both Q4 in 2026. On Q4, I was just wondering if there was any impact from stock. So maybe if you held back any shipments that might have the negative impact on the wholesale development in Q4?

And then any early guidance on how to think about wholesale for the three brands into 2026, please? Thank you.

Okay. I think the both for Gianluca,but then if Gildo wants to comment more on the U.S. market, I'm sure that you can give us some nice colors and on the sales look share.

It's a mix of things. I think that ZEGNA has continued to be extremely successful, both with loyal clients and with new clients coming in, whether through the [indiscernible], through a [indiscernible]. So it's This, of course, will has been an important driver. So ZEGNA is a very round acceleration across the board. TOM FORD -- Thom Browne, there is definitely, as I said before, some openings, which has generated new clients whether it's New York [indiscernible] or it's Metros place.

In TOM FORD has been a very good acceptance of the new collection that has been put together, starting in August and September because that was the peak moment of pushing the collection of either, but also through Q4. And as we commented, at the beginning of this year in January, we have seen good momentum in spring. So I think that three brands are seeing good traction in U.S.

In wholesale, your question, we are definitely wholesale will not be a driver of growth in 2026. We expect the decrease to be lower than this year for the three brands. Of course, it will also depend from the [ SAC ] evolution. So at the moment, before any major change on the [ SAC ] landscape, the wholesale channel is expected mid high single-digit negative for the year with a higher decline on Thom Browne, which could be in the low single -- low double-digit mid-teens range. So that is the scenario that we have in front of us.

Of course, isolating any situation on [ SAC ] that for the time being is still liquid in terms of evolution.

And just to confirm also for ZEGNA brand...

Sorry, for the ZEGNA brand, the wholesale channel will remain negative in 2026.

Yes. It will be -- as I said, if I said high single-digit group and Thom Browne is low double digit means that ZEGNA will be negative and below. .

Thank you, Chiara, and follow up, we can move to another question -- another analyst sorry.

Our next question comes from Bhumi Kanabar with Jefferies.

Hi, Bhumi from Jefferies. Congratulations on the results today. Just two questions from me, if I may. Are you able to quantify what [ Dubai Zoloto ] and Villa Zegna Milan contributed to organic growth in Q4?

And then secondly, you commented on your happiness with EBIT consensus for the full year. But on the revenue base reported today, consensus has about a 13.9% margin for ZEGNA segment. Do you think this can get above 14% or close to 15% given the operating leverage from Q3 and Q4?

Okay. On Villa Zegna, well, that has not impacted Q4, if this was your question, but I leave Mr. Gildo to comment a little bit more on Villa Zegna, which I think is a very important concept that we will continue to leverage on.

On the EBIT, in particular, the question was on ZEGNA brand EBIT for full year 2025. If I understood well, I'll leave then Gianluca to comment.

I want to stick to the comment on consensus at group level for the time being because [indiscernible] also -- but when we -- I think Anthony was asking, if we confirm the consensus of EUR 173 million at group level, yes before [ SAC ] accruals Yes, of course. Of course, the numbers of ZEGNA DTC have been specifically positive. So we might see some impact on that positive impact. Yes, that is -- that is to be expected.

Okay. village, it's a long journey. We started -- if you see on a go with this project. which I think that highlights the personalization and the high-end product of ours. And I think the clue there is that we try to localize Villa Zegna. Villa Zegna is not one alike, but we try to make them one different than other. And I think this is an exciting journey because also a customer that has bought before can find newness and differences on the Villa Zegna. That's number one.

Number two, I think that more and more customers are embracing this project because it's about experience. It's not about selling because most of the product, you can find in Villa Zegna, you cannot find them in the store. And so I think the level of service, the level of surprise, ever experiences the level of product innovation created by [ Alessandro Sartori ] are quite unique.

Our intent is to continue this journey, we have a couple of the destinations set that are still seek for this year. But surely, they will complement new store opening and maybe also market where we don't have stores. because it gives us the possibility to reach our customer without knowing of their stores.

So Milan was extremely successful, more than what we expected as has been Dubai. And there's a matter of fact for you that want to build this time in Milan, we'll still be there for several months to come. And so enjoy your journey. We've got to think that is something very, very special.

Thank you, Bhumi. Can we move to another analyst or investors.

Our next question comes from often with Oliver Chen.

Hi Gildo and Gianluca, congrats on the leadership transition. Regarding what you're seeing in Greater China as well as the cluster, are you expecting things to get less negative there? I know it's a very dynamic and volatile environment. And what are you seeing in terms of traffic and/or what you're monitoring with that consumer and how it interplays with your results.

Second, regionally, Americas continues to really execute, but the comparisons get tougher. Do you anticipate double-digit increases at Zegna brand to continue? And which products within the ZEGNA brand have been performing better versus less good as well would be interesting to know. Thank you.

So a couple of questions, very interesting as always. The first one on [indiscernible]. Are we seeing the environment less competitive? And what are we seeing there? And then the second one, which I'm sure Gildo would take it is how we executed in America even if -- and what we expect there, even if the environment ended base comparison for us is becoming increasing challenges. So I leave the first one for Gianluca and the second one to the [indiscernible], is okay for you.

So in order to see the momentum in China, it's been there recently, early January. So probably we can see some slight improvement in Hong Kong, if we want to see the overall picture rather than in Mainland. Mainland itself, we are still taking a prudent approach because the environment is volatile. Then we can take a draw more definitive conclusion after the end of Chinese New Year end of February.

So for the time being, I would not raised the flag that we see a change in momentum probably with the exception of Hong Kong.

And for our momentum in the U.S. and our market?

I said it before, I think our momentum in the U.S. will surely continue organ because we are becoming better and better, thanks to the new product offering that is well received by our customer. And number two, we are opening new stores. There is surely a good trend, not only for ZEGNA, also for TOM FORD. And I think that for Thom Browne, we opened a good number of stores also in the mid recently. So we hope that the results will come in '26. So overall, still bullish on America on the three brands. We know the -- there is this situation that, as Gianluca said, will be monitored, but we remain positive on the outcome of the situation. We are continuing investing in both marketing and in store development, which we have done a few years ago. And I think the results are coming, thanks to that foresight and I believe in a market that seems to be resilient to also geopolitical situations, for us at least.

On wholesale -- I had a question on wholesale. Where do you expect it's 12% of resin in, but when you look longer out, what do you think the mix of wholesale as a percentage of revenue should be perhaps at ZEGNA as well as Thom Browne. And on the Thom Browne strategy awareness and marketing is obviously a big opportunity as well as continuing to commercialize the Thom Browne business. Just would love to know where you are in that journey and key catalysts ahead there as well on the Thom Browne brand.

Sorry, you're asking only about Thom Browne or about the three brands?

Wholesale at ZEGNA and then the mix of wholesale ZEGNA and then Thom Browne, just strategy awareness sell and change...

On ZEGNA, we are getting close to 90%. I mean, retail versus wholesale. And I think this journey has started quite a while ago when we decided to convert the wholesale into concession. I think that was an important step we have taken. And plus, as the productivity of the store client surely that was a very favorable situation.

On Thom Browne, it's a transition. And surely, the future will be more in direction in retail. We have decided to cut the holds in the past 2 years. And I think that it has -- we still have some -- a little more to do, but I think most of the work has been done. And I think that retail can have a good progress because we have enough stores of from other world, it's just a matter of to improve the productivity and to become a stronger retailer.

And on TOM FORD, I think America is very strong. We are going to strengthen our distribution in Europe, we can anticipate the new store that will open in Paris on Central are by the end of the year. And we are opening also store on the same road. So this is a good groups adding a few stores in America and Asia remains a big territory to be done that will be coped in due time. But overall, our future is more and more retail and less wholesale for the entire group.

Thank you, Oliver. And let's go to the next one, if there are further questions.

The next question comes from Adrien Duverger with Goldman Sachs.

Adrien Duverger from Goldman Sachs. First, congratulations on the great show in -- for ZEGNA in Milan earlier in January. And then I have Three questions, if possible. The first one would be on the performance of the Chinese cluster in the fourth quarter and on the underlying demand trends for the group and by brand. And also what you would expect for the rest of 2026?

My second question would be on pricing. How do you think about the pricing environment and the overall opportunity to continue to drive higher pricing from the product mix?

My last question would be on the higher spending cohort. I think we've seen that they have been quite resilient so far. Has there been an increase in the proportion this year versus last year in your revenue numbers? And if so, do you see any difference between the different geographies?

Thank you, Adrien. Okay. So in the -- for the cluster for the Chinese cluster, sorry, we might not have a side. But when we comment in cluster, we comment in ZEGNA brand. So the comment on the cluster was referring to ZEGNA brand.

In terms of pricing, how we see the price environment and spending cohort. So the in import, which has remained more resilient this year I leave to a Gianluca and to Gildo to comment on this. On the pricing Gianluca and then we move forward on the cohort.

Pricing, as we see 2026, we are facing spring and fall with mid-single-digit price increases in order to offset the currency evolution. So that is -- the pricing we are taking is in that regard. It's not for the sake of repricing, but to offset the currency fluctuation. And on the spending, I spending cohort, the evolution, I refer to Gildo.

Yes, the success on our spending. I think that we have, in particular, in ZEGNA, I think we have set up a goal to go after the big spender. And I think that all the product development is in that direction including the personalization project, which we are second to none.

And I think every time we apply those assets, we see that the customer expense. And so I think that the increase will come more from the high tender than from the less vendor. And so I think that -- our goal is to continue go in that direction, both for ZEGNA and [indiscernible], and we are preparing a sell to do the same with some round know that the personalization project is fueled by the safer [indiscernible] supply chain.

So this is an advantage. So there is no reason why if it -- it's well done for cannot be done the same for TOM FORD and Thom Browne. And I think this is something that we are developing and strengthening this year for the years to come.

On spending cluster, I can add the ZEGNA side that we see extremely good momentum on the clients above the 25,000 pending. Those are the ones that we nurture in order to get to ZEGNA brand and of course, also the ones above 20,000 -- 50,000 are the ones labeled at ZEGNA brand. So those cluster, 25 to 50 and 50 and above are the ones that are driving the growth on the ZEGNA brand specifically.

On China, probably one thing that we already mentioned and will become more present in 2026 is the pruning of our retail footprint that is going on, both on the ZEGNA brand as well as on Thom Browne. So the numbers of the of GCR already in Q4, but even more in 2026, we will give preference to rationalization of storage to concentrate business in fewer better stores.

Thank you, Adrien. If you don't have a follow-up, we might move to the other question, the other analysts or investors.

The next question comes from Maria Meita with Bernstein.

I have two. First, could you please break down the growth at ZEGNA between price mix and volumes? And how do you see this evolving into the next year? And then second, what actions are you planning to undertake a ton for to sort of keep the momentum, the strong momentum from last year going into 2026?

Okay. Thank you, Maria. I'll leave to Gianluca to comment on ZEGNA brand price/mix and volume and TOM FORD momentum.

It's the driver is price/mix more than volume and will continue being -- this is the pattern. It's consistent with the trajectory and the strategy and the positioning of the brand. We want to focus on elevated items, elevated moments, elevated clients. So price and mix, price, as I said before, in order to defend the margins rather than just repositioning like-for-like to increase the margin, but to defend the margin and the mix, because we are creating more and more collection that carry sophisticated materials, more elevated details in the making. So its mix is the driver together with price.

In terms of the port momentum, how we keep this momentum into 2026?

TOM FORD will have both comp as well as space. So TOM FORD is today distributed in 60, 70 doors, and it's a brand that will deserve 100 stores in the midterm. So we will also use that lever. And for instance, in U.S., consistently with the success that we have seen, we are going to open a few stores in the year. [indiscernible] will be one, for instance, that we opened apart from Paris that Gildo mentioned before.

So there will be space and of course, all the activities that we have been putting together, investing in these years in retail team, merchandising, IT, CRM are all levers that we are deploying in order to replicate the same go-to-market model of ZEGNA. So the cadence of product, the activations of clients with CRM tools. All these are the levers that we expect to generate increased revenues on a like-for-like basis.

Thank you. Operator, I don't know if there are follow-up questions.

Our next question comes from Daria Nasledysheva with Bank of America.

I have three. The first one, to follow up on one of the previous questions on China. And also given your outstanding performance ex QCR as of today, is there anything outside of macro that keeps an your brand from closing this gap in performance in China versus rest of the world? For 2026 and also for the medium term because I think that's pretty important.

Number two, could you please share your thinking around development of your store base for 2026 across your three brands? Any indications that we could be using for our models and maybe anything to comment also on the CapEx cycle.

And the third one, can I please follow up on your thinking on EBIT margin development into next year? How should we be thinking about this, as you said, flattish because of FX between gross margin versus OpEx leverage as leverage.

Okay. Daria, thank you for all the nice questions. First one on China. The question is, is there anything on 2026 that it's a outside macro that can cause us for the let's say, limiting our performance in China, and I'll leave to Gianluca to comment on this. And then the second and the third are more numeric questions on store development and EBIT margin development on' 26.

I think that we monitor ourselves compared to competitors, of course, and I think we are seeing more or less in the same location, similar trends. So we don't judge to be a specific brand related topic. So it's more related to macro. It's more related to the appetite of spending that we are.

And of course, to the fact that There, we are not using space as a lever. It's vice versa, we are shrinking the network. So I think it's probably that is the combination of macro with something that is specific to us. I would just say the network that is not in our favor, it's more on the opposite.

In terms of development of stores by brand for 2026, you commented already that basically for ZEGNA you should assume no space or very little space contribution or not?

I want to -- we already mentioned on TOM FORD. We have definitely three stores that are in U.S. that are coming. One is [ Balarbor ], as I mentioned before, San Diego in [indiscernible]. There is Paris.

Very end of the year, so.

Yes, mostly, it will be on the second half on this one. And there will be errors [indiscernible]. On Thom Browne there is no impact on data space. Probably there will be some stability more than anything else. On ZEGNA, we have some openings. The most important ones that come to my mind are still a couple in U.S., San Diego Scottsdale. There is one in China, which is counterintuitive because we are reducing, but there is one that we are going to open in Shenzhen Bay, which is an important city from a technological standpoint. We are opening a couple of stores in Middle East in Riyadh and Abu Dhabi. These are the main relevant openings that we see going forward.

And in terms of margin, Daria, you comment on margin 26% to be flattish. And how you comment on this?

No, we confirm the movement on the sideline with possible some improvement on the margin, of course. But there is an impact on the top line coming from the deflation of the FX. So I would not enter into the detail, whether it's gross margin or OpEx. We have said that it will be more lateral than a steep increase.

I will speak to this. Thank you. And moving to the next one. Thank you Daria.

The next question comes from Natasha [ Bonnet ] with Morgan Stanley.

Congratulations on the good set of results at particularly the ZEGNA brand. I've got a few questions. The first, just going back to your comments on the group EBIT margin -- sorry, the group EBIT margin, moving sideways in 2026, what level of growth have you baked in for margins to move sideways? I see consensus has 5.4% organic next year? And do you expect TOM FORD EBIT to turn positive in 2026. And then the guidance, I guess, on EBIT, 12% to 2028, that's where consensus is. Does that still make sense?

Second question would be, could you please tell us your exposure to the Triple Stitch franchise in 2025?

And my last question would just be, you mentioned store rationalization at the ZEGNA brand and Thom Browne in Greater China. Could you tell us how many stores you're planning on closing this year and next?

Okay. Thank you, [indiscernible]. And sorry, the first -- well, we really lost a little bit in translation with all the numbers that you mentioned. But the reality is what I would like to call out is that actually this is a call on revenues. So we might leave all the questions on margins when actually we report margins in March, if you don't mind. .

So the second question you had on Triple Stitch, but I didn't get the real -- the actual question, sorry.

So it was your exposure in terms of revenue now on Triple Stitch. .

Okay, yes. So it's a line of the 15% on fiber that you remember, we said shoes overall, including also other shoes is around 20% of our revenues and Triple Stitch as we said in the 15%, and no changes from the past.

And the third question was?

The store rational...

The number of close store in China. Yes, right. So I'll leave this to Gianluca. Thank you, Natasha.

It's not specific to 2026. But in the midterm, probably we might have 10 stores that we are not renewing the expiry. So that is ballpark the on ZEGNA. We might have some others also on Thom Browne. TOM FORD is barely distributed. So I don't see a major impact from TOM FORD, but definitely on ZEGNA might be 10 stores. Not in 2026.

Over the medium term? Okay. Natasha, if it is final, we can move to the next one. I'm not sure if there are other questions on the line.

At this time, we have no further questions on the phone lines. And so Paola, I will hand back to you.

Thank you. Thank you to everybody for the many questions. Actually, we like them all. And of course, we remain at your disposal, [ Alicia ] in myself to any follow-up questions that you have, we are here anytime and we recover on March 20 for the full year results. Thank you so much, and see you or speak to you very soon.

Thank you, everyone, for joining us today. This concludes our call, and you may now disconnect your lines.

Good morning everyone. Thank you for joining the Ermenegildo ZEGNA Group Q3 2025 revenues Call. Please note that today's material and presentation are available under the zegnagroup.com website.

Joining us today is the ZEGNA Group senior management team, including Gianluca Tagliabue, Group CFO and COO, and Paola Durante, Chief of External Relations. Before we begin, we need to point out that the team will make certain forward-looking statements during the call.

The group actual results may be materially different from those expressed or implied by these forward-looking statements. Also, these statements are subject to a number of risks and uncertainties, including those described in our SEC filings. Please refer to the forward-looking statements cautionary statement included at Page 2 of today's presentation. 

I'll now hand over to Paula Durante. 

Thank you operator, and good morning also from myself, and good afternoon to everybody. Welcome to our Group Q3 and 9 months 2025 revenues call. As usual, for Q1 and Q3 revenues, today's call is led by Gianluca Tagliabue, and myself, Alice Poggioi is absolutely here with us. Our CEO, Mr. Gildo, will attend the February call on full year 2025 revenue. 

Let's then move to Page 7 of the presentation where we comment revenue trends. You know that commenting revenue trends, we want to focus on organic performance, which exclude foreign exchange impacts, and therefore, it is better to reflect the underlying business dynamics. This approach actually is particularly relevant to this year, given the sharp appreciation of the euro against the key currencies such as the U.S. dollar and the Chinese renminbi, among the others. And I have to say even more in this quarter and the next one. 

In Q3 2025, our group reported EUR 398 million in revenues, up 4% organic with a sequential acceleration of the DTC channel, which was up 9% in the quarter, with, I have to say, remarkable results across the 3 brands. 9 months revenues were EUR 1.3 billion. 

Let's then move to Page 8, and let's go directly to, I'd like to comment the performance by brand. In Q3, ZEGNA brand recorded revenues of EUR 249 million with a 6% growth. This performance was led by solid DTC, a solid performance in the DTC channel, particularly in EMEA and Americas.

Thom Browne revenues of EUR 48 million in Q3. The brand, although remaining slightly negative in the quarter showed a sequential improvement in both channels. TOM FORD FASHION, which reported EUR 66 million in revenues was up 4% organic, which was driven by the DTC channel, also supported by the good reception of the Fall/Winter '25 show collection. 

Last, Textile was flat in the quarter, while other revenues that you know are today a marginal part of our business and related to the finished product, the ready-to-wear garments that we produce for third-party brands, reported a 12% growth. 

Moving now to Page 9 and commenting by geographic area revenues. Starting from EMEA. EMEA represented in the first 9 months, 36% of the group total revenue. It's the first region of our group. The quarter revenues in the quarter were up 3%, thanks to a very solid performance in the DTC channel, particularly at ZEGNA and TOM FORD FASHION, which was partially offset by the negative contribution of the wholesale.

Americas, second region with contributing to 29% of the 9 months revenue recorded in the quarter, a 13% growth driven by the solid DTC performance across the 3 brands. And with the U.S. as a market, which is also the largest market, leading the performance. But let me say that also LATAM, even if still a relative small contributor to the region, continue to show robust double-digit growth. 

Commenting on cluster, I know that this is a question you normally ask after considering ZEGNA brand U.S. customers cluster continued to grow sound double digit. So the ZEGNA U.S. customers were growing both domestically and abroad. 

Moving to the Greater China region, which in the first 9 months accounted for 23% of total revenues. In the quarter, revenues were down 7%, showing a sequential improvement across the 3 brands, with Thom Browne leading the trends. Finally, on rest of APAC, 12% of 9 months revenues. The quarter showed a 3% growth driven by strong performances recorded in Singapore, of course, of a smaller basis, but nice performance and some improvements in, mainly in Korea. 

Page 10, I won't really go much in details because as you know, we prefer to comment on the brand by channel performance. Only 2 numbers I would like to highlight. The first one is the 9% DTC growth in the quarter. And the second one that DTC in the first 9 months accounted at the group level for 82% of our revenues. 

So let's then move to Page 11, ZEGNA, commenting on ZEGNA. In the third quarter, ZEGNA DTC revenues grew 7% or equal to 87% of the brand's 9 months revenues. This 7% growth in the quarter was led by a solid double-digit growth in EMEA and Americas. The Greater China region revenues trend remained negative but showed some signs of improvement compared to the second quarter, also thanks to easier or a slightly easier base of comparison in this quarter.

The performance in the region remains volatile. I have to say, it remains volatile and still difficult to read. But commenting on the cluster, the cluster improved in the quarter sequentially and was negative, high single digit compared to the double digit we reported that you remember previously.

In ZEGNA in the third quarter, closed 4 stores and these were mainly actually in GCR. Briefly on the wholesale performance for ZEGNA, revenues were down 3% or 11% in the 9 months. I ask you, in particular for the wholesale performance to consider or to look more into the year-to-date, in this case, 9 months performance, which better reflects the underlying business. Sometimes quarterly performance can be affected by different timing of deliveries, in particularly for ZEGNA, also for the drop strategy that, as you know, can cause different deliveries to our wholesale customers. 

For year-end, we confirm the indication for ZEGNA of wholesale down in the mid-teens because, as we commented already several times, we are increasing control in the distribution of iconic products. And we also did some conversion of wholesale point of sales in retail concessions. 

Now Page 12, Thom Browne. Thom Browne DTC revenues were up 10% in the third quarter, showing a sequential acceleration, which was driven by the Americas region, also because of the new openings, as well as some sequential improvement in GCR and rest of APAC. Thom Browne opened for DOS in the quarter, including an important concession at Selfridges Women in London and Kyoto Isetan. The wholesale in line with expectation was down 37% in the quarter and 50% in the first 9 months. 

Let's then move to TOM FORD FASHION. So I can say last but not least, Page 13. TOM FORD FASHION reported in the third quarter, a 16% growth in the DTC channel which has been driven by the successful reception of the Fall/Winter '25 collection in stores across all regions and also by some new store openings.

Of course, also the work that has been done in this month in terms of people and training, and talent in stores is also bearing some results. But we know that we are just at the beginning of the journey to strengthen the brand in the fashion business, in particularly in the DTC important channel. The path ahead of us is clear, it's defined. We need to follow it step by step, and we just are doing the first step into it. 

That said, we are absolutely encouraged by the clients' positive feedback on the collection. TOM FORD FASHION didn't open any store in the quarter, and the wholesale was down 19%, 10% in the first 9 months. Again, some timing differences, we confirm here by year-end, and wholesale performance negative in the region of 10%. 

I finish my comment showing on Page 14, the nice facade of the very beautiful ZEGNA store in the Miami Design District. Miami is a vibrant city, not only in the U.S., and in December, ZEGNA will host an event during the Art Basel Miami. As you know, Art has always been part of ZEGNA identity and legacy since our founder, ZEGNA. Early this year, we signed a multiyear partnership with Art Basel, which offers a global platform to celebrate art that resonate with ZEGNA customers and ZEGNA values. So, in early December, we will have this nice event with our customers in Miami. 

And on Page 15, moving to Page 15, you find just our store network, no comments to be made here. You just need to see the numbers, I think. And before leaving the floor to Gianluca, on Page 16, we have published the financial calendar for 2026. You can find it here in our press release and also on our website. Please mark your agenda for next year.

And with this, I now hand over to Gianluca for some final remarks before your Q&A. 

Thank you, Paula. So before heading to the Q&A session, I would like to share a few final remarks. Let me begin by highlighting the exceptional fashion shows presented by both TOM FORD FASHION and Thom Browne in Paris in this October. Both received enthusiastic recognition from the press and from our clients, reflecting continued progress along the path set for these brands. 

Talking about TOM FORD FASHION in particular, as Paula noted, the first Haider Ackermann collection for winter '25 arrived in the store at end of August, and it was well received and contributed to our quarterly results. Of course, these are early signs. And while we are pleased to see such a positive start, we are aware that the journey to fully unlock TOM FORD FASHION potential is still ahead of us and that it might not be a straight line. We must continue anyway building this momentum. 

On Thom Browne, let me highlight the recent events also held to celebrate the opening of the Ginza store in Tokyo. The brand hosted a series of curated experiences from a screening of the Thom Browne documentary presented by GQ Japan to a cocktail party, an intimate dinner with celebrities and friends of the brand, and the presence of Thom himself. This moment reflects the brand's emotional connection with its audience. We'll see more of this unfolding on Thom Browne social media channels in the coming weeks. 

Finally, turning to ZEGNA. We have already touched on the success of Drop 2, which saw an activation on September 1 and was launched alongside the campaign. "It’s Not a Suit, It’s a Zegna." With this collection, ZEGNA celebrated its heritage and the ongoing pursuit of excellence and innovation embodied by Vellus Aureum, the finest wool, Vellus Aureum means Golden fleece.

The ZEGNA Torino suit draws directly from our founder's personal wardrobe, recalling the days he would drive to his Torinese tailor to craft suits with a unique, defined, and unmistakable style. Rooted in heritage yet forward-looking, the Torino style bridges the path and the future. This campaign reaffirmed ZEGNA's role in shaping contemporary style, while the collection's results confirm the strength of the brand's vision and the robustness of its execution. 

Let me remind also you that on October 1, we celebrated the reopening of the fully renovated store in Dubai Mall, which now includes Il Salotto, the brand's exclusive by appointment only private space, a space that is truly exceptional. I invite you whenever you pass in Dubai to visit. 

I will now share a few general closing remarks. Currency fluctuations, as Paula anticipated, continue to present a headwind for the sector. We have seen that in Q3, it was between 3 and 4 points. And the base of comparison in this regard will be even stronger in the fourth quarter, where the impact of currency might be between 4% and 5% from organic to reported. 

The volatility of consumer demand remains a defining factor, particularly in certain regions, starting with China, which we expect to remain volatile in the coming months. As Gildo noted in the prior calls, China remains a cornerstone for the sector and for us. But we see it settling into a new normal, which we expect to lead into balanced growth rates in the coming years. That's the way we put ourselves the mindset. We had towards budget, towards open to buy. 

In this environment, we know how important it is to stay sharply focused on the key priorities we have defined for each of the 3 brands and to deliver on them. The direction is clear. The projects in our pipeline are being implemented with discipline. This gives us a solid base to remain cautiously confident as we navigate the period ahead of us. And with that, let me open the Q&A session. 

[Operator Instructions]. Our first question today comes from Anthony Charchafji with BNP Paribas

The first one would be on current trading and any expectation that you could share into Q4? My second one would be on China and namely Mainland China performance at ZEGNA. Could you add a bit of color on what you're seeing in terms of traffic? And more importantly, if you're seeing rather the affordable part of the demand that is coming back and rather than the high end? That would be my second question. And my last one would be on the FX impact, not on top line, but rather on margin. What do you expect for this year or rather into next year? And do you think that it's a fair assumption to assume some kind of impact into next year? 

Okay. Thank you, Anthony. Thank you for the 3 questions. Well, I'll leave to Gianluca and then if you have other comments, but on current trading and on China performance. 

Anthony, so the current trading, so Q4 just started. So we, it's early to make a final comment after just a few weeks in any event, what I can anticipate, we are not seeing trends substantially different from the one of Q3. So we need to keep on executing. The performance so far has been not different in line. We need to remember a couple of things heading into Q4. First, as I said before, and that was also your third question is FX is steep in terms of delta between reported and organic in Q4 because if you remember, we had a USD around 103, 104 and that from November through January, that was probably the strongest moment for both USD and renminbi. And last year, we had a very solid Q4 with high single-digit organic in DTC. 

Anyway, having said that, the trend is not that different so far. In terms of China, giving color, I can give you colors by geography within GCR and some by cluster spending. So first, we are seeing that the top of the pyramid guests are performing well also in China, both on Vellus Aureum and Aureus, on the most sophisticated high price point suits. So we are seeing good traction on the top of the spending. We are not yet seeing solid, consistent indication on traffic and more affordable spending. That is what we are seeing. 

But from a geographic standpoint, we can report some improvement on Hong Kong in terms of trend. We see the, call it, second-tier cities performing slightly better. So I'm taking out Beijing and Shanghai, the other important cities, call it Shenzhen, Chengdu, Guangzhou, those cities are slightly performing better than the 2 big ones. But again, as I said, as Paula said, the environment is volatile.

That's why we want to be cautious and that being cautious means for us betting on open to buy for next year, betting on CapEx and OpEx for next year and possibly also, and that is something we already mentioned. We are, we have been pruning the landscape of our network by wherever meaningful, trying to consolidate the business in fewer, better stores. This is something that started in '25 will continue in the next couple of years.

On ForEx impact in 2026, well, we can comment on our ForEx.

Of course, the impact does exist because it's, we hedge, but you have some still you have some mitigated impact on the bottom line. This year, we, I think we have hedged particularly well, both the USD and renminbi, this is very true for fall/winter '25 is also true for spring '26. So now the topic will be on how we handle prices in fall/winter '26, which will be the second part of the year. So, the hedging covers at this point, we are happy with the hedging we have done through spring '26 included.

The second question, operator? A set of questions.

Our next question comes from Adrien Duverger with Goldman Sachs.

I would also have three, if possible. So, the first one is if you could please provide us with a bit more information on the consumer environment across regions. So you already commented on China, but if you could give us a bit more on the U.S. and on Europe, especially around traffic, conversion rates and appetite to spend.

My second question would be about the wholesale sector and the trends you're seeing so far in the second quarter and ahead of 2026. is the rationalization of the channel almost done? And do you expect it to be finished by the end of this year? Or could we still expect some impact into next year?

And maybe my last question would be on TOM FORD. Could you comment on the performance there? And on the integration of the brand, if you could provide us a bit more color on this.

Okay. Okay. So three questions, very, let's say, articulated. On the consumer environment and cross region, maybe I'll just comment quickly on by-cluster performance, and I'll leave Gianluca to elaborate more on if he has comment. And then on wholesale Thom Browne and TOM FORD performance, I'll leave to immediately directly to Gianluca. So on by-regions, what we have seen in the third quarter is a continued solid growth by cluster of double-digit growth of the U.S. and the European cluster.

And as I commented during the call, during the first part, a slight improvement on the GCR cluster to a mid-single-digit negative. I have to say that in the Americas, U.S. continue to remain very strong, but also LatAm. This is driven by, I would say, more than by traffic. Of course, traffic in our store is always, but really by the very strong work, good work that our people are doing and of course, the very well acceptance of our collections and the product because everything starts from there.

And I have to say, I would say the same in Europe. Of course, in Europe, you have Middle East that continues to remain very strong. But even Europe, excluding Middle East, has done very well in the quarter.

In terms of wholesale, I think that most of the effort has been done in terms of selection, especially on the Thom Browne side. If I recall what is, which are the numbers of this year. We don't set numbers for next year. But we start from this year having Thom Browne declining 35% and mid-single digit -- mid-teens, sorry, mid-teens for ZEGNA and around 10% negative on TOM FORD.

This is the result of different things. The conversions that we have been doing will continue next year selectively, of course, depending from, for instance, with some U.S. wholesalers, we are debating location by location. This will continue probably to a lower extent because most of the conversions we have already done, but the conversion trend will continue as long as we will find the opportunities to do it. There is still a selection of distribution on iconic items for ZEGNA.

We are pretty much happy with the distribution at this point of, through wholesale. But definitely, we will continue limit as much as possible our iconic items that we would not like to be resold at discounts or in distribution markets that we don't want. And TOM FORD, minus 10% will be, overall, I think the comment for next year, I think, will continue some decline, but to a much lower intensity.

That is driven by conversion, driven by the fact that we keep on selecting distribution on Thom Browne, of course, not to the level that we have seen in the last two years. So I think that we will see a much more muted decline still for next year of wholesale channel.

Okay. And TOM FORD FASHION, the last one. Overall performance, any comment?

I don't know, Adrian, if was something specific but the performance, as we said, the quarter has benefited from several factors. But for sure, the good acceptance and good reaction of our clients of the first Haider collection for TOM FORD that I remind you is the one that showed in Paris in March, but touched the floor in the stores as usual a few months after.

So it was introduced at the end of August, and this creates, in particular in the U.S., but in reality, also in Europe across all the regions, a very nice vibe. And so our clients, customers loyal, so existing customers, also new one came and bought and purchased the collection. So this has been for sure a positive factor. But the second one is the openings that we have done, some nice openings that are doing, that are also providing good revenues results.

And as I was saying, of course, in the past few months, we have invested in the platform, in the people, in starting to create a CRM system. So we are still at the beginning, but all this step-by-step has done and is doing some results still at the beginning, as we said.

Just add one point. You have seen DTC in Q3 at plus 16%. We want to clearly, there is a space, but there is also a substantial comp component, which gives us comfort because we start seeing traction on assortment planning, on training of the people, the people on the field, the retail management.

So we see the growth of DTC is not just space. There is an important comp component. On the wholesale, linking to what we said before, the decline, for instance, there is the impact of a few conversions, I name the most important ones last year, in Q3 of last year, we converted [Saks women]. We converted [Arroz men], we converted Puerto Banús in Spain. So some part of the new comp comes also from this conversion of wholesale locations that have been redirected into DOS directed operated store.

In terms of geography, we have seen across the board, U.S. solid, EMEA very strong. GCR for growth from a small base has shown an interesting sequential improvement. So we are -- we report positive comp, wholesale affected by these three important conversions and good performance in the major regions for the brand.

Our next question comes from Oliver Chen with TD Cowen.

This is Nicolas Silvia on for Oliver. I know you just touched on the wholesale distribution. So continuing on with channel distribution, could you comment more on how ZEGNA is leveraging the direct-to-consumer network to drive growth?

And then a second part is with FX impact, I agree that's definitely a headwind that we've seen across the sector. Could you touch more on how you're offsetting those costs and currency pressures that are posing a headwind in light of the recent tariff impacts that you mentioned?

Sorry, we need to ask you to repeat the two questions because we couldn't really get the line very clearly. If you can repeat maybe one and the other, sorry for asking, but really, there was a lot of noise.

Of course. Is this better?

That’s better.

So, starting over here. This is Nicolas Silvia on for Oliver. I know you touched on wholesale. So continuing on with channel distribution, could you comment more on how ZEGNA is leveraging the direct-to-consumer network to drive growth? And then just the second part I have here is with FX, I agree that's definitely a headwind we've seen across the sector. Could you touch more on offsetting those cost and currency pressures that are posing a headwind in light of the recent tariff impacts?

Okay. So, the first one is, in particular, on ZEGNA DTC network and the evolution, if I got it correctly. And the second one is regarding ForEx, given the ForEx headwind, how we are offsetting the cost of higher tariff increase in the U.S.

So I'll leave to Gianluca.

So we drive positive trend on the retail side. I think I gave you some comments distinctively from boutique and outlet. So I start from outlet, which is probably the easiest one. That is not a driver of growth. it's on the opposite is a channel that we keep shrinking as soon as we see the possibility to do it and the driver there is, of course, the sell-through of the season.

Of course, we are, our internal KPI that we monitor carefully is sell-through at full price because ZEGNA doesn't do any bargain at this point anymore. So as soon as we have good level of inventory on hand from leftovers, we reduce the outlet channels. So that is a driver of nongrowth within the retail environment.

On the full price boutique, yes, we have this year, the number that you have seen, it's mostly comp. First remark, the number that reported, it's 7.4%. It's a growth organic is, I would say, almost entirely comp. And what is the driver behind the comp? It's conversion. Of course, we need to work, and that's the CRM machine that is behind the scenes. Of course, we cannot enjoy in this moment in some areas of our market, traffic.

So, we need to generate ourselves the traffic. So, the outreach is laser-focused on bringing clients in, preparing the appointment with the selection for them. And this is the driver behind a good improving conversion trend. On the other side, so this mitigates in terms of number of tickets mitigates the decline coming from traffic. On the other side, the value of the ticket is increasing. It's increasing through AUR because we are elevating the offer in every season, whether it's Vellusarium, whether it's personalization, whether it's second skin, whether it's new leather out pieces that are coming out or the enlarged collection of Conte jackets. So AUR and conversion are the two numbers that are driving up the comp for this year.

Space so far has not been a point. I think that we still have some opportunities in terms of space going forward. For instance, ZEGNA next year is expanding the network in U.S., which is still in terms of distribution is still not fully exploited. So, we will have at the end of the year, for instance, a location in Troy, Michigan. We will have next year San Diego. We will have Scottsdale. We will remodel Ballard. So, there are still interesting opportunities in U.S., not as much in China, as we said, it's probably the other way around. where we will try to consolidate.

So, Space might be a minor factor. So, we need to help ourselves with comp as we have done so far. That is the algorithm and the logic behind our performance on DTC. In terms of FX, how we protect ourselves. So, the mechanic is always, we fix, the logic is always that we fix the currency for the price list months in advance. We defend that price list. So that's why we have now at this point, during, we did the selling campaign of spring '26 was in June of this year. We set the FX at that time, and now we are basically fully covered at a good currency rate.

Which means that we protect the sell-in margin.

We protect the sell-in margin. Then the rest is self-protected because you have OpEx and you have the revenues offsetting. So of course, as I said, now we need to add into the fall/winter '26. Our mindset is always to stay a low mid-single-digit growth of prices. We need to consider if this is enough everywhere. Probably there is also the tariff component in U.S., which might bring us a bit a touch up upwards. But definitely, these are the mechanics that we use to defend ourselves in an environment of currencies.

It's nice also to underline that we did in September this year, some price increase because of the tariffs, as you know, and the reaction from the customers were very positive. So, there was no, I would say, negative reaction. Of course, everything that we do in terms of price increase has to be always is an elaboration and an analysis done by the merchandising team looking at the full price collection and protecting the important price point of every collection. This is part of the job that Gianluca and the merchandise team does do every season, every collection. I don't know if we answered.

Our next question comes from Chris Huang with UBS.

I have three. The first one, just to follow up on the Q4 current trading commentary. If I look at your group DTC channel performance as a whole, the improvement in Q3 pretty much was in line with what your comps would have suggested. So, in light of the very impressive Q4 you had last year and Gianluca, I think your previous comments around trends so far unchanged in the fourth quarter, would it be possible that perhaps in Q4, we continue to see a high single-digit DTC growth at group level? So that's the first one.

Secondly, on cluster, I just wanted to clarify a little bit here on the Chinese consumers, if it's down mid-single digit or high single digit. And related to that, so it seems like the Chinese consumers really accelerated in Q3 when the total X DTC is kind of in line. So, what other nationalities are probably moderating or normalizing a little bit, if you can give some color on that?

And last but not least, on H2 margins. I think on the previous call, H1 call, you commented that for the full year, you're expecting the ZEGNA segment margins to land between 13% and 14%. But if I heard correctly, the 7% growth in DTC in Q3, you said was mostly driven by comps. So that is quite a good number to really see some operating leverage. So I'm just wondering if there's any update on the margin expectations you can give us for the ZEGNA segment for 2025.

Okay. Thank you for the three questions. So, the first one is on the follow-up on Q3. And in particular, if, and this is a question that you directed rightly to Gianluca, if we can deliver on a high single-digit Q4 growth for DTC. The second one is on the Chinese cluster, and then we go after.

I'll ask Gianluca to comment the first one in the meantime.

Start from the Chinese cluster, the Chinese cluster has seen a high single-digit negative. And we have seen more stronger decline on Chinese abroad, although smaller in terms of incidents for us. The decline has been steeper for Chinese buying outside of Greater China region. But anyway, overall, has been on the high single-digit environment.

In terms of Q4, I don't want to comment on the on the expectation by channel, by brand because it's, then it's, conceptually, we are trailing not different than what we have seen in Q3. Of course, we need to know that last year, we had a solid performance. So it will be more challenging. But so far, I would say, same trend than Q3. And if you want to have an indication, I would probably stick rather than by brand by geography, I think that the consensus out there today is reasonable. So overall, I think the consensus that is out on our website that we report for full year revenues look a good indication.

ZEGNA margin for full year, Chris was reminding that the comment we made in September that we were expecting ZEGNA margin around 13%, 14%. Of course, Chris, this was an indication we gave. I don't think this is the place at the moment to comment on margins. But just reminding you that the growth by comp is not something that is coming as a surprise for ZEGNA, it's something that is planned in our expectations and in our numbers. So, it's absolutely a nice very important growth, but is aligned with, or at least following, let's say, our expectations.

Maybe a little bit better, but not much. Okay. I don't know if we answered this. If you don't have any follow-up, we can go to the next one.

Our next question comes from Chiara Battistini with JPMorgan.

I have a couple of follow-ups and maybe a curiosity. First question on ZEGNA. If you, if I can follow up asking about the mix, like the price mix and volumes and also the evolution for the ZEGNA brand between the recruitment of new consumers versus returning customers, what you're seeing from that point of view?

The second question, a follow-up on TOM FORD. And I was wondering, given all the initiatives in place, the fact that the product under the new designer is ramping up the CRM and also the ongoing store rollout, is there any reason why we should not be assuming further acceleration sequentially for Q4 into year-end and also into next year from a DTC perspective?

And then finally, more of a high-level question. There's been a lot of debate in the market lately about the build of the new fashion designers at different houses and this potentially reinvigorating and reigniting desire for bolder fashion and more outstated fashion. So potentially penalizing more understated brands. So I was wondering if you could share your views about this ongoing debate that there is in the market at the moment. Thank you, Okay.

On the price mix volume evolution for ZEGNA, is, okay, price mix is clearly very important, but I ask Gianluca if he wants to comment more also on the returning customers. On the further acceleration, why not let's ask Gianluca. And on the third one, sorry, Kara, the theme and the debate is, if I understood well, but I'm not sure how that design are becoming even more important for the brand or that there was many changes in the design. Sorry, Alice is looking at me and saying, no, you don't understand anything.

So, No, I was wondering because there's been a lot of renewed enthusiasm around potential fashion trends and reigniting appetite for bolder fashion as some of the new designers or designers have moved.

I start from ZEGNA, I confirm that price mix is the biggest driver. Mainly comp is coming from price and mix. Of course, there is the like-for-like price increase. And as I said, the mix component of elevation of the content of the collection is the other component. So price mix is the major driver of comp. In terms of returning, recruiting new, we are seeing a good traction in new clients, especially retaining new clients. Of course, there is always someone coming in walking. The point is whether you create stickiness, you create a stickiness that you bring them in possibly through triple stitch, possibly through a knitwear. And then little by little, some of those go away, some return. The ones that are returning are our focus and we see good numbers over returning new clients and especially the objective is elevating the clients.

So what we are always looking at is spending by cluster, we try to identify by the type of product that they buy if they have potential. And we intensify our activity around them in order to bring them above the 10,000, above the 25,000 threshold and finally above the 50,000 threshold that is our ZEGNA friend territory. So we, of course, the numbers, we are growing very well on the clusters above 25,000. On the lower spending, we see a good traction of returning new especially people that are coming in, maybe coming back to buy a second pair of triple stitch or buying, starting to buy a more broader total look. So I think it's a healthy proposition of clients staying, client entering and staying with us for a longer time.

TOM FORD FASHION and Q4, why not further acceleration? Okay. I ask Gianluca to answer, but I just remind you 2 things. One, of course, there is always a sort of wow effect when you have a new collection and this is something that we want to continue to keep it. But the first time, normally, it's a little bit more sound or strong. This is normal. It happens like this. But the second one is also for TOM FORD, the Q4 last year was a little bit more dense in terms of performance. So there is also for TOM FORD FASHION, a base of comparison effect. And I'll leave Gianluca if any further comments also on what we are doing on TOM FORD FASHION.

I think that the solid double-digit growth like we did in Q3 is something that we are happy with, especially because it's partially generated by Comp.

I think that run rate, I think it's something that we are definitely pleased with. What we are doing is injecting into the machine of TOM FORD some of the lessons learned we have done with ZEGNA. For instance, we are injecting more and more CRM logic and approach. I think that the team is with the logic of TOM FORD but trying to intensify the drops of product in order to create the reason why they call the clients back. I think that in TOM FORD, as we, as I called out on ZEGNA, we have, we see the opportunity to increase the presence in the successful U.S. market. So next year, TOM FORD will open stores in U.S. We are also, I think we mentioned last time, we are working on a store in Paris. So there are different arrows for TOM FORD distribution.

In terms of assortment, the collection, the team is working hard on the women's side. This is the biggest opportunity, both on the daywear as well as on shoes and handbags. So those are the areas of opportunity, the distribution as I said, notably on the Western world. And there is, I think, some mechanics in terms of merchandising, in terms of CRM that we are injecting cross-fertilizing among, across the different brands.

On the third question, Chiara, I started giving my view, but of course, this would be better off if Gildo would have been here. But next time, you can ask him as well. And of course, Gianluca will also give his own view. This is a debate that we are, in terms of, yes, fashion, well, I know people like to talk about by luxury fashion. And I think the reality is that innovation is what clients and what the clients want. Innovation has to be coherent with the brand's DNA.

So ZEGNA is an innovative brand. We innovate in terms of garments. We innovate in terms of style. But as also our Creative Director explains and actually, there was an interview yesterday on a newspaper. The innovation comes always taking in consideration what was presented the season before. So it's not changing everything, but it has to grow within the DNA and within the legacy of the brand. And by doing this, you create a stronger brand, but also something new for the clients. So I don't think there is clients don't want to buy always the same things. I don't think so, but they want to buy something that is reason that has a meaning behind that has something that goes just, it's not only a garment but it means something because of the quality, because of how it's made, because of the values of the brands. And this is what I think is true today as much as in the past, maybe not always but in many periods of the history of the sector. This is my view, but sorry, okay, I cannot talk for our year, and I actually would be very happy to have him, to have the same question presented to him in February for the full year results. I don't know if Gianluca has...

Nothing to...

I don't know if there...

Our next question comes from Daria Nasledysheva with Bank of America.

This is Daria from Bank of America. I have 2 quick ones actually. Is there any way you could help us quantify the impact of Haider’s new collection on the acceleration this quarter, given you said that there is the initial wow effect that exists? And how should we be thinking about the pace of product rollout for next year as a percentage of revenues for the brand? And my next one, could you please comment on your thoughts about full year EBIT consensus as well, like you normally do? I know you commented on revenues but what about profitability?

Thank you for the follow-up. So in terms of quantification of either in the acceleration of some for fashion, I would, I mean, I'll leave Gianluca to give you some qualitative, but, and I think it's something that we will repeat what we said. But no, I don't think there is, not a way, but clearly, yes, there is a one effect, but Haider is designing the collection also the next one and plus is not only there is as we were saying is, let's say, a work together with having better people in stores, having better instruments in terms of CRM, having better collection, not only the either one but also the one that is -- we call it but is not the one. So it's having better merchandise in store. So being better in buying for the store. So it's, and also the marketing and the visibility effect that the collection designed by Haider has created. So it's a mix of everything. But I leave Gianluca to comment a little bit more.

Tough to identify what is the specific driver coming from the Haider collection. Let's remember that is part was mostly on the winter side that came through the quarter so not at the beginning of the quarter. So there has been definitely part was Haider, part was also the collection that was before the drop of the show collection that came, I think it was around

June, July, July.

June.. July, the fall, but the collection...

Haider of... Of August, yes.

Of course, there is -- part of the quarter has been impacted by the specific fashion show collection, part was before. So I think it has had an effect in terms of curiosity to visit the show, visit the collection of the show but it's not only that one, that thing. In terms of consensus, I would reiterate what I said on revenues. I think that the consensus on full year for EBIT looks pretty reasonable. Of course, having always the line of thinking that we still have a couple of months which for us are still very important. And therefore, it's subject to the performance of the coming 2 months. But we think today that the consensus out there on revenues and EBIT looks pretty reasonable.

And -- if it's okay, Daria, we'll ask it otherwise.

No, no, no. I think that's good. And can you just comment on percentage of revenues of new product for TOM FORD throughout the next year?

Yes. okay. The drop or the, let's say, the delivery of TOM FORD collections. There is.

We will have, I think, on, November. November, second part of November, a first injection of spring and then the second will be in January. So the next will be, I don't remember the specific date, but will be around mid-November should be the first drop of spring in the floors.

Yes. Remember that the first drop is always the non-show collection. We call it spray, but in any case, apart from, this is the most important part in any case because the collection show for everybody for any fashion brand then represents a smaller part, not as small but a smaller part of the collection for the whole season. And the one that will start Okay.

If there is the last one, I think, because I know there is also another company reporting in half an hour. So we might give you the time to prepare if anything. But if there are questions, we are very happy to answer.

We have one final question, which comes from Bhumi Kanabar with Jefferies.

It's Bhumi. Just 2 questions from me, if I may. So number one, could you add a little bit of color on what you're seeing in APAC ex China, given the very slight sequential decline there versus H1? I think every other region was an improvement. I know you mentioned Korea and Singapore, but any other regions to call out that weren't as, didn't go as well? And then number two, you mentioned you're happy with EBIT consensus for the year, but I just wanted to ask on gross margin. It seems that given the share of DTC revenues in the 9 months, there's a little bit of upside there. If you could comment on that.

Okay. leave Gianluca Tagliabue for the color of APAC [Indiscernible] EBIT consensus, sorry, gross margin consensus, not EBIT.

On APAC, I would call out, of course, Singapore is doing well, both for ZEGNA and also we have a new store of TOM FORD that is picking up after the opening. So I think we are seeing good momentum there in Singapore overall. In terms of Japan, I would say that we still see softness, especially on Japanese residents buying in Japan, which is the bulk majority for us. So we still see some softness. In Korea, we have seen some slight sequential improvement compared to the second quarter. Macau, we are not seeing good momentum.

As I said before, Hong Kong, yes, Hong Kong, both traffic and also top line. And in China, I think I commented already before. So I don't have any other major Australia is not so important for us. In terms of, what was the second question was?

The gross margin consensus. As she said, I understand you are okay with EBIT consensus. Are you okay also with gross margin consensus, which is around 67%.

I think so. Yes, we are, I think that overall, the consensus directionally meaningful from what we say. I think if you say we have an upside and 2 year, we will see at the end of the year, if you are right. And for the time being, I would stick to the consensus.

I don't know if you have any. Otherwise, I'll leave to the operator.

We have no further questions. And so Paola, I will hand back to you.

Okay. So as usual, thank you so much for all your questions. We are here at your disposal for any follow-up that you have. And we will rejoin together on February 2 for the full year 2025 preliminary revenues. So thank you so much for the time you spent with us and speak to you soon.

Thank you, everyone, for joining us today. This concludes our call, and you may now disconnect your lines.