Q3 2024 Ermenegildo Zegna NV Earnings Call
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Good afternoon, and good morning, everyone before we begin I need to point out that management on the call. We'll make certain forward looking statements included at the beginning of today's presentation.
He's noted that today material and presentation are available under Zenia group Dot Coms website.
Speaker Change: I will now hand over to judo, Zenia, chairman and CEO of the group.
Yeah.
Judo Zenia: Good morning, and good afternoon to everybody and thank you for joining today's conference call on the Grupo <unk>.
Speaker Change: Q3 24 revenues.
Since we just spoke a month ago to discuss at our age one results in detail and provide an in depth update on our strategy and the important actions we have taken to navigate the challenges currently facing our sector.
Speaker Change: We would not take much of your time today.
I want to be just a few comments on Q3 and talk a bit about some recent trends.
Speaker Change: As anticipated Q3, DTC performance was impacted by an increasingly challenging environment, especially in the greater China region.
Speaker Change: The quarter also saw a softer wholesale performance, which was negatively impacted by the ongoing door last year and organizational at Tom Brown, but the conversion rates.
Speaker Change: Which are all say two concessions, which are repaid and based on different timing deliveries towards dania and adult for attrition.
Speaker Change: Although this was the most challenging month in the quarter.
September was so a slight improvement.
Speaker Change: Danielle branded quota double digit performance in Americas and EMEA.
Also thanks to the success of the second drop of deliveries or fall or winter of 'twenty four.
Speaker Change: During the past two weeks, we had some important events that I, we used to talk about.
Speaker Change: Most recently I'm very pleased to say that we finally inaugurated the dania Monte Carlo store.
Speaker Change: And we also opened Beijing Shin Kong place in October.
Speaker Change: Digital edition to add an important stores, we opened in Q3, including Anadolu Ala Moana, and New York Meat packing district.
Speaker Change: Telephone fashion also had a major event in the newly opened Beijing, China Awards store, which resonate very well with customer all solving important celebrities attending and the large young crowd. It was the first event to present their fashion collection.
Speaker Change: And in China.
Speaker Change: Over the past weeks, Tom Brown ore sources, some significant events in Korea. The brand opened an experiential for pumps during <unk>. So one of the most vibrant and young please think of syllable, which has been very successful in Hong Kong. The brand launch we also Tom but.
Speaker Change: Attending the world of Tom Brown, and multi category installation.
Speaker Change: Cross George specific place landowner and lane Crawford that these our partner.
Speaker Change: But not only events and I am proud to anticipate that Tom was honored by the.
Speaker Change: FDA of America with nomination for 'twenty for Menswear, and 24 women sort of design of the year and as you know the awards will take place on October 28 in New York.
Speaker Change: Let me finally comment on the Golar weak in China.
Speaker Change: The weak performance of the room was a bit ahead of our expectations and showed an improvement compared to the Q3 down trend. However, as you can imagine revenues in the week were still below last year.
Speaker Change: Xena, so a higher quality traffic, which means that even if traffic was down conversion and average ticket was up.
Speaker Change: Coherent with our strategy, we are pursuing for the brand.
Speaker Change: Tom Brown saw some small initial positive signs, but they continue to remain cautious on the overall outlook knowing that uncertainty is still there.
Speaker Change: Professional Golden week has a minor impact since the lower exposure of their brands in China.
Speaker Change: To conclude I wish to leave you with a comment and the promise 24 is turn out to be a different a year for what I believe the whole sector initially planned.
Speaker Change: We played we faced is different outlook with the conviction that we must work for the long term in this environment. As you know we took some important decisions and actions so reinforce our brands for the long term, but that will have some short term impacts on our results in.
Speaker Change: Importantly, we streamlined that Tom Brown wholesale business and focus our brand on D. C. While also making some important investment in marketing merchandising everyday talents.
Speaker Change: Broad fashion, we are born and Hydra Ackerman as creative director in order to bring the brand to its full potential high that the collection would it be in store next year by June July we will be.
Speaker Change: 25, I believe that we will start this year then next year in a much better shape, even though that's what remains uncertain.
Speaker Change: Blending carefully investing in our brands both in terms of marketing and in some selected openings and attracting the right talent is what we will continue to do.
Speaker Change: Moving forward. This is the only way we can continue to strengthen our group and deliver on our ambitions.
Speaker Change: 2025 could be unpredictable either way. So we are prepared for both ways.
Speaker Change: But I know that we are facing stronger by staying the course to the cycle.
Speaker Change: You.
Speaker Change: Let me now hand over to Gianluca. Please.
Speaker Change: Thank you Jill.
Gianluca: Good afternoon, everybody lets start on page seven of the presentation with our key highlights.
Gianluca: Yes, we report.
Gianluca: Revenues for the first nine months equal 1 million three 1.357 billion Euro.
Gianluca: 2% year on year on a reported basis plus 3% in constant currency minus 4% in organic terms, let me remind you the changes in the parameters that are neutralized by the organic growth metric.
Gianluca: The transport fashion business, which is consolidated since April of 2009.
Gianluca: Last year second the acquisition of the Korean business.
Gianluca: Brown occurred July the first of last year.
Gianluca: Therefore this business you think included in the organic bearing that Theyre starting from Q3 of this year when we compare it to Q3 of last year and third affair.
The effect on the organic growth metric is deposition of Korean business, which occurred on January the first of this year. Therefore, when we refer to organic growth, we neutralized the year on year Delta perimeter, resulting from the pre acquisition and also we ended the Forex impact.
Gildo Zegna: During this call, I will refer mainly to the organic performance, which better reflects the underlying performance of the business. In the nine months, the Zegna segment contributes to 944 million, with Zegna brands up 5% organic, Tom Brown segment at 1220, Tom Ford Fashion segment at 214.
Gianluca: During this call I will refer mainly to the organic performance, which better reflect the underlying performance of the business.
Gianluca: In the nine months, the Dania segment contributed $944 million with Zinnia Brian.
Gianluca: 5% organic Thom Browne segment that 220.
Gianluca: <unk> fashion segment at 214 in the third and fourth or the group reached 397 million Euro revenues down 8% year on year reported minus six in constant minus seven inorganic.
Unknown Executive: In the third quarter, the group reach 397 million euros in revenues, down 8% year or near, reported minus 6 in constant minus 7 in organic.
Unknown Executive: Let's move to page 8 of the presentation where we analyze our results of revenues by segments. Let's focus here on the third quarter figures. As I commented, revenues were 397, down 7 on organic basis. The Zegna segment, which includes both Zegna brand as well as textiles in the minor third party B2B business, recorded minus 1 in organic terms due to the deterioration of textiles and the minor third party brands, while Zegna brands continued to deliver a positive organic growth.
Speaker Change: Let's move to page eight of the presentation, where we analyze our results of revenues by segment, let's focus year.
Speaker Change: On the third quarter figures as I commented revenues were $397 seven on an organic basis. The <unk> segment, which includes both linear brand as well as textile and the mining third part the B to B business recorded minus one inorganic terms you too.
Speaker Change: The deterioration of textile and minor other third party brands, while Zynga brand continue to deliver a positive organic growth.
Unknown Executive: Tom Brown and Tom Ford segment recorded respectively minus 27 and minus 11 in the quarter.
Speaker Change: Tom Brown and Tom Ford segment recorded the respectively minus <unk>, seven and minus 11% in the quarter.
Gildo Zegna: I would comment specifically on their performances on the following pages that are specific by brand. Let's move to page 9 where we see the revenue by brand and product line Zegna brand, which represents 60% of group's revenues in the nine months. It shows a solid performance, also in 23, with a last 3% organic growth driven by DPC channel at plus 4%. In particular, in America and Japan, where the brand recorded solid double-digit growth. Let me also add that in America, we have seen both Europe as well as the Middle East both performing very well.
Speaker Change: I will comment specifically on their performances.
Speaker Change: On the following pages that are specific by Brad let's move.
Speaker Change: So page nine where we do see the.
Speaker Change: Our revenue by brand and product line, Zynga brand, which represents 60% of group's revenues.
Speaker Change: Nine months showed a solid performance also in Q3 with a plus 3% organic growth driven by DTC channel at plus 4%.
Speaker Change: But in particular in <unk>.
Speaker Change: Europe, Middle East and Africa America, and Japan, where the brand recorded solid double digit growth.
Speaker Change: Let me also add that in EMEA, we have seen both Europe as well as the immediately east both performing very well.
Gildo Zegna: Moving to Tom Brown, in 23, Tom Brown recorded 53 million euro revenues minus 27% organic, mainly due to the decision to streamline the wholesale business, as discussed thoroughly during the past goals. On top of this, you three revenues have always had been also more difficult in the greater China region, while on the positive side, Japan continued to show very strong double-digit positive growth and Korea follows with a good positive performance. On Tom Brown's fashion, 23 revenues reached 65 million Euro, minus 11 organic due to the negative contribution of the wholesale channel, also related to a change in the timeline of deliveries.
Speaker Change: Moving to some ground in Q3 from a reported $53 million Europe revenues minus 27% organic mainly to.
Speaker Change: So the decision to streamline the wholesale business as discussed.
Speaker Change: Early during the past calls on top of this Q3 revenues have always.
<unk> been also more difficult in the greater China region, while on the positive side in Japan continued to show very strong double digit positive growth and Korea Hall with a good positive performance.
Speaker Change: On top of our fashion Q3 revenues reached 65 million Euro minus 11 organic due to a negative contribution of the wholesale channel also related to a change in the timeline of deliveries while the DTC channel upon fourth national recorded positive results at plus 3% organic.
Gildo Zegna: While the DPC channel of Tom Brown's fashion record that positive results at plus 3% organic as I will describe later in the page detailing this brand before.
Speaker Change: As I will describe later in the face of detailing this trend performance.
Gildo Zegna: Zegna Performance was negative minus 16, sequentially deteriorating from the prior quarters. I remember that in the first half, you're going to grow for Texan was basically flat at minus 0.6%. And this Q3 has been affected by a decreasing B2BD band from luxury goods brand outside of the green which first purchased from our Texan platform.
Speaker Change: <unk> performance was negative minus 16.
Speaker Change: Sequentially the stereo rating from the prior quarter's I remember that in the first half the organic growth for <unk> was basically flat at minus <unk>, 6%.
Speaker Change: And this Q3 has been affected by a decrease in B to B B band from luxury goods brand outside of the group, which versus purchased from our <unk> platform.
Unknown Executive: The other revenues line can now be considered marginal, being a 4 million euro in the quarter, after the acquisition of the Tom Ford International and the change in the accounting of Tom Ford's problems. Moving to page 10 for this revenue, breakdown by geography.
Speaker Change: The other revenues line can now be considered marginal being at 4 million euro in the quarter. After the acquisition of the thumb for the international and the change in the accounting of Tom Ford problems.
Speaker Change: Moving to page 10.
Speaker Change: Is the revenue breakdown by geography.
Unknown Executive: Starting with a Maya. In Q3, a Maya reported minus 2 organic growth composed by a double digit growth at Zegna brand, so the positive double digit for Zegna retail, driven by Zegna retail, more than offset by the decline in old sales from Brown and to a lower extent also wholesale from Ford fashion. America's record the minus 3% organic growth in Q3, showing the acceleration compared to the first six months, entirely related to the wholesale channel performance.
Speaker Change: Starting with EMEA in Q3, EMEA reported minus two organic growth composed by a double digit growth at Dania brand. So the positive double digit for the dania retail.
Speaker Change: <unk> by more.
Speaker Change: More than offset by the decline in wholesale umbrella and to a lower extent also wholesale for fashion Americas recorded minus 3% organic growth in Q3, showing a deceleration compared to the first six months entirely related to the wholesale channel performance in the.
Unknown Executive: Indeed, compared to the first semester and before, the DTC channel continued to perform very well, induced by Zegna's ongoing double-digit growth. The wholesale channel showed negative performance in the region for all the three brands used to different timing in delivery and to some conversions from wholesale doors into directly operated stores both for Zegna and Tom Brown. As an example, we call out to the conversion of air erosion stores in Canada for Zegna and Norse for Tom Brown.
Speaker Change: This compares to the first semester 70 for the DTC channel continued to perform very well despite dania ongoing double digit growth. The wholesale channel showed negative performance in the region for all the three brands due to different timing and deliveries and to some conversions from.
Wholesale doors into directly operated stores, both for Dania and Tom Brown as an example, we call out that the conversion of avocados in stores in Canada for Virginia, and North some homegrown.
Unknown Executive: Greatest China region brand news declined by 22% in Q3, and as we commented broadly, this is due to a very subdued consumer confidence in the region, which got worse in the summer months, especially in August, as Gilda said. Among the three brands, Zegna outperform the group average in the region. In the rest of Asia Pacific, Japan continued to show a solid double-digit performance positive both for Zegna and Tom Brown.
Speaker Change: Greater China region revenues declined by 22% in Q3.
Speaker Change: And as we've commented broadly this is due to a very subdued consumer confidence in the region, which got worse in the summer months, especially in August as Gilles said among the three brands Dania outperformed the group average in the region.
Speaker Change: And the rest of Asia Pacific, Japan continued to show a solid double digit performance positive both for Zynga and some brands.
Unknown Executive: Looking at the results by the nationality clusters, which I know you're always interested in. We're referring to specifically to Zegna DTC. We saw US cluster that kept growing on a solid double digit to open Q3, and GCR residents were weaker in Q3, down in the missing range.
Looking at the results by.
Speaker Change: Nationality clusters, which I know you are always interesting income, we're referring to specifically to vignette DTC, we saw U S cluster that test growing on a solid double digits and also in Q3.
Speaker Change: And GCI residents were weaker in Q3 down in the mid teen range.
Unknown Executive: Moving to page 11, the revenue breakdown by distribution channel, just to very quick comment this, then we will comment more on a bright brand basis in Q3. Overall, DTC channel group 1% organic with positive growth of Zegna and Tom Brown fashion brand, sounds are balanced by the decline of Tom Brown retail.
Speaker Change: Moving to page 11, the revenue breakdown by distribution channel just two very quick comments. Since then we will comment more on a bright brand basis in Q3.
Overall, DTC channel grew 1% organic with positive growth of Dania and Tom Ford fashion brand.
Speaker Change: Through a balanced by the decline of homegrown retail wholesale.
Unknown Executive: Whole sales performance in Q3 was negative at minus 24. We already highlighted the reason, just as we've commented on the impact from conversions that in Q3 was significant deeper people as for Zegna brand.
Speaker Change: Performance in Q3 was negative at minus point before we already highlighted the reasons just a quick comment on the impact from conversions that in Q3 was significantly in particular for Zynga brand.
Unknown Executive: Converting stores from wholesale to retailers, you know, creates a time difference in revenues since the conversion of wholesale determines enough front slow down of season of selling to the client, while the associated retail revenues are generated up.
Speaker Change: Worthy stores from wholesale to retail as you know creates a time difference in revenues since the conversion of wholesale determines and upfront slowdown of seasonal related to the client.
Speaker Change: While the associated the retail revenues are generated off the boards.
Let's move to page 12.
Speaker Change: A breakdown by.
Distribution channels for specifically the Dania brand in Q3, they had DTC revenues grew by 4% organic accounting at this point, 80% of the brand revenues as I already mentioned.
Speaker Change: EMEA Americas, and Japan continued to report the solid double digit growth rates for Dania brand, while greater China region sequentially deteriorated.
Speaker Change: And saw a double digit decrease in prostate not offset by a healthy increase in the average ticket.
Speaker Change: In the quarter the brand opened.
Speaker Change: Six net new stores, including New York Knicks backing on Hulu, and some conversions from wholesale into retail among.
Speaker Change: Among which we call out as I said, the aerie roles in store in Canada and also one story in the yard in Saudi Arabia that has been converted from wholesale to retail.
Speaker Change: Moving to wholesale the Dania brand recorded minus 5% organic in Q3 as a result of the conversion will be Scott.
Speaker Change: Sure and some have different timing and deliveries I would confirm here whether you already said during Q2 call I expect dania wholesale to before flattish on a year on year basis for full year 'twenty for inorganic terms, which means that it will be single digit negative on a reported basis.
Speaker Change: Let's move to page 13 that is the breakdown of homebound by channel in Q3.
Speaker Change: DTC for ground was minus 13% organic.
Speaker Change: As I said at the beginning of the organic method for some brand in Q3 at this point includes also the Korean market contribution since it had been acquired on July one of last year.
And the performance is composed of.
Speaker Change: A double digit growth.
Speaker Change: Tom Brown BTC in Japan, a positive Korea for Tom Brown, retail, which was more than offset by the negative performance in greater China region in the quarter. The brand opened four stores.
Speaker Change: In Asia Pacific.
Speaker Change: In Q3 wholesale for thumb Brown declined 46% similar to the Q1 numbers for the same reasons.
Speaker Change: And we already commented I just add that we expect to have this channel at the end of the year down around one third versus last year. So in the minus 35% area. We expect that the streamline of the wholesale business to focus on the DTC for example.
Speaker Change: Ron will continue until spring 'twenty five collection.
Speaker Change: Let's move to Tom Ford revenues split by distribution channel page 14 year, even more than before I look at the organic performance that takes into consideration. The performance starting from end of April that was the deal closing date of last year in Q3.
Speaker Change: Of 24 comfort passionate reported plus 3% organic in the DTC channel with a strong performance in EMEA, a solid performance in U S counterbalanced by Asia Pacific.
Speaker Change: During the quarter thoughtful fashion opened six net new stores, including Beijing, China World, which is the first flagship in the country and Saks Fifth Avenue women.
Speaker Change: Wholesale reported 30% organic down in the fourth but was impacted by a different timing of deliveries both some anticipation into Q2 and some delays that impacted.
Speaker Change: Reported performance.
Speaker Change: I think as always wholesale is better to look at on a year to date basis because of neutralizes.
Speaker Change: The ups and downs by quarter, and you see that year to date, the number of wholesale for Tom Tom Ford Passion is minus 11.
Speaker Change: And that is much more insightful number two.
Speaker Change: To see the performance of comfort fashion on this channel I will stop now on the next slide where you can see the success of the <unk>.
Speaker Change: Recently opened Meatpacking District, New York, Xenial store Nio and it over to follow for the Q&A session.
Speaker Change: Thank you. Thank you and John look I think your data and now we can open up the Q&A session.
Speaker Change: Hospitals that <unk> 445.
Speaker Change: Can you give us the 10-Q.
As a reminder, if you would like to ask a question today you can do so now by pressing star followed by the number one on your telephone keypad.
Speaker Change: Change your mind or you feel like your question has already been answered. Please press star followed by K to remove yourself from Nikkei.
Speaker Change: Our first question comes from Oliver Chen with TD Cohen.
Speaker Change: All of the please go ahead.
Oliver Chen: Hi, Good morning, Thank you for the detail the China comments were very helpful. You mentioned subdued consumer confidence in China.
Oliver Chen: Essentially getting worse what are you seeing there in terms of what you think happens neck and where things go.
Oliver Chen: At work before they get better and then Americas has been resilient.
Oliver Chen: <unk> to be that story.
Of great DTC offset by negative wholesale trends negative wholesale trends should eventually get easy compares just would love your thoughts on on what Youre seeing with wholesale and that that channel in the Americas.
Oliver Chen: <unk> improve over time, thank you.
Oliver Chen: Okay.
And thank you for your question that our Borsa I believer for Mr. Zane Yeah. The first one is on the finance consumer confidence and how we see China and.
Oliver Chen: In these days and in the future and the second in the U S market than that it didnt stay in the Osage.
Oliver Chen: Yes.
Speaker Change: Matter of fact, I will be leaving for China Tomorrow.
Speaker Change: So I will surely will have more color.
Speaker Change: After my trip, but that shows how important China remains set to us.
Speaker Change: And how.
Speaker Change: We believe that in these important the luxury market.
Speaker Change: Surely China has gone through some challenging moment 24, which iqos I believe that they will continue at least for the first part of 'twenty five.
I think we have to be a little bit cautious.
Speaker Change: In terms of the expectation.
Speaker Change: For both Don Brown and Dania.
Speaker Change: I think it's quite premature to make a.
Speaker Change: Further comment.
Speaker Change: I think that we should look at some positive signs.
Speaker Change: So.
Speaker Change: And.
Speaker Change: That should make us.
Speaker Change: More confident for the long term and for instance on Dania, we continue to see that.
Speaker Change: ASP and <unk>.
Speaker Change: <unk> growing nicely.
Our customers are younger.
Speaker Change: In Asia compared to before not because they are by the iconic zipper stage.
Gildo Zegna: But because the brand of a lot is attracting new young customers, I think this is a very, very strong sign. It means that our new strategy of rebranding is working. We always said that it was a little bit slower compared to other markets like the States, but I think that it's gaining more and more traction. Our source network in China has been fairly renewed. And we have a practically stocked tire location in most of the more. And we have a very strong relationship and trust with the top landlords.
Speaker Change: Because the brand overall is attracting new younger customers I think this is a very very strong.
Speaker Change: It means that our new strategy of banning is working we always said that it was a little bit slower as compared to other market like United States, but I think that we have.
Speaker Change: Gaining more and more traction.
Speaker Change: Our stores network in China has been fairly renewed.
Speaker Change: And we have practically to top tier location in most of the mall.
And we have a very strong relationship and trust with the top landlords.
Gildo Zegna: In that regard, we might have to do some more at a newer location in the coming years, but I think that the good work has been already done. And as an example, Villa Zegna, which is the personalized way to move the brand forward. As we did in New York, was held in Shanghai. And the good thing is that the customer we saw Villa Zegna came back to buy in the store, which is another important sign. Our urban luxury made to measure incidents growing, which is positive. You know, this is a unique characteristic. None of the luxury players have made-to-measure projects and culture and stuff like the one we have.
Speaker Change: In that regard we might have to do some more of a new location in the coming years, but I think that the good work has been already done.
Speaker Change: And as an example of realization.
Speaker Change: Which is.
Speaker Change: Personalized way to move the brand forward as we did in New York.
Speaker Change: It was held in Shanghai and.
The good thing is that the customer we saw it with a senior came back to buy in the store, which is another important sign.
Speaker Change: Our Uber luxury a made to measure answering that is growing which is positive.
Speaker Change: He is an unique characteristic none of the luxury players have a made to measure project.
Speaker Change: Culture and stuff like the one we have.
Gildo Zegna: And the urban luxury means bringing me to measure even higher. We develop our collection to be conveyed in the first quarter of next year. And we think that we will be helpful for China as well. So Uber luxury made to measure will continue to be important in China.
Speaker Change: And the Uber luxury it means bringing mako measure even higher.
Speaker Change: The value side of our collections will be unveiled in the in the first quarter of next year, and we think that there will be helpful for China as well, so Uber luxury Mako manager will continue being important.
Speaker Change: Also in China.
Gildo Zegna: And as I said, the one brand strategy is not only a logo, but is a deep. can sure change for our brand and for our people in the stores that are moving more and more from a transaction-driven to interaction-driven with the customer.
Speaker Change: And as said the one brand strategy.
Speaker Change: <unk> is not only a logo about these are deep.
Speaker Change: Sure unchanged.
Speaker Change: For our brand and for our people.
Speaker Change: In the stores that.
Speaker Change: Are moving more and more from a transactional driven so.
Speaker Change: Interaction driven with the customer.
Gildo Zegna: So to conclude on China, we are not yet where we aim to be, but the part is clear, and we are now completing the last step moving forward.
Speaker Change: So to conclude on China, we are not yet where we aim to be but the path is clear and we are now completing the last step moving forward.
Gildo Zegna: That's it for China. America, we are seeing solid, solid double-digit numbers. And I think that is the American customers in love. We go to do all the things that set for China, you know, are ahead. And we just delivered our drop for collection. And it is is is is is is really checking out well that we're calling pieces the month jacket and the month the, sorry the month issues and the content jacket are flying out really. And so we are very pleased about the development that is no reason why these development should stop for them in the next two months.
Speaker Change: This is for China America America, we are seeing solid solid double digit numbers.
Speaker Change: And I think that is.
Speaker Change: The American customers they love, what we do all the things I've said for China.
Go ahead.
Speaker Change: And we just delivered.
Speaker Change: Our drop for collection.
Speaker Change: And is really shaking out the whaler two iconic pieces, the monza jacket and demand the sorry, the monitor shows in the Comed a jacket are flying out really.
Speaker Change: And so we're very pleased about the rental but there is no reason why these developments should stop for them in the next two months.
Gildo Zegna: You know, we are retail guys, so retail is everyday. So we have another two months to just to do our best. And I think that everything is in place to do so not only for the, but for the other two brands.
Speaker Change: We have repaid guys. So.
Speaker Change: Retail is every day, so we have another two months.
Speaker Change: To just to do our best.
Speaker Change: And I think that everything is in place to do so.
Speaker Change: Not only for <unk>, but for the other two brands.
The question was also on the sales trend and I think anybody saw.
Or am I correct that you said that and Lisa can also bode well for next year without an easier base of comparison.
Speaker Change: But there.
Speaker Change: Of course, there are some conversions as has been commented that buy and gianluca.
Speaker Change: <unk> done this cost that are for sale at the power of handset as well as seven different timing in anyway.
Speaker Change: For the year and I think.
Speaker Change: From 19 during low cost feature and added that import tend to forget sale is to look at the nine months, telling me yesterday, it's up almost more than that unfortunately.
Speaker Change: So far months away or are we kind of look outside the we expect that to be.
On an organic so excluding the come there some amazing supply Asia.
Speaker Change: We already commented on on one thing a while are installed in the Farnborough Air show.
Speaker Change: Some volumes have been at all time.
Speaker Change: Yes.
Speaker Change: Two points.
Speaker Change: I don't know if we answered all your question Oliver or if you have any follow up.
Oliver Chen: That's very helpful. Thank you best regards.
Oliver Chen: Thank you.
Speaker Change: Operator is sustainable through the second one.
Operator: Thank you. Our next question comes from Anthony <unk> with BNP Powerbar.
Speaker Change: Please go ahead.
Speaker Change: Yes. Thank you, it's something you touched obviously from the Vantiv fiber.
Speaker Change: Yeah.
Speaker Change: A few questions here.
Speaker Change: First one would be on the.
Speaker Change: On your on the current trading.
Speaker Change: In October and as you can.
Speaker Change: Give us a little bit.
Speaker Change: Give us the.
Speaker Change: The current growth rate compared to the minus 7%.
Speaker Change: In the in the in Q3.
Speaker Change: My second question would be.
In terms of margin noise with China.
Speaker Change: But on the other side you have.
Speaker Change: You have the stronger.
Speaker Change: Our sale.
Speaker Change: Shrinkage I would say that that should help.
What can we expect for <unk> doing demo FERC.
Speaker Change: Margin.
Speaker Change: I see that consensus is.
Speaker Change: He is expecting and it did.
Speaker Change: The 10% <unk>.
Speaker Change: H two so if you can give a comment on that.
Profitability for <unk>.
Speaker Change: For the year.
Speaker Change: And my last question would be just to just to confirm that you are that you are guiding minus 35% for <unk>.
Speaker Change: For some brown.
Speaker Change: Further for the full year, which would imply positive.
Speaker Change: In Q4 on the plus 42%.
Speaker Change: Base. Thank you.
Speaker Change: Joseph I don't know if.
Speaker Change: Okay.
Speaker Change: And so the first question is actually on the current trend in October and what we are seeing in particularly go back to the Q3 numbers that they just foundation pieces that I needed to get that one and then I might take the second question on the data and then thirdly on some wrong on December three.
Speaker Change: That I find us.
Speaker Change: Even though.
Speaker Change: In October.
Speaker Change: October is only a few weeks.
Speaker Change: And then moving forward.
Speaker Change: Remaining part.
Speaker Change: So we will see but I think that the.
Overall has been slightly better.
Speaker Change: As a group than Q3.
Speaker Change: But we don't want to get too excited.
Speaker Change: Still more two months ahead.
Speaker Change: To cover as I said.
Speaker Change: And.
Speaker Change: Kind of environment is still volatile and uncertain at least.
Speaker Change: In one part of the award so that that's what I can tell you.
Speaker Change: Okay. So the second question I'm, sorry, Anthony we don't comment on that.
Speaker Change: EBIT to full yet.
Speaker Change: We never provided the guidance or what we can say is that.
Speaker Change: Today.
Speaker Change: The consensus for <unk> is that.
Speaker Change: Money is what I'm gonna be commodities and have all that he has seen no important months I had the last I saw.
No no no further comment that as you know on the expectation portfolio on Tom Brown.
Speaker Change: Anthony and Luca So I confirm the guidance on the 35 down or come down on the year basis after nine months.
Speaker Change: You look at the.
Speaker Change: The reported numbers, it's minus 39, and organic minus 38, which means implicitly that in Q4, there is still a decline not the growth or decline, but to a lower extent than the year to date nine months metric. So.
Speaker Change: That is the answer.
Speaker Change: I don't know if we answered the question on farm Anthony sorry, Yes. Thank you very much. Thank you. Thank you sorry.
And then Angela Qian comes.
Speaker Change: The next question comes from Chris <unk> with UBS.
Speaker Change: Please go ahead Chris.
Speaker Change: Hello highest Chris from UBS I have three the first one just to come back on the cost of the comments you made for the thing our brand DTC.
Chris: If I understood. It correctly the Chinese cluster is slowing from a high single digit negative in Q2 to mid teens negatively in Q3 saw my question would be what other nationalities et cetera because.
Speaker Change: Sequentially, the DTC channel was growing at 4%.
Speaker Change: And then within that the weakness quarter over quarter of the Chinese is it driven by.
Speaker Change: Mainland, China, Hong Kong, Macau or some other markets. If you can comment on that.
Speaker Change: Secondly, also on the Zale brand DTC grew 4% in the third quarter.
Speaker Change: Of course, we saw a few march four openings compared to last year. So if you can kind of help us understand a little bit more in terms of the like for like in space breakdown.
Speaker Change: Last one all of these.
Speaker Change: On the Chinese consumer as well so I know in the past you've commented that around 90% of the Chinese plant globally was in greater China are you seeing any change in thought because I think in the press release, you commented that Japan continues to be strong.
Speaker Change: But just trying to understand if there's any impact we need to be aware of.
Speaker Change: The currency moved from Japan. Thank you.
Speaker Change: Okay, I hope I guess, when we get all of your pet Chem, because that you speak about anybody.
Speaker Change: Desktop.
Speaker Change: First one is on the Chinese the class there given that the comments. We made then and so I leave it to John look at to answer and I think also on the second one on the comp for a while.
Speaker Change: And I think most of the third one in there.
Speaker Change: So I think these are three questions I've done noga. Thank you Chris.
Speaker Change: So in terms of the.
Speaker Change: Of nationalities, we've seen very positive Q3 for Europeans.
Speaker Change: So not in Europe, but.
Speaker Change: European demand in European residents.
Which have seen an acceleration compared to the prior year quarters, we continue seeing positive very positive double digit of Americans.
Speaker Change:
Speaker Change: Booth.
Speaker Change: And outside.
Speaker Change: Also in U S. We are experiencing double digit growth of Americans in Q3.
Speaker Change: And the other engine of growth has been middle eastern.
Speaker Change: Which are buying not only locally but also outside of middle East.
Speaker Change: So.
These are the three engines of our DTC growth by nationality.
Speaker Change: Perspective, and I confirm that <unk> residents.
Speaker Change: We're mid teens negative and.
Speaker Change: Of course, it's driven by mainland China, because it's the most of the bulk majority and they escaped immediately to the last question that you raised you remember correctly, we have always said that.
Speaker Change: Chinese and when we talk about Chinese our inventory metric is always greater China, because we report that geography.
Speaker Change: Yes.
Speaker Change: See this lessens buying 90% locally.
Speaker Change: And of course, we are seeing more spending.
Speaker Change: Outside namely in Japan.
Speaker Change: We have seen a solid growth of Chinese spending across the year and also in Q3.
Speaker Change: But that part is minimal because it's only.
Speaker Change: 10% of their spending for us.
Speaker Change: <unk> been buying bags or for our case, it's more local purchase than rather than.
Speaker Change: And definitely we are since we talked with our beliefs elsewhere definitely feel some more.
Speaker Change: Purchase abroad is more related is more stronger on the womens side rather than menswear.
Tend to buy more local.
Speaker Change: With trusted customer advice, so I think that this goes back to your first and.
Speaker Change: Last question.
Speaker Change: On the on the comps we don't report comp so that is a metric of course, we seek internally.
Speaker Change: But the delta perimeter is not.
Speaker Change: He is not the only reason for our positive UPC.
Speaker Change: For the need for the Dania, Brian So.
Speaker Change: The deal of course.
Speaker Change: We have grown the network we have converted some stores we have opened stores, but that is on top of a positive comp base on a year to date basis.
Got it.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes Paolo.
Speaker Change: Rick This is valid for year to date as well as Q3, yes, it's valuable support Q3 for Xinyuan UTC the call discussed.
Speaker Change: Okay.
Speaker Change: And Chris I don't know if you have any follow up that.
Speaker Change: We answer all your questions.
Speaker Change: That's very clear thank you very much.
Speaker Change: Alright.
Speaker Change: Positive despite the GTR issue that we commented.
Speaker Change: Uh huh.
Speaker Change: As far as they stay with us.
This is despite the VCR, which is I think before oven for most of the environment has.
Speaker Change: Is becoming.
Speaker Change: The headwind.
Speaker Change: Okay. So we can move to the next question.
Speaker Change: You.
The next question comes from Brian Martin with Goldman Sachs.
Speaker Change: Please go ahead.
Brian Martin: Great. Thanks, very much Jodi, John Linker and payload.
Brian Martin: Tuesday. Please my first is just on the China retail store footprint.
Speaker Change: Some comments in the last call and looking at a range of potential.
Speaker Change: Our plans on the table potentially consolidating some stores are pushing back.
Speaker Change: Rollout I wonder if there's been any progress on the thinking about especially with shifting.
Speaker Change: Shifting some of the trends and some positive thing around the stimulus.
Speaker Change: And my second would just be on pricing.
Speaker Change: In particular I was wondering what kind of.
Speaker Change: And that's top of mind, sorry can I stop here a second.
Speaker Change: Possible for you to speak a little bit closer to the mic because it's a little bit difficult for us to get.
Your question I think the first one was on China.
Speaker Change: Got it.
Speaker Change: Those things evolution in China, and then showing up all the three brands and so forth.
Speaker Change: Right, but if possible. Thank you sorry, if I interrupt.
Speaker Change: Yes.
Speaker Change: Hopefully, that's a little bit better.
Speaker Change: Much better thank you.
Speaker Change: Great.
Speaker Change: Then my second one was just on price list across the three brands I Wonder if you can now talk to the kind.
Speaker Change: Contribution you expect across 2025.
Speaker Change: Across the three main brands across list.
Speaker Change: Thank you thank you and I think no.
Speaker Change: Right. So for sure I leave it to John and look out on the China evolution.
Speaker Change: We need to do.
Speaker Change: And on China, Okay.
Speaker Change: On China.
On <unk> I already said that.
Speaker Change: We are I would say almost done in industrial nation.
Speaker Change: Our stores.
Speaker Change: The new brands.
Speaker Change: And I think that the challenges to.
Speaker Change: Increase the productivity in the store and do keep doing a good job with new customer.
Speaker Change: Do remember that.
Speaker Change: A good part of Daniel business, but I'll call. It was aspirational things who's using it so we have a process.
Speaker Change: And so we are looking for.
Speaker Change: It is spending.
Speaker Change: Client, which we are getting but these things.
Takes a while but I think we are on that either on the right.
Speaker Change: Revenue in terms of.
Speaker Change: Tom Brown I think Rodrigo has done.
Speaker Change: It's our job in the past few months.
Speaker Change: To strengthen the organizational structure.
Speaker Change: And we have a head of retail that has it.
Speaker Change: <unk> made many changes in staffing in order to support the new opening because we as you'll recall in the past couple of years, we had reopened.
Speaker Change: Several stores and.
Speaker Change: Even this last event that have taken place.
Speaker Change: Okay on conga and even three months ago in China.
To foster also with the presence of charm the Nu.
Speaker Change: So tomorrow, which is more women and more accessories and motor facilitation My new personalization is something that we believe local Indian senior of it in the three brands.
Speaker Change: I think that at all.
Speaker Change: The events is creating private rooms, whether you get the one to one.
Speaker Change: Broach with customer privacy exclusivity and so this goes well.
Speaker Change: Both men and women and so.
Speaker Change: Tom Brown.
Speaker Change: I think that is ready for.
Speaker Change: Sure surely a positive year in 'twenty five.
Speaker Change: In China.
Speaker Change: Gain.
Speaker Change: You know what.
Speaker Change: It did not happen in 'twenty four.
Speaker Change: As far as going forward. This concern is so different.
Speaker Change: Duration going forward brand is very strong in America.
Speaker Change: And here's.
Speaker Change: As a long way to go in Asia, but the thing that <unk> has put the.
Speaker Change: As head of the top Asian market people that are retailers.
Speaker Change: There are.
Speaker Change: Preparing for growth.
Speaker Change: In 2005, China Award.
Speaker Change: He is a good example, we are going to orbit and other big store opening in Singapore.
Speaker Change: And so these are the work that he has to do.
Speaker Change: Of course sure.
Speaker Change: We have good way than other season to fully expressed our best.
Speaker Change: For the brand in particular in ladies and the necessities.
Speaker Change: We did it with the new design and how are they document and so we expect that surely more of Tom Ford in the second half of 'twenty five during the first half, but easy to this strategy we are pursuing with the three brands.
Speaker Change: So.
Speaker Change: I think that.
Speaker Change: Whatever happens in China, I think that will be.
Speaker Change: The best situation that we'd be at 24.
Speaker Change: And then in terms of openings that we would be more for sure and detailed that in our when we release it.
Speaker Change: So you guys have any sort of thoughts at the end of January clearly that will be the timing.
Speaker Change: For sure we will provide some more guidance.
Speaker Change: Details for you in terms of new openings.
Speaker Change: Paul It's Eric.
Speaker Change: Sorry, I, just wanted to focus or the key.
Speaker Change: In China is having the right connection with landlords and the thing that thanks to the two brands that we feel good that as people the landlord Trust our group.
Speaker Change: And so I think that is giving us the chance to.
Speaker Change: Well and to foster our positions in a moment in which the China Chinese market is changing for everybody.
Speaker Change: Perfect.
Speaker Change: In terms of the price and size.
Speaker Change: Right.
Speaker Change: Policy.
Speaker Change: General statement, and then I'll give you a.
Speaker Change: <unk> flavor.
Speaker Change: So in general for the three brands and we believe that at this point the price architecture is.
Speaker Change: Right.
Speaker Change: These bonds.
Speaker Change: We have gone through a repositioning, especially on that thing aside I think now.
Speaker Change: The one brand strategy.
Speaker Change: A proper reflection in terms of price architecture.
Speaker Change: Having said this I think going forward, we need to.
We see moderate price increases in order to offset cost inflation.
Speaker Change: And currency flipped.
Speaker Change: Fluctuations, but we are not at this point.
Speaker Change: In mind.
Speaker Change: Structural.
Speaker Change: Repositioning of the crisis.
Speaker Change: And on the senior side, we see more.
Speaker Change: Positive tailwind coming from mix, we still see.
Speaker Change: <unk> also next year with the release of new products.
Speaker Change: On EBIT luxury side, so it's more mix than price for dania.
Tom Brown: Tom Brown.
Tom Brown: We have decided to be.
Tom Brown: Moderating the price increases in the law.
Tom Brown: Years, and maybe more than other peers and this for instance has been helping us, namely in Japan, where we have been experiencing in Iceland.
Tom Brown: So I think this is in a nutshell our situation on the final one one positive aspect is the learning curve.
Tom Brown: <unk>.
Tom Brown: Items, what we have seen in <unk>.
Tom Brown: We created a platform of HEICO.
Tom Brown: Now we are building a franchise on the platform.
Tom Brown: I think that also don't Florida until Brown semi Lindsay just a merger to push them.
Tom Brown: For them.
<unk> and I think that is pretty straightforward photo format. So I think that other than we know who are doing we have the means that it's just a matter of execution.
Tom Brown: Because of this low part of preparing what we need is being done now we just imagine to speed up the execution.
And just growing when the market is ready so.
Tom Brown: The majority of the market is already the biggest one is not yet.
Tom Brown: We look forward when it will be.
Speaker Change: Okay. Thank you.
Tom Brown: I don't know I fully answered all the questions that I would say, maybe even a little bit why there are so.
Speaker Change: Got any follow up otherwise that we see no other questions on the call.
Speaker Change: No that was great. Thank you very much.
Speaker Change: Thank you. Thank you.
Speaker Change: In April.
We have no further questions.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Sure Matt.
Matt: Thank you for for average for everybody for participating to this call just a couple of notes when is that.
Speaker Change: First of all I would like to anticipate that that starting from next year, we will slightly change the format of our investors call.
Speaker Change: And particularly with regard to the management for sure in General look at myself in the <unk>. Yeah. We continue to be present in all the income is call it while our CEO.
Speaker Change: We left and only two selected one sale during the year. This will be much more in line with best practice for our sector.
Speaker Change: Let me know anticipated that that he would be price and peso on the forthcoming or full year 2024 75.
Speaker Change: <unk> thousand 74 revenues call, which will be on January 27, 2025.
Speaker Change: You haven't seen that I'm sure you have seen on our press release and on our website that we and it is our calendar financial color and therefore, the next year. So the first caller will be on January 27.
Speaker Change: And with this I now end today's call I. Thank you again, Florida for all the questions always very interesting for either.
Speaker Change: Of course, our leach and my size, but we are here for any follow up that and in the meantime, we show a goodbye.
Speaker Change: Thank you everybody.
Speaker Change: Thank you everyone for joining us today. This concludes our call and you may now disconnect your lines.