Full Year 2025 Ermenegildo Zegna NV Earnings Call

March 20, 2026

Speaker #1: Hello everyone, and thank you for standing by. The Ermenegildo Zegna Group FY2025 preliminary revenues call will be beginning in just a few minutes' time.

Speaker #1: We thank you for your patience and will begin soon. Hello, everyone, and thank you for standing by. Today's call will begin in one minute.

Speaker #1: Good afternoon, good morning, everyone. Thank you for joining the Ermenegildo Zegna Group FY2025 preliminary revenues call. Please note that today's material and presentation are available on the ZegnaGroup.com website.

Operator: 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 on 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.

Speaker #1: Joining us today are the Zegna Group leadership team, including Gianluca Tagliabue, 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.

Speaker #1: 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.

Operator: 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 two of today's presentation. I will now hand over to Gildo Zegna.

Speaker #1: Please refer to the forward-looking statements’ cautionary statement included at page 2 of today’s presentation. I will now hand over to Gianluca Tagliabue.

Speaker #2: 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 express our deep appreciation to our colleagues in the Middle East for their dedication, professionalism, and commitment during this complex period.

Gildo Zegna: 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 express our deep appreciation to our colleagues in the Middle East for their dedication, professionalism, 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.

Speaker #2: 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.

Speaker #2: 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 customer.

Gildo Zegna: 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 customer. Let me now turn to the business update, starting with the recent Tom Ford fashion show, which, as you know, has taken place earlier this month. Haider Ackermann's third runway show, presented in Paris, 4 March, has been widely acclaimed. Haider has further demonstrated his ability to interpret the brand's codes and DNA in a way that is unique, contemporary, and deeply personal. The selective elegance of Tom Ford, its craftsmanship and tailoring heritage, and its iconic leather pieces, reimagined with modernity, were all powerfully affirmed in this collection, which also added innovative knitwear garments.

Speaker #2: Let me now turn to the business update, starting with the recent Top Four fashion show, which, as you know, has taken place earlier this month.

Gildo Zegna: Haider Ackermann's third runway show, presented in Paris, 4 March, has been widely acclaimed. Haider has further demonstrated his ability to interpret the brand's codes and DNA in a way that is unique, contemporary, and deeply personal. The selective elegance of Tom Ford, its craftsmanship and tailoring heritage, and its iconic leather pieces, reimagined with modernity, were all powerfully affirmed in this collection, which also added innovative knitwear garments.

Speaker #2: Eider Ackermann's third runway show, presented in Paris on March 4th, has been widely acclaimed. Eider has further demonstrated its ability to interpret the brand codes and DNA in a way that is unique.

Speaker #2: Contemporary and deeply personal. The selective elegance of top four, its craftsmanship and tailoring heritage, and its iconic leather pieces reimagined with modernity were all powerfully affirmed.

Speaker #2: In this collection, which also added innovative knitwear garments, I found the whole collection very confident and consistent—in one word: very strong. And I want to extend my applause to Eider, and to the entire team who worked alongside him to bring these shows to life.

Gildo Zegna: I found the whole collection very confident and consistent, in one word, very strong, and I want to extend my applause to Haider Ackermann and to the entire team who worked alongside him to bring these shows to life. 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 that the Tom Ford Fashion management team, supported by Gianluca Tagliabue and the whole group, are working to build on this success. I was also very pleased to see the promising start of recently launched Thom Browne sneaker in collaboration with ASICS. First presented during the Fall/Winter 2026 fashion shows, the brand hosted in San Francisco ahead of the Super Bowl. These limited sneakers were officially launched worldwide on 2 March.

Speaker #2: 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.

Speaker #2: We're confident that Leo Gavazza and the top four fashion management team, supported by Gianluca Tagliabue and the whole Group, are working to build on this success.

Speaker #2: I was also very pleased to see the promising start of the recently launched Tom Brown sneaker, in collaboration with ASICS. First presented during the Fall/Winter 2026 fashion shows the brand hosted in San Francisco ahead of the Super Bowl, these limited sneakers were officially launched worldwide on March 2nd.

Gildo Zegna: I was also very pleased to see the promising start of recently launched Thom Browne sneaker in collaboration with ASICS. First presented during the Fall/Winter 2026 fashion shows, the brand hosted in San Francisco ahead of the Super Bowl. These limited sneakers were officially launched worldwide on 2 March.

Speaker #2: The launch was supported by several high-visibility pop-up events, including at Selfridges in London, Isetan Tokyo, and Plaza 66 in Shanghai. The collaboration is achieving strong resonance ahead of our expectations.

Gildo Zegna: The launch was supported by several high visibility pop-up events, including at Selfridges in London, Isetan Tokyo, and Plaza 66 in Shanghai. The collaboration is achieving strong resonance 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 customer. Sam Lobban 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 customer. There is a journey our clients, especially these new clients, should undertake. Jersey, and even more so knitwear, are important, a second purchase for them. I'm also excited that in June, Thom Browne will show in Milan during the Milan Men's Fashion Week for the first time.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: There is a journey our clients, especially these new clients, should undertake. Jersey, and even more so knitwear, are important as a second purchase for them.

Speaker #2: I'm also excited that in June, Thom Browne will show in Milan during Men's World Fashion Week for the first time. Moving to Zegna, as you know, at the beginning of this year, Zegna presented its Fall/Winter 2026 show in Milan, titled 'A Family Closet.'

Gildo Zegna: Moving to Zegna, as you know, at the beginning of this year, Zegna presented its Fall/Winter 2026 show in Milan, titled A Family Closet. The idea behind this collection was simple but deeply rooted in our history. Clothes are never just garments. They carry memories. They move across generations, preserving experience and stories over time. This concept of memory as living legacy continues to inform many of the initiatives we are developing across the world. Finally, looking ahead, in March, we introduced Memorie, a fragrance collection that translates moments from the founder's life into scent. Rather than being conceived as a traditional perfume launch, Memorie distills more than a century of Zegna history into six chapters each rooted in a place, gesture, or object from Ermenegildo Zegna's daily world. The collection is currently available in selected Zegna locations with a progressive global rollout continuing through 2026.

Speaker #2: The idea behind this collection was simple but deeply rooted in our history. Clothes are never just garments; they carry memories. They move across generations, preserving experiences and stories over time.

Speaker #2: This concept of memory as living legacy continues to inform many of the initiatives we are developing across the world. Finally, looking ahead, Zegna will present its—in March, we introduced Memory, a fragrance collection that translates moments from the founder's life into scent.

Speaker #2: Rather than being conceived as a traditional perfume launch, Memory distills more than a center of Zegna history. In the 2026 chapter, it's rooted in a place, gestures, or objects from the Ermenegildo Zegna daily world.

Speaker #2: The collection is currently available in selected Zegna locations, with a progressive global rollout continuing through 2026. Beyond this launch, we are also very proud that Zegna has been announced as the main sponsor of the Italian pavilion at the 61st International Exhibition, La Biennale di Venezia 2026.

Gildo Zegna: Beyond this launch, we are also very proud that Zegna has been announced as the main sponsor of the Italian Pavilion at the 61st International Art Exhibition, La Biennale di Venezia 2026, one of the most important platforms for contemporary art worldwide. The Italian pavilion will present Con te con tutto, a project by artist Chiara Camoni, curated by Cecilia Alemani, with whom we have developed a meaningful dialogue over the past decade. This initiative, alongside our global partnership with Art Basel, reflects how Zegna increasingly operates not only as a luxury brand, but as a cultural platform connecting fashion, contemporary art, and landscape, continuing a vision that has been part of the company since our founder first imagined house of Zegna.

Speaker #2: One of the most important platforms for contemporary art worldwide, the Italian Pavilion will present Conte Contutto, a project by artist Chiara Camoni, curated by Cecilia Canziani, with whom we have developed a meaningful dialogue over the past decade.

Speaker #2: This initiative, alongside our global partnership with Art Basel, reflects how Zegna increasingly operates not only as a luxury brand, but as a cultural platform connecting fashion, contemporary art, and landscape.

Speaker #2: Continuing a vision that has been part of the company since our founder first imagined Oasi Zegna. Finally, looking ahead, Zegna will present this Spring and Summer 2027 fashion show in Los Angeles, by Creative Director Alessandro Sartori, together with the launch of Villa Zegna LA.

Gildo Zegna: Finally, looking ahead, Zegna will present the Spring/Summer 2027 fashion show in Los Angeles by Creative Director Alessandro Sartori, together with the launch of Villa Zegna LA. Following the experience we created in Dubai last June, Los Angeles will allow us to showcase our collection within one of the most dynamic markets of our group. The city resonates not only as a global fashion hub, but also as a cultural capital, with influence extend far beyond its border. Together, this initiative reflects Zegna's long-term vision, building a brand that moves seamlessly between fashion, culture, and landscape, while remaining deeply rooted in the values of its founder. Now, let me hand over to Gianluca. Thank you.

Speaker #2: Following the experience we created in Dubai last June, Los Angeles will allow us to showcase our collection within one of the most dynamic markets of our Group.

Speaker #2: The city resonates not only as a global fashion hub, but also as a cultural capital, with influence extending far beyond its borders. Together, this initiative reflects Zegna's long-term vision.

Speaker #2: 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 Gianluca.

Speaker #2: Thank you.

Gianluca Tagliabue: Thank you, Gildo. Good morning, good afternoon to all of you. Let's move to page seven of the presentation, where you find full year 2025 results key highlights. The revenues for full year 2025 have already been disclosed early February, and we confirm them at EUR 1,917 million, -1.5% year over year on a reported basis and +1.1% on an organic basis. In 2025, the group reached a 67.5% gross margin and adjusted EBIT of €163 million, which does include €10 million of provisions related to losses on trade receivables for Saks Global Chapter 11 procedure. Thus, without this €10 million, but that provision, the adjusted EBIT would have been €173 million.

Speaker #1: Thank you, Gildo. Good morning, good afternoon to all of you. Let's move to page 7 of the presentation, where you find full year 2025 results highlights.

Speaker #1: The revenues for full year 2025 have already been disclosed early February, and we confirmed them at $1,917,000,000, minus 1.5% year over year on a reported basis and plus 1.1% on an organic basis.

Speaker #1: In 2025, the Group reached a 67.5% gross margin, and an adjusted EBIT of $163 million, which does include $10 million of provisions related to losses on trade receivables for the Saks Global Chapter 11 procedure.

Speaker #1: Thus, without this $10 million bad debt provision, the adjusted EBIT would have been $173 million. The Group also reached $109 million of profit, up 20% from $91 million last year.

Gianluca Tagliabue: The group also reached EUR 109 million of profit, up 20% from EUR 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 2025, 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. As you know, DTC gross margin is higher than the wholesale one. Moving to SG&A. SG&A in full year 2025 reached EUR 1,034 million with 53.9% incidence on revenues compared to 51.8 last year.

Speaker #1: Moreover, at the end of the year, the Group had a net cash surplus of $52,000,000. Let's move to the following pages to comment more on these results.

Speaker #1: In full year 2025, gross profit rose by 90 basis points to $67.5 million, 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.

Speaker #1: Moving to SG&A. SG&A in full year 2025 reached $1,034,000,000, with a 53.9% incidence on revenues, compared to 51.8% last year. This increase in the SG&A incidence is linked to the following factors.

Gianluca Tagliabue: 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 Thom Browne and Tom Ford. More, it has been impacted by the negative operating leverage caused by the streamlining of the wholesale at Thom Browne. This SG&A line of EUR 1,034 million includes also EUR 10 million provisions related to the losses on trade receivables owed by Saks Global. Moving to the marketing expenses, in 2025, they were EUR 121 million, equal to 6.3% of revenues, in line with the prior year and our indications of a fair mid-term marketing on revenues incidence of around 6%.

Speaker #1: The investments in talent, systems, and organization across different functions and brands are looking at the long-term vision for each of the brands. Store network expansions, in particular for Thom Browne and Tom Ford.

Speaker #1: Moreover, it has been impacted by the negative operating leverage caused by the streamlining of the wholesale at Thom Browne. This SG&A line of $1,034,000,000 also includes $10,000,000 in provisions related to the losses on trade receivables owed by Saks Global.

Speaker #1: Moving to the marketing expenses, in 2025, these were $121 million, equal to 6.3% of revenues, in line with the prior year, and our indications of a fair mid-term marketing-on-revenues incidence of around 6%.

Gianluca Tagliabue: Let's move to page nine, 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's 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 EUR 3 million of provisions in relation to Saks Global, because these provisions are not in the adjustments or affecting the adjusted EBIT. Without which, the adjusted EBIT for the Zegna segment would have been EUR 200 million with 14.7% margin.

Speaker #1: 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 management to analyze the performance of the business at Group and at segment level, and you can find the reconciliations in the appendix.

Speaker #1: Let's move to the analysis by segment. The Zegna segment, which includes the Zegna brand, the textile division, and the third-party brands business, generated an adjusted EBIT of $197 million and a margin of 14.4%, versus 13.9% last year.

Speaker #1: This result in EBIT reflects and includes $3,000,000 of provisions in relation to Saks Global. Because these provisions are not in the adjustments, they are affecting the adjusted EBIT.

Speaker #1: Without which, the adjusted EBIT for the Zegna segment would have been $200 million, with a 14.7% margin. The Thom Browne segment has been the most hit by the reduction in revenues, driven by the wholesale streamline, and achieved $1 million of adjusted EBIT.

Gianluca Tagliabue: Thom Browne segment has been the most hit by the reduction in revenues driven by the wholesale streamline and achieved EUR 1 million of adjusted EBIT. This performance includes EUR 2 million provisions in relation to Saks. Tom Ford Fashion segment reported a loss at adjusted EBIT level for EUR 16 million generated in H1, while in the second half of the last year, Tom Ford Fashion recorded a positive adjusted EBIT performance. Full year 2025 results for Tom Ford include EUR 5 million of provisions in relation to Saks Global. On the positive side, corporate costs decreased mostly due to lower insurance costs. Moving to page ten, you can see here summarized our reported income statement. A brief comment on taxes.

Speaker #1: This performance includes $2.0 million in provisions related to Saks. The Tom Ford fashion segment reported a loss at the adjusted EBIT level of $16.0 million, generated in H1, while in the second half of last year, Tom Ford fashion recorded a positive adjusted EBIT performance.

Speaker #1: Full year 2025 results for Tom Ford include $5 million in provisions in relation to Saks Global. On the positive side, corporate costs decreased, mostly due to lower insurance costs.

Speaker #1: 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 non-taxable income in 2025 related to the remeasurement of put option liabilities, mainly the one on the remaining 8% stake in Tom Brown.

Gianluca Tagliabue: As you see, the effective tax rate decreased to 22% compared to 30% last year due to non-taxable income in 2025 related to the remeasurement of put option liabilities, mainly the one on the remaining 8% stake on Thom Browne. As a result of the above, we reported group profit in full year 2025 at EUR 109.5 million, up 20% versus EUR 90.9 million in 2024. Based on this result, and in line with our dividend policy, the board of directors proposed a dividend distribution of EUR 0.12 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.

Speaker #1: As a result of the above, we reported Group profit in full year 2025 at $109.5 million, up 20% versus $90.9 million in 2024. Based on these results, and in line with our dividend policy, the Board of Directors proposed a dividend distribution of 12 euro cents per ordinary share, which equals a total dividend distribution of approximately $32,000,000.

Speaker #1: Let's now move to page 11, where we comment on CapEx and trade working capital. Cash out for CapEx in 2025 reached $103,000,000, 5.4% of revenues, of which about 60% is related to stock network, and the remaining 40% to investment in production, including the shoe factory we are building close to Parma and in IT.

Gianluca Tagliabue: Cash outlay for CapEx in 2025 reached EUR 103 million, 5.4% on revenues, of which about 60% are related to store network, and the remaining 40 to investment in production, including the shoe factory we are building close to Parma and in IT. As we have already anticipated, 2026 is going to be an important year in terms of CapEx, since the investments are related to the new shoe factory in Parma, which will be completed by this year. For this reason, we expect CapEx in 2026 to be closer to the 7% mark.

Speaker #1: As we have already anticipated, 2026 is going to be an important year 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.

Gianluca Tagliabue: Trade working capital reached EUR 408 million at the end of December 2025, 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 input. 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 EUR 10 million in the prior year. This despite the already mentioned CapEx of EUR 103 million paid and EUR 150 million for lease liabilities and right of use assets.

Speaker #1: Trade working capital reached $408 million at the end of December 2025, equal to 21.3% of revenues, compared to 460,236% of revenues at the end of 2024.

Speaker #1: This was the effect of improved inventory management, control of trade receivables, and forex impact. Looking at free cash flow on page 12, let me highlight the Group generated $82 million of positive free cash flow compared to $10 million in the prior year.

Speaker #1: This is 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 $107 million, the Group reported at the end of December a positive cash surplus of $52 million versus a $94 million net financial indebtedness at the end of 2024.

Gianluca Tagliabue: 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 107 million, the group reported at the end of December a positive cash surplus of EUR 52 million versus EUR 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 Zegna brand 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.

Speaker #1: Let me conclude again with a brief comment on the impacts of the current situation in the Middle East. As you know, the Middle East is a relevant region for our Group and for the Zegna brand in particular.

Speaker #1: Revenues for the region represent a mid-high single-digit share of 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 impacts of this conflict on 2026 results, as it will largely depend on the duration and possible implications for the global economic outlook.

Gianluca Tagliabue: At this stage, it is difficult to fairly assess the potential impact 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 these factors. Now to Paola for your questions.

Speaker #1: 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 these factors.

Speaker #1: Now, to Paola for your questions.

Paola Durante: Thank you. Thank you, Mr. Gildo. Thank you, Gianluca. I will moderate and open up for the Q&A session.

Speaker #2: Thank you. Thank you, Mr. Guido. Thank you, Gianluca. And I'll operate and open up for the Q&A session.

Operator: Thank you. If you would like to ask a question today, please do so now by pressing star followed by the number 1 on your telephone keypad. If you change your mind or you feel like your question has already been answered, you can press star followed by 2 to remove yourself from the queue. Our first question today comes from Chris Huang with UBS. Chris, please go ahead.

Speaker #3: Thank you. If you would like to ask a question today, please do so now by pressing Start, followed by the number 1 on your telephone keypad.

Speaker #3: If you change your mind or you feel like your question has already been answered, you can press Start, followed by 2, to remove yourself from the queue.

Speaker #3: Our first question today comes from Chris Huang with UBS. Chris, please go ahead.

Chris Huang: Hello. Hi, it's Chris from UBS, and thank you for taking my questions. I have three. Firstly, starting with the top line momentum, 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. I'm just wondering if you can give an update on the latest trends you are seeing by different regions, nationalities, whatever you can provide. Secondly, on the margin, it seems like Zegna segment, excluding the Saks impact for the year, ended around 14.7% EBIT. If I look at the latest consensus, I think people are modeling around 14.1%.

Speaker #4: Hello. Hi. It's Chris from UBS, and thank you for taking my questions. I have three. Firstly, starting with the top-line momentum: I think at the previous conference call in Q4, you were saying that, excluding the Chinese New Year, you weren't seeing any meaningful change on a sequential basis versus Q4.

Speaker #4: So, I'm just wondering if you can give an update on the latest trends you are seeing by different regions, nationalities—whatever you can provide.

Speaker #4: Secondly, on the margin, it seems like Zegna's segment, excluding the tax impact for the year, ended around 14.7% EBIT. If I look at the latest consensus, I think people are modeling around 14.1%.

Chris Huang: Are there any reasons why you believe that given the pickup in theory for like-for-like growth into 2026, you shouldn't be able to do a margin that is higher than what you did in 2025? That's my second question for the Zegna segment. Last but not least, I think FX moved a bit over the last few weeks. I think part of your caution on 2026 margins was coming from the fact that FX is not supportive. 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.

Speaker #4: So, are there any reasons why you believe that, given the pickups in theory for lifelike growth in 2026, you shouldn't be able to do a margin that is higher than what you did in 2025?

Speaker #4: That's my second question for the Zegna segment. Last but 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 supportive.

Speaker #4: So I'm just curious to know if the recent moves of FX make you feel a bit more comfortable in meeting the 2027 targets in terms of profitability.

Speaker #4: Thank you.

Paola Durante: Thank you, Chris, and thank you for the three questions. I think the first one 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 the 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.

Speaker #2: Thank you, Chris, and thank you for the three questions. I think the first one is for Mr. Guido, and it is related to the current trend and an outlook or a comment across all regions. Of course, let's say I anticipate that sales information will be given more at the end of April when we release Q1 numbers.

Speaker #2: But very happy to provide a comment on the current trend.

Gianluca Tagliabue: Yeah. Thank you, Paola. Overall, the year has started well, with the trend slightly better than Q4 2025 in DTC. This notwithstanding the uncertainties we are facing in the past few weeks with the war in the Middle East. We saw a good performance in Tom Ford Fashion, thanks to the new spring summer product and the continuation of a good trend also in Thom Browne, in particular in recent weeks after the launch of the Thom Browne x ASICS. 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. We are satisfied with the performance of Chinese New Year, slightly ahead of expectation.

Gildo Zegna: Yeah. Thank you, Paola. Overall, the year has started well, with the trend slightly better than Q4 2025 in DTC. This notwithstanding the uncertainties we are facing in the past few weeks with the war in the Middle East. We saw a good performance in Tom Ford Fashion, thanks to the new spring summer product and the continuation of a good trend also in Thom Browne, in particular in recent weeks after the launch of the Thom Browne x ASICS. 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. We are satisfied with the performance of Chinese New Year, slightly ahead of expectation.

Speaker #4: Yeah. Thank you, Paola. Overall, the year started well, with the trend slightly better than Q4 2025 in DTC. This is notwithstanding the uncertainties we are facing in the past few weeks with the war in the Middle East.

Speaker #4: We saw a good performance in Tom Ford fashion, thanks to the new Spring/Summer product. And the continuation of a good trend also in Thom Browne, in particular in recent weeks after the launch of the Thom Browne AZ sneaker.

Speaker #4: Maybe a comment on China. We are seeing some sequential improvement in the region; however, we remain cautious, and we continue to assume a flattish performance for the year.

Speaker #4: But we are satisfied with the performance of Chinese New Year, slightly ahead of expectation. So that we know what we have to do, and we'll adopt the focus store strategy to enhance the quality and efficiency of our DOS network in the region.

Gianluca Tagliabue: So that we know what we have to do, and we'll adopt a focused store strategy to enhance the quality and efficiency of our DOS network in the region. On the other two major region, 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. I would say that also Europe looks pretty resilient, besides the conflict in the Middle East. Overall, you know, not a bad situation of the first eight to 10 weeks of the year.

Gildo Zegna: So that we know what we have to do, and we'll adopt a focused store strategy to enhance the quality and efficiency of our DOS network in the region. On the other two major region, 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. I would say that also Europe looks pretty resilient, besides the conflict in the Middle East. Overall, you know, not a bad situation of the first eight to 10 weeks of the year.

Speaker #4: On the other two major regions, in particular the Americas—United States and Latin America—remain very resilient, and we see a continuation of good growth as we did last year.

Speaker #4: And I would say that also Europe looks pretty resilient, besides the conflict in the Middle East. So, overall, not a bad situation for the first 8 to 10 weeks of the year.

Paola Durante: Okay. The second is for Gianluca, and it is related to the Zegna segment, EBIT performance.

Speaker #2: Okay. The second is for Gianluca and it is related on the Zegna segment. Edit, performance.

Gianluca Tagliabue: Hi, Chris. I think you pointed out an important angle that is, of course, that the profitability of Zegna segment EBIT margin in H2, if you exclude the Saks Chapter 11 provisions, would have been close to 15%. We are pleased with that step. We know that Zegna segment deserves stronger profitability still. We are working on it. 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. We observe with pleasure the fact that we'll get there. Linking also to the

Speaker #5: Hi, Chris. So I think you pointed out an important angle, that is, of course, that the profitability of the Zegna segment EBIT margin in the second half, if you exclude the Saks Chapter 11 provisions, would have been close to 15%.

Speaker #5: So we are pleased with that step. We know that the Zegna 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.

Speaker #5: And we don't want to chase short-term quick results. So we observe with pleasure the fact that we will get there. And linking also to your last sentence, it's true that in the recent weeks, when we talked early February, the dollar was 1.18, and now it's 1.15, 1.16, and the renminbi was at 8.10, and now is below 8.

Gianluca Tagliabue: Your last sentence, it's true that in the recent weeks when we talked early February, the dollar was 1.18, and now it's 1.15, 1.16, and the renminbi was at 8.10, and now is below 8. We have seen some inflection point on currency, which should favor us. 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. This is still a factor that will impact the group, will impact also the Zegna side. Having 2 points of headwind from currency, definitely will be a dragging factor in the profitability. That's why also I link to one of the statement that I did last time that we want to see.

Speaker #5: 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 two points, of headwind from currencies.

Speaker #5: So this is still a factor that will impact the group, will impact also the Zegna side. So having two points of headwind expected from currency definitely will be a dragging factor in the profitability.

Speaker #5: And that's why also I link to one 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 one-time provisions of Sax.

Gianluca Tagliabue: We are expecting to move the needle on the profitability for the group in 2026, taking aside the one-time provisions of Saks. I think I put together the second and third question.

Speaker #5: So, I think I put together the second and third.

Speaker #4: Second and third question.

Chris Huang: Perfect. Thank you so much. Maybe just to clarify, the commentary on Q1 D2C momentum, you're referring to an acceleration versus the Q4, which was 10% at group level. Is that correct?

Speaker #5: Perfect. Thank you so much. Maybe just to clarify, so the commentary on Q1 DTC momentum—you're referring to an acceleration versus Q4, which was 10% at group level.

Speaker #5: Is that correct?

Gianluca Tagliabue: It's correct. It's correct.

Chris Huang: Perfect. Thank you.

Speaker #4: It's correct. It's correct.

Speaker #5: Perfect. Thank you.

Paola Durante: Thank you, Chris. Second?

Speaker #2: Thank you, Chris. Second.

Operator: Thank you. The next question comes from Adrien Duverger with Goldman Sachs. Adrien, please go ahead.

Speaker #6: Thank you. The next question comes from Adrian Diverga with Goldman Sachs. Adrian, please go ahead.

Adrien Duverger: Hey, good afternoon, Giorgio, Gianluca, and Paola. Thank you very much for taking my questions. I guess the first one 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 your relationships with the clients there? My second question would be, on the resilience from the higher spending cohort. Have you continued to see, like, an increase in the proportion this year compared to Q4? And if so, have you seen any differences by different geographies?

Speaker #7: Hey, good afternoon, Guido, Gianluca, and Paola. Thank you very much for taking my questions. I guess the first one would be, sorry again on the current environment.

Speaker #7: 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 impact in other regions?

Speaker #7: And within the Middle East, are you taking any specific initiatives to maintain your relationships with the clients there? Then my second question would be on the resilience from the higher-spending cohort.

Speaker #7: Have you continued to see an increase in the proportion this year compared to Q4? And if so, have you seen any differences by different geographies?

Adrien Duverger: Thank you very much.

Speaker #7: Thank you very much.

Paola Durante: Very cool. Hi, Ciao, Adrien. In terms of current environment, if we have seen any headwind, any negative after the war, I-

Speaker #2: Okay. Cool. Hi. John Andrew, so in terms of current environment, if we have seen any headwind, any negative after the war, I mean.

Gianluca Tagliabue: No, as I said previously, not with the exception of the Middle East, in which the stores have been, you know, initially closed and then opened, but there is less traffic and there is, you know, less energy, surely. Customers are surely down, you know, quite a bit. I would say that we are scoring better than what we've heard. That shows 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.

Speaker #7: No, as I said previously, not, with the exception of the Middle East, in which the store has been initially closed and then opened. But there is less traffic and there is less energy, surely, and so customers are surely down quite a bit.

Speaker #7: I would say that we are scoring better than what we have heard. And so that shows the brand is very well placed in that part of the world.

Speaker #7: 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 probably will be buying, hopefully, outside the area.

Gianluca Tagliabue: I think that many of those customer probably, you know, will be buying hopefully outside the area, and are the top resilient customers that we are talking about. Overall, with the exception of that particular area, I think that the rest is continuing the expected, you know, growth.

Speaker #7: And are the top resilient customers that we are talking about. So overall, with the exception of that particular area, I think that the rest is continuing the expected growth.

Paola Durante: The question on the third one was also related to which cohort and, in particular, if the high spenders are continuing to drive the growth.

Speaker #2: And the question on the third one was also related to which cohort and, in particular, if the high spenders are continuing to drive the growth.

Gianluca Tagliabue: No. We have, you know, a program around the world of personalization. I think that we are becoming more and more known to do that extremely well. Appointments and store events that goes beyond the Villa Zegna. I think that could be a good flow of business of product that also you won't find in the store. That helps keep the resilience of those customer high.

Speaker #7: But we have a program around the world of personalization. So I think that we are becoming more and more known to do that extremely well.

Speaker #7: And appointments and store events that go beyond the Villa Zegna. So I think that that could be a good flow of business or product that also you don't find in the store.

Speaker #7: So that helps keep the resilience of those customers high.

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

Speaker #2: In terms of the relationship, or what we are doing with the Middle East customer, it was also asking if there is something particular that we are doing so far.

Speaker #2: I think, in terms of relationships in the Middle East, I...

Gianluca Tagliabue: No, I don't think that. You know, we have a good partner there. There's actually two good partner. One is Al Tayer for Zegna, and the other one is Chalhoub for Tom Ford.

Speaker #7: No, I don't think we have a good partner there. There's actually two good partners. One is Altair for Zegna, and the other one is Chaloux for Tom Ford.

Gildo Zegna: I think that, you know, we are following the happening very closely and we know that they are trying to keep the malls as open and as active as ever. That's the partnership with local is important and to support them, you know, with the merchandise and with some local promotion.

Speaker #7: And so I think that we are following the happening very closely. And we know that they are trying to keep the mall as open and as active as ever.

Speaker #7: And so that's why the partnership with local is important. And to support them, with the merchandise and with some local promotion.

Paola Durante: Also, the relationship that our client advisor has with all our customers that continues is something that clearly is helping this in this situation. I think we answered your questions.

Speaker #2: And also the relationship that our client advisor has with all our customers. They continue with something that clearly helps in this situation. Andrew, I think we answered your questions.

Gildo Zegna: Anthony.

Paola Durante: Anthony.

Adrien Duverger: Yes. Thank you very much.

Paola Durante: And, uh

Adrien Duverger: Can I follow up with a quick question on the?

Speaker #2: Anthony.

Adrien Duverger: Can I follow up with a quick question on the?

Speaker #7: Yes, thank you very much. Can I 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 like-for-like and mix?

Paola Durante: Yes.

Adrien Duverger: 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 like-for-like and mix?

Gianluca Tagliabue: No. 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, both, as Gildo was saying, through exclusive collection, but also in the store in ready-to-wear, we keep elevating the offer. This is, of course, in Zegna, but also on the other brands. I think the rule of thumb stays with the low mid-single digit price increase in order to offset the cost factors.

Speaker #4: No, as we said last time, we continue doing low- to mid-single-digit price increases on a like-for-like basis. We continue having an evolution of the mix upwards.

Speaker #4: That is our both, as Guido was saying, through exclusive collection but also in the store, in ready-to-wear. We keep elevating the offer. This is, of course, in Zegna.

Speaker #4: But also on the other brands. So I think the rule of thumb stays with the mid- to low-mid single-digit price increase, in order to offset the cost factors.

Gildo Zegna: One addition in particular to Zegna is the drop strategy of coming up every several weeks with new deliveries and with product that looks different from the previous delivery. It brings an incredible excitement to the store. I think that color is a driving force. I think iconic product and not only the prestige but also other categories are meeting more and more the desires of customer. I think that the outreach is very important. To keep the interest of the store high, it's extremely a priority in times where overall you see a little bit less traffic.

Speaker #7: No, sorry, one addition in particular to Zegna is the drop strategy of coming up every several weeks with new deliveries, and with product that looks different from the previous delivery.

Speaker #7: It brings an incredible excitement to the store. I think that color is a driving force. I think iconic product, and not only the tip of stitch, but also other categories, are meeting more and more the desires of customers.

Speaker #7: 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.

Gildo Zegna: I think that the possibility to apply the same rules to Thom Browne and Tom Ford is very important. I think that the excitement that Haider will bring with the new collection is important to not only retain current customer, but to attract new customer. The possibility to have Thom Browne show in Milan. We know that Thom Browne has to strengthen his presence in Europe, particularly in retail, and I think that having a show in Milan will enhance his brand awareness and his exposure to the local.

Speaker #7: 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 Haider will bring with the new collection is important not only to retain Caracasso, but to attract new customers.

Speaker #7: The possibility to have Tom Brown show in Milan. We know that Tom Brown has to strengthen his presence in Europe, in particular in the retail.

Speaker #7: And I think that having a show in Milan will enhance his brand awareness and his exposure to the local. So I think it's fine to expect the flow of foreign customers, but I think the key is to work well with the local.

Gildo Zegna: I think it's fine to expect the flow of foreign customers, but I think the key is to work well with the locals, and have, you know, staff in the store that created this relationship that made Zegna so strong in the States and in other parts of the world.

Speaker #7: And have stuff in the store that created these relationships that made Zegna so strong in the States and in other parts of the world.

Adrien Duverger: Thank you very much.

Paola Durante: Perfect. Thank you, Adriano. Ciao. Thank you. The next one.

Paola Durante: Perfect. Thank you, Adrien. Ciao. Thank you. The next one.

Speaker #2: Perfect. Thank you, Adriana. Thank you. Is the next one?

Speaker #7: Thank you very much.

Operator: Thank you. The next question comes from Chiara Battistini with J.P. Morgan. Please go ahead.

Speaker #8: Thank you. The next question comes from Chiara Battistini with J.P. Morgan. Please go ahead.

Chiara Battistini: Thank you very much. Good afternoon, everyone. I have a follow-up question on the situation in the Middle East. Notably, I was wondering in terms of the shipments of the merchandise to the Middle East, have you reduced or suspended shipments to the region, or it's still business as usual from that point of view? 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 Tom Ford, profitability improvements in H2. I calculate actually excluding the tax provision and the profit release went back to positive territory. I was wondering if you could expand on the margin drivers for Tom Ford in H2 and whether that comes mainly from gross margin or OpEx.

Speaker #9: Thank you very much. Good afternoon, everyone. I have a follow-up question on the situation in the Middle East. Notably, I was wondering, in terms of the shipments of the merchandise to the Middle East, have you reduced or suspended shipments to the region, or is it still business as usual from that point of view?

Speaker #9: 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 Tom Ford: profitability improvements in H2.

Speaker #9: I calculated, actually, excluding the Saks provision, the profit released went back to positive territory. So I was wondering if you could expand on the margin drivers for Tom Ford in H2, and whether that comes mainly from gross margin or OPEX.

Chiara Battistini: Finally, can you remind us, I think you're highly exposed to the local spend rather than tourism, but can you remind us how much of your sales come from tourist spend, please? Thank you.

Speaker #9: And finally, can you remind us? I think you're highly exposed to the local spend rather than tourism, but can you remind us how much of your sales come from tourist spend, please?

Paola Durante: Which?

Speaker #9: Thank you.

Gildo Zegna: Tourist spend.

Paola Durante: Okay.

Gildo Zegna: I didn't get the third question.

Speaker #7: Tourist spend.

Gildo Zegna: I didn't get the third question.

Speaker #2: Oh, tourists.

Paola Durante: Okay. Chiara, maybe you can help us going through the four because I don't know if we fully understand all of them. In any case, the first on Middle East in terms of shipments and rents, and I'll leave it to Gianluca to comment.

Speaker #7: I didn't get the third question.

Speaker #2: Okay. So, Chiara, maybe you can help us go through the four, because I don't know if we fully understand all of them. But in any case, the first one is Middle East, in terms of shipments and rents, and I'll leave it to Gianluca to comment.

Gianluca Tagliabue: 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. 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 fixed. I think I would say it's more skewed to the variable than the fixed, like a typical Western European street-side store. We have more variable than fixed, the rent.

Speaker #4: 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.

Speaker #4: 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.

Speaker #4: In terms of cost, I think some relevant stores have variable with some fixed, but we are well above the fixed. So I think I would say it's more skewed to the variable than a fixed, like a typical Western European street-side store.

Speaker #4: So, we have more variable than fixed. The rent. The Tom Ford, the second part, I think that we have, as we said, we have built the infrastructure of Tom Ford at this point.

Paola Durante: Thank you.

Chiara Battistini: Thank you.

Gianluca Tagliabue: The Tom Ford, the second part, I think that we have said we have built the infrastructure of Tom Ford at this point. We have come to a certain point where we have built the OpEx, and I think 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 Angelo Zegna.

Speaker #4: So, we have come to a certain point where we have built the OPEX, and I think we have been starting to enjoy some good results in the second half and some scale.

Speaker #4: 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 two things.

Gianluca Tagliabue: I think it's a combination of the two things, quality of gross margin and the inflection starting to see some slowdown in the growth that we have done in the last couple of years to build the structure both at headquarters and market level for Tom Ford. I think this is, in a nutshell, the situation of the second half of Tom Ford EBIT.

Speaker #4: Quality of gross margin and the inflection—starting to see some slowdown in the growth that we have done in the last couple of years to build the structure, both at headquarter and market level, for Tom Ford.

Speaker #4: So I think this is, in a nutshell, the situation of the second half of Tom Ford EBIT.

Paola Durante: The last question was on the level of tourism. Chiara, I didn't get if it's in general or you asked a certain area.

Speaker #2: The last question was on the level of tourists. Chiara, I didn't get if it's in general or if you are asking us about a certain area.

Chiara Battistini: No, no, it's in general, I think you have a very high exposure to local consumption, but I just wanted to make sure what your tourism exposure group level is. Thank you.

Speaker #9: No, no. In general, I think you have a very high exposure to local consumption. But I just wanted to make sure what your tourism exposure at the group level is.

Speaker #9: Thank you.

Gianluca Tagliabue: It's minimal because, well, if you take Greater China, it's mostly locals. If it's America, it's low double digit, the non-locals. Of course, in Europe, not Middle East, you have 30%, 40%. I think that is our client base, of course, for the intrinsic nature, especially on Zegna, but also on Tom Ford and Thom Browne, which are skewed to men's. There is a big component of locals. There is a big component of the top of the pyramid. That's why, as Gildo was saying, of course, we see the uncertainty in front of us, but we enjoy also the resilience of our customer base.

Speaker #4: It's minimal because, well, if you take Greater China, it's mostly locals. If it's America, it's low double-digit, then non-locals. Of course, in Europe, you have Europe, not Middle East, Europe.

Speaker #4: You have 30%, 40%. So, I think that is our client base—of course, for the intrinsic nature, especially on Zegna, but also Tom Ford and Thom Browne—which are skewed to men's.

Speaker #4: There is a big component of locals, so there is a big component of locals. There is a big component at the top of the pyramid.

Speaker #4: That's why SGO was saying, of course we see the uncertainty in front of us, but we also enjoy the resilience of our customer base.

Chiara Battistini: Perfect. Thank you.

Paola Durante: Thank you. Grazie, Chiara. Thank you. Next one.

Speaker #9: Perfect. Thank you.

Speaker #2: Thank you. Grazie, Chiara. Thank you. Next one.

Operator: Thank you. The next question comes from Antoine Belge with BNP Paribas. Please go ahead.

Speaker #8: Thank you. The next question comes from Antoine Belge with BNP Paribas. Please go ahead.

Antoine Belge: Yes. Hello, everyone. It's Antoine Belge at BNP Paribas. Three questions. The first one is that in 2026, not asking for a forecast, but you know, within your portfolio, would you expect a lot of difference between the top line goals of the three brands, especially now that maybe there should be less impact from you know, wholesale adjustments? Yeah, so any you know, maybe an update on wholesale and which brands have the most exciting prospects, at least for 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.

Speaker #7: Yes. Hello, everyone. It's Antoine Belge at BNP Paribas. Three questions. The first one 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 three brands?

Speaker #7: Especially now that maybe there should be less impact from wholesale adjustments. Yeah. So, any maybe an update on wholesale, and which brands have the most exciting prospects, at least for 2026.

Speaker #7: My second question is about the gross margin. What are going to be the moving parts in the channel mix? I'm not sure I understood the impact of FX when you said a couple of points.

Antoine Belge: You said, was it about like a minus 2 impact on the top line, or was it impact of basis points on the margins? Finally on the Middle East.

Antoine Belge: You said, was it about like a minus 2 impact on the top line, or was it impact of basis points on the margins? Finally on the Middle East. Just to understand. The exposure to the Middle East is mid- to high-single-digit. Within that, how much are people who are not originating from the Middle East? Also, the sort of opposite question, which is, you know, what's the percentage of Middle Eastern consumer spending elsewhere, notably, in Europe, to get an idea of the-

Speaker #7: You said, was it about a minus two impact on the top line, or was it impact of basis points on the margins? And finally, on the Middle East, just to understand, the exposure to the Middle East is mid- to high-single digit.

Gianluca Tagliabue: Mm-hmm.

Antoine Belge: Just to understand. The exposure to the Middle East is mid- to high-single-digit. Within that, how much are people who are not originating from the Middle East? Also, the sort of opposite question, which is, you know, what's the percentage of Middle Eastern consumer spending elsewhere, notably, in Europe, to get an idea of the-

Speaker #7: 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, then I get to the cluster.

Paola Durante: Sure.

Antoine Belge: If I deduct and then I add, then I get to the cluster. Thank you.

Speaker #7: Thank you.

Paola Durante: Okay. Thank you, Antoine.

Antoine Belge: Antoine.

Paola Durante: Antoine. Sorry. In 2026, I asked Gianluca to comment on the different expected growth by brand, and I think there was also a question on wholesale.

Speaker #2: Okay. Thank you, Anthony. Antoine, Anthony.

Speaker #7: Antoine.

Speaker #2: Sorry. So, in 2026, the comment—I asked Gianluca to comment on the difference in expected growth by brand, and I think that there was also a question on wholesale.

Gianluca Tagliabue: I start from wholesale. Well, first, I reiterate the fact that on the DTC, the three brands, all the three brands are growing very well, and all combined, we are growing more than the trend that we have shown in Q4. That performance is well-balanced on the three brands. 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, will continue to contract in a different intensity by brand. Zegna, I would expect to decline by mid-teens, considering both our intentional icon protection and some still wholesale conversions. Tom Ford should be possibly negative single digit, and this is mostly related to selling to the wholesale partners in the Middle East region.

Speaker #7: So, it starts from wholesale. Well, first, I reiterate the fact that on the DTC, all three brands are growing very well.

Speaker #7: And all combined, we are growing more than the trend that we have shown in Q4. So that performance is well balanced on the three brands.

Speaker #7: 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.

Speaker #7: We'll continue to contract at a different intensity by brand. Zegna, I was expecting to decline by mid-teens, considering both our intentional ICOM protection and some still ongoing wholesale conversions.

Speaker #7: Tom Ford should be possibly negative single digit, and this is mostly related to sell-in to the wholesale partners in the Middle East region. Thom Browne will still be solid double-digit negative, although less than last year.

Gianluca Tagliabue: Thom Browne will still be solid double-digit negative, although less than last year, and of course, much less than last year in absolute terms. At this point, the business of Thom Browne 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. This is in total. Linking to your second question of the 2 points effects impact, it was related to revenues. Of course, then how this translates into the bottom line, you have, of course, also the OpEx deflating. It's part of that. It creates an impact much lower, of course, than 2 points the effects. 2 points were related to top line.

Speaker #7: And of course, much less than last year in absolute terms. So at this point, the business of Tom Brown wholesale is smaller, and the reduction—and therefore the impact in absolute terms to the business—is becoming smaller and smaller.

Speaker #7: And the decline in absolute terms will be much less than last year. So this is in total. And linking to your second question of the two points FX impact, it was related to revenues.

Speaker #7: 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, than two points. The FX two points were related to the top line.

Paola Durante: Okay.

Gianluca Tagliabue: What was the last question?

Paola Durante: There was a few questions on gross margin, if it was driven mainly by channel mix and then the impact on Forex.

Speaker #7: What was the last question?

Speaker #2: There were a few questions on gross margin—if it was driven mainly by channel mix, and then the impact on Forex.

Gianluca Tagliabue: Okay. Well, this I just answered.

Paola Durante: Yes. These three answers.

Speaker #7: These I just asked.

Gianluca Tagliabue: 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 Thom Browne and Tom Ford is stepping up the incidence of full price up-front. That is the second big driver of improvement for Thom Browne and Tom Ford.

Speaker #2: Yes. These are your answers.

Speaker #7: Well, the impact on 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 Tom Browne and Tom Ford is stepping up the incidence of full-price outro.

Speaker #7: That is the second big driver of improvement for Thom Browne and Tom Ford.

Paola Durante: Okay.

Gianluca Tagliabue: The last question was on Middle East?

Paola Durante: Yes. On the nationality, how many are not local?

Speaker #2: Okay.

Speaker #7: The last question was on the Middle East.

Speaker #2: Yes. On the nationality, how many are not local?

Gianluca Tagliabue: It can be empirical. It's an important part that we have people either traveling or resident there temporarily, but we don't have a specific number. 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 London, to Istanbul. We have been seeing people, same customers there and elsewhere. That is also part of our safety net, together with resilience, because our clients are moving, so especially the ones that we have been serving in the Middle East.

Speaker #7: It can be empirical. It's an important part that we have people either traveling or resident there, temporarily, but we don't have a specific number.

Speaker #7: 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 London, to Istanbul.

Speaker #7: So, we have been seeing people send customers there and elsewhere. That is also part of our safety net, together with resilience, because our clients are moving.

Speaker #7: So, especially the ones that we have been serving in the Middle East. Thank you very much. Very clear.

Oliver Chen: Thank you very much. Very clear.

Chiara Battistini: Thank you very much. Very clear.

Paola Durante: Sorry, Angelo. Thank you to you. If there are other questions, yeah.

Speaker #2: Sorry, Anthony. Thank you to you. And if there are other questions, yeah.

Operator: Thank you. The next question comes from Oliver Chen with TD Cowen. Oliver, please go ahead.

Speaker #4: Thank you. The next question comes from Oliver Chen with TD Cowen. Oliver, please go ahead.

Oliver Chen: Thanks. Hi, Gilda and Gian Luca. Thank you. Regarding Thom Browne and Tom Ford, a lot of great initiatives. How is profitability at both, you know, 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. We just love your thoughts on that as it applies to China and the Americas. Kind of different, what's happening. Thank you.

Speaker #8: Thanks. Hi, Gilda and Gianluca. Thank you. Regarding Thom Browne and Tom Ford, a lot of great initiatives. How is profitability at both moving relative to your targets?

Speaker #8: 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.

Speaker #8: We just love your thoughts on that as it applies to China and the Americas—it's kind of different what's happening. Thank you.

Paola Durante: Okay. The first one, I'll leave it to Gianluca on the Thom Browne and Tom Ford profitability in 2026 and longer term, and on US, I'll leave it to Gildo after.

Speaker #2: Okay. The first one, I'll leave to Gianluca on the Tom Brown and Tom Ford profitability in '26 and longer term. And on the US, I'll leave it to Gilda after.

Gianluca Tagliabue: If on the EBIT of Thom Browne and Tom Ford. First, to give a qualitative perspective, both are enjoying growth in, as I said before, DTC, and it's not just only from space, but it's come to our current trend on those two brands. Part is the success of the new collections on Tom Ford. There has been. That is a very strategically important initiative. All the initiatives put together by Sam and the team is around making the most of the use of the merchandising drops. For instance, in the first month, there has been put together drops in the Zegna-like way around denim, around ASICS. These are, especially the ASICS one, is very instrumental to capture names of new clients that don't know the brand.

Speaker #8: So, if on the EBIT of Tom Browne and Tom Ford—so first, to give a quality perspective, both are enjoying growth in, as I said before, on DTC, and it's not just only for the space, but it's comp.

Speaker #8: Our current trend on those two brands. Part is the success of the new collections on Tom Ford. There has been, and that is a very strategic important initiative—all the initiatives put together by Sam and the team.

Speaker #8: It's around making the most of the use of the merchandising drops. And so, for instance, in the first month, there have been put together drops in the Zegna-like way around denim, around ASICS, and these are—especially the ASICS one is very instrumental to capture names of new clients that don't know the brand.

Gianluca Tagliabue: These are leading indicators for something improving in both the brands. In terms of profitability, on Thom Browne, 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 of 2025. We do not expect a loss of Thom Browne, on the opposite, to make it sure. We expect to go back to reasonable profitability on Thom Browne and still injecting talents in the organization. But we want to go back to decent profitability. Tom Ford, we expect an EBIT performance to be better in 2026 than 2025, with a substantial improvement.

Speaker #8: So these are leading indicators for something improving in both the brands. In terms of profitability, on Thom Browne, 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 of 2025.

Speaker #8: We do not expect a loss at Tom Brown. On the contrary, to make it sure, we expect to go back to reasonable profitability at Tom Brown.

Speaker #8: And still injecting talents in the organization, but we want to go back to decent profitability. And Tom Ford, we expect an EBIT performance to be better in '26 than '25, with a substantial improvement.

Paola Durante: Longer term?

Gianluca Tagliabue: Longer term, Thom Browne needs to go to a double digit. Of course, EBIT margin, there is no way that it doesn't go back there. Tom Ford, the same, with the debt of all this to be paid to the IP owner of the brand. Both brands enjoying a journey towards a scale that is much higher than the $300 million that we see today, enjoying scale. Both, at this point, they are ready to enjoy that scale and go to a profitability that needs to be a double digit.

Speaker #2: Longer term.

Speaker #8: Longer term, and Tom Brown needs to go to a double-digit, of course, EBIT margin. There is no way that it doesn't go back there.

Speaker #8: And Tom Ford the same, with the delta of royalties to be paid to the IP owner of the brand. So both brands enjoying a journey towards a scale that is much higher than the $300 million that we see today, $300 million round of dollars, enjoying scale. Both, at this point, they are ready to enjoy that scale and go to a profitability that needs to be a double-digit.

Paola Durante: Perfect. On consumer confidence in the US and the US market overall, I'll leave it to Gildo to comment.

Speaker #2: Perfect. And then on consumer confidence in the US and the US market overall, I'll leave it to Gilda to comment.

Gildo Zegna: 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 three brands, in particular Zegna and Tom Ford. However, also with Thom Browne, we are building a stronger retail network. That should help. We have a couple of openings for both Tom Ford and Zegna across the year that will materialize and give us an even more homogeneous and stronger network distribution across the country. Maybe a word on Saks Group since it's a strong wholesaler of ours. I think that it seems they are moving according to plan. We have shipped spring/summer, and we decided to produce for winter.

Speaker #8: 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.

Speaker #8: In all three brands, in particular Zegna and Tom Ford—however, also with Thom Browne—we are building a stronger retail network that should help.

Speaker #8: We have a couple of openings for both Tom Ford and Zegna across the year. That will materialize and give us an even more homogeneous and stronger network distribution across the country.

Speaker #8: Maybe a word on Sax Group. Since it's a strong wholesaler of ours, I think that it seems they are moving according to plan. We have shipped spring/summer, and we decided to produce for winter.

Gildo Zegna: You know, we keep our fingers crossed, but we do believe that the Saks Group will remain an important partner of ours in the future to move ahead together. We were reassured by the validity of the plan, and surely we supported them, you know, after having been hit last year. I think that we decided to support them from the beginning, and I think it will happen. Another important thing, Latin America. Latin America, we are one of the leaders in luxury because the brand is known, has been known. I'm talking about Zegna now for many years.

Speaker #8: And so we keep our fingers crossed, but we do believe that the Sax Group will remain an important part of ours in the future to move ahead together.

Speaker #8: 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 them from the beginning, and I think it will happen.

Speaker #8: Another important thing is Latin America. Latin America—we are one of the leaders in luxury because the brand is known, has been known—I'm talking about Zegna now.

Gildo Zegna: The fact that we have relaunched our stores in the past few years, and we have a similar level of service and product as we have across the world, I mean, makes that customer more local, which before he was buying all over the world. I think that it's quite incredible, the growth, the percentage growth that we had in Latin America in the past two years, and it will continue. Surely, our attention will be not only in North America, but also in South America, in particular in those two countries.

Speaker #8: For many years, and the fact that we have relaunched our stores in the past few years, and we have a good network in particular of stores in Mexico and Brazil.

Speaker #8: With a similar level of service and product that we have across the world, I mean, it makes that customer more local, which before was buying all over the world.

Speaker #8: And so I think that it's quite incredible, the percentage growth that we had in Latin America in the past two years, and it will continue.

Speaker #8: So, surely, our attention would be not only in North America but also in South America, in particular in those two countries.

Oliver Chen: Gildo, and China, are you seeing encouraging traffic and conversion? Like, how would you characterize environment? One more, Gianluca

Speaker #3: Gilda, and China—are you seeing encouraging traffic and conversion? How would you characterize the environment? And one more, Gianluca, as we model that.

Gildo Zegna: I'm traveling with Paola tomorrow, so I can be more specific after our trip. I 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 PRC. As I said, Chinese New Year, we did our plan. I do believe that we touched the bottom, and it will be a gradual recovery. However, we remain prudent for 2026. You know, if things will improve, we surely share it with you. For the time being, we remain cautious on 2026.

Speaker #8: I'm traveling with Paola tomorrow, so I can't be more specific. After our trip, I'll tell you. As I said before, we have seen some signs of improvement here and there.

Speaker #8: I would say, in particular in Hong Kong, I think Hong Kong and Macau have seen more encouraging improvement compared to the PRC. But as I said, China's New Year—we did our plan, and I do believe that we touched the bottom and it will be a gradual recovery.

Speaker #8: However, we remain prudent for '26. And if things will improve, we will surely share it with you. But for the time being, we remain cautious.

Gildo Zegna: We plan 2026 cautious, but we see some signs, some small signs of improvement.

Speaker #8: On ’26, we plan ’26 cautious, but we see some signs, some small signs of improvement.

Oliver Chen: Thank you. Gianluca, follow up on SG&A. Can that line item grow lower than sales? Or what should we know in terms of any non-recurrents or the forecast on the SG&A side? Lots of excitement on Thom Browne. I'm on the ASICS wait list as well. Nice job. Thanks.

Speaker #3: Thank you. Gianluca, a follow-up on SG&A. Can that line item grow slower than sales? Or what should we know in terms of any non-recurring items, or the forecast on the SG&A side?

Speaker #3: And then lots of excitement on Tom Brown. I'm on the ASICS wait list as well. Nice job. Thanks.

Gianluca Tagliabue: Well, 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 from the sale of Thom Browne, and that has not come together with a relevant drop of SG&A because it's a SG&A light business. Since we said that the drop going forward of our sales in absolute terms of Thom Browne is smaller, that dragging factor should not be replicated. Definitely our journey towards improved profitability goes definitely through improved SG&A. The other factor has been we invested in the last 18, 24 months in the structures of Tom Ford, especially. Therefore, as I said before, we are coming to a sort of inflection point in the growth.

Speaker #8: Well, definitely the step-up in profitability needs to come from SG&A leverage. This year, of course, if you go back, we reduced $50 million, more or less, from the sale of Thom Browne.

Speaker #8: And that has not come together with a relevant drop of SG&A, because it's an SG&A-light business. So, since we said that the drop going forward of all sales in absolute terms of Thom Browne is smaller, that dragging factor should not be replicated.

Speaker #8: So, definitely, our journey towards improved profitability goals is definitely through improved SG&A, and the other factor has been we invested in the last 18 to 24 months in the structures of Tom Ford especially, and therefore, as I said before, we are coming to a sort of inflection point in the growth.

Gianluca Tagliabue: Those are two factors that should help us phase out from the deleverage on SG&A.

Speaker #8: So those are two factors that should help us phase out from the de-leverage on SG&A.

Oliver Chen: Gentlemen, Best regards.

Paola Durante: Thank you, Oliver. Thank you. Can we ask the operator if there are follow-up or other questions?

Speaker #3: Gentlemen, that's regards.

Speaker #2: Thank you all again. Thank you. Can we ask the operator if there are follow-up or other questions?

Operator: Our next question comes from Natasha Banoori with Morgan Stanley. Natasha, please go ahead.

Speaker #1: Our next question comes from Natasha Bonnet with Morgan Stanley. Natasha, please go ahead.

Natasha Banoori: Thank you very much for taking my questions. The first is just coming back down to the Middle East. I know you said it was about mid-single digit, high single-digit percentage of your sales. Could you split it by country? Is the UAE, is it fair to assume that it's the majority, so over 50%? If you could split spending just between locals, expats, and tourists. Also in the Middle East, I believe, Gildo Zegna, last year you said that you had plans to open more stores in the region. Could 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 it moving sort of sideways in 2026.

Speaker #9: Hi, thank you very much for taking my questions. The first is just coming back down to the Middle East. I know you said it was about mid-single digit, high single digit percentage of your sales.

Speaker #9: Could you split it by 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 expats and tourists, also in the Middle East. I believe, Adela, Zegna, last year you said that you had plans to open more stores in the country.

Speaker #9: 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 it moving sort of sideways in 2026.

Natasha Banoori: I see consensus has EUR 188 million with a 9.5% margin. Do you see that as feasible at this stage? My last question would just be a clarification on current trends. You said since the start of the conflict 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 very much.

Speaker #9: I see consensus has $188 million with a 9.5% margin. Do you see that as feasible at this stage? And then my last question would just be a clarification on current trends.

Speaker #9: You said since the start of the conflict 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.

Gianluca Tagliabue: Sure.

Paola Durante: Thank you, Natasha. Okay. I think the question on Middle East and the incidents the most important part, but I anticipate the answer, but I can leave Gianluca to comment a little bit more. There was a question also on local, expat, and tourist, which we said we don't provide this kind of detail.

Speaker #9: Thank you very much.

Speaker #8: So, thank you, Natasha. Okay. So, I think the question on the Middle East and the incidents, in a way, is the most important part, but I anticipate yes. But I can leave Gianluca to comment.

Speaker #8: A little bit more. There was a question also on local expat and tourists, which we said we don't.

Gianluca Tagliabue: Of course, the biggest impact is in UAE because it's the biggest by far market for the group there. When we talk about decline in the region, it's basically the decline in Dubai and Abu Dhabi, because those are the two big markets where we see revenues coming from. The second was if we have 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 Grove.

Speaker #3: Good. Of course, the biggest impact is in the UAE, because it's by far the biggest market for the group there. And so, when we talk about decline in the region, it's basically the decline in Dubai and Abu Dhabi, because those are the two big markets where we see revenues coming from.

Speaker #3: The second was, if we have 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.

Speaker #3: We have already disclosed the growth, and we also have Tom Ford. And for Tom Ford, 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.

Gildo Zegna: Also, Tom Ford.

Gianluca Tagliabue: Also Tom Ford.

Gildo Zegna: Also Tom Ford.

Gianluca Tagliabue: Tom Ford, we are not changing the plan. We are going forward with the opening because it was already planned and we continue the execution of that store, those two stores.

Paola Durante: Yeah. 2026 EBIT consensus.

Speaker #3: Those two stores. Yeah.

Speaker #2: 2026 EBIT consensus.

Gianluca Tagliabue: What we have said is the EBIT margin is sidelined. If you take out the accrual of tax, we had more or less 9% this year, so we are moving sidelined. The percentage is that one. Of course, the absolute becomes a variable depending on the revenues. So far, we are seeing revenues in the range of EUR 2 billion. Of course, it's subject to the length and the impact of the disruption in the Middle East in the next month or weeks. Hopefully.

Speaker #8: What we have said is, we said the EBIT margin is sideline. So, if you take out the accrual of tax, we had more or less 9%.

Speaker #8: This year, so we are moving sideline. The percentage is that one. Of course, the absolute becomes a variable depending on the revenues. And so far, we are seeing revenues in the range of $2 billion.

Speaker #8: But of course, it's subject to the length and the impact of the disruption in the Middle East in the next month or weeks. So, hopefully.

Paola Durante: In terms of current trend, the last question from Natasha was if we have seen any difference after the war, apart from Middle East.

Speaker #2: And in terms of current trend, the last question from Natasha was if we are seeing any difference after the war, apart from the Middle East.

Gildo Zegna: I already commented, no.

Speaker #8: I already commented, no. We are quite impressed by the resilience of the rest of the country, so we are on. It means that we are doing the right things.

Paola Durante: No.

Gildo Zegna: We are quite impressed by the resilience of the rest of the country. We are on. It means that we are doing the right things. The good thing is not only with Zegna. Zegna was expected, but the other two. We are doing well with the three brands, I repeat, even after the conflict erupted a few weeks ago. Let's be positive to continue the trend because we think we know what we're doing, and there is extremely clear strategy for each brand. I think we finally have three good organization. I think nobody asked about the new governance. I'm going to volunteer to say that I think it's working jolly good. I'm enjoying not rest.

Speaker #8: But the good thing is not only with Zegna. Zegna was expected, but the other two—we are doing well with the three brands. I repeat.

Speaker #8: Even after the conflict erupted a few weeks ago, let’s be positive to continue the trend because we think we know what we are doing.

Speaker #8: And there is an extremely clear strategy for each brand. We have a, I think we finally have, three good organizations. I think the new—nobody asked about the new governance.

Speaker #8: I'm going to volunteer to say that. I think it's working jolly good. I'm enjoying, not the rest. I'm working harder probably now than before.

Gildo Zegna: I'm working harder probably now than before. Besides that, I think that the new team is proceeding very well, you know, in creating value and in doing the right things, and in making sure that the two brands that we expect as growth, which are Thom Browne and Tom Ford, are well supported by headquarters and by the leadership of Gianluca supporting the other CEO. I think that is good. I'm glad that we did courageously what we did there last year because we are better placed with this organization than we were before.

Speaker #8: But besides that, I think that the new team is proceeding very well—in creating value, and in doing the right things. And in making sure that the two brands that we have, that we expect there as growth, which are Thom Browne and Tom Ford, are well supported by headquarters and by the leadership of Gianluca supporting the other CEO.

Speaker #8: So I think that it's good. And I'm glad that we did courageously what we did last year because we are better placed. We did organization than we were before.

Paola Durante: Anything to add from Natasha on your page?

Speaker #2: Any follow-up, Natasha? Are you okay?

Natasha Banoori: No, I'm good. Thank you very much. Actually, one just thing on the Middle East. What's the split between retail and wholesale, if you can share? Thanks very much.

Speaker #9: No, I'm good. Thank you very much. Actually, just one thing on the Middle East—what's the split between retail and wholesale, if you can share?

Paola Durante: Retail, wholesale in Middle East.

Speaker #9: Thanks very much.

Gianluca Tagliabue: Zegna is basically entirely retail. We have already also taken over Qatar. There is a small portion in Lebanon, yeah, that is the most relevant wholesale business we have on Zegna. Tom Ford, actually instead is 100% wholesale.

Speaker #2: Retail wholesale in Middle East.

Speaker #8: Zegna is basically entirely retail. We have already also taken over Qatar. So there is a small portion in Lebanon. Yeah. That is the most relevant wholesale business we have on Zegna.

Speaker #8: Tom Ford, actually, instead is 100% wholesale. And Thom Browne is not really relevant. So I would.

Gildo Zegna: Yeah.

Paola Durante: Yes.

Gianluca Tagliabue: Thom Browne is not really relevant, so I wouldn't.

Gildo Zegna: See, when we say wholesale, it means the franchising, and we still have the Tom Ford and Thom Browne logo. It's not that we sell it to specialty store. Just,

Speaker #10: See, when we say wholesale, it means franchising. And we still have the Tom Ford and Thom Browne logo. It's not that we sell the specialty store, just that somebody else runs those stores for us.

Gianluca Tagliabue: They sell.

Gildo Zegna: It's just that somebody else runs the stores for us.

Gianluca Tagliabue: Tom Ford, we have franchising mono-brand stores.

Speaker #8: Yeah. Tom Ford, we have franchising monobrand stores.

Gildo Zegna: Yeah.

Natasha Banoori: All right. Thank you.

Speaker #10: Yeah.

Gildo Zegna: Thank you to you. Thank you. Next one.

Paola Durante: Thank you to you. Thank you. Next one.

Speaker #9: All right. Thank you.

Speaker #2: Thank you to you. Thank you. And next one.

Operator: Thank you. The next question comes from Chris Gao with CLSA. Please go ahead.

Speaker #11: Thank you. The next question comes from Chris Dowell with CLSA. Please go ahead.

Gildo Zegna: Mm-hmm.

Chris Gao: Thank you. Hello, Gildo. Hello, Gianluca, Paola. Thanks for taking my questions. Chris Gao from CLSA. I have a couple of quick follow-up. Firstly, it's about Chinese demand. We are very happy to see an above expectation current trading 1Q and also end FX guidance for the full year, flat year-over-year. Just wondering that if the current improvement that you see from Chinese is more from the new consumer recruitment or existing consumers. Also maybe could you please share more that which price points of Zegna core brand are seeing more of the acceleration that's from Q4 2025? This is the first question. My second question is regarding the sales density in China compared with our global average of Zegna core brand. Basically, where are we now?

Speaker #12: Thank you. Hello, Jodo. Hello, Gianluca, Paola. Thanks for taking my questions. Chris Dowell from CLSA. I have a couple of quick follow-ups. So firstly, it's about Chinese demand.

Speaker #12: We are very happy to see above-expectation current trading in Q1, and also ending test guidance for the full year flattish year-over-year. So just wondering if the current improvement that you see from Chinese is more from new consumer recruitment or existing consumers, and also maybe could you please share more on which price points of Zegna core brand are seeing more of the acceleration—that's from Q4 2025?

Speaker #12: This is the first question. My second question is regarding the sales density in China compared with the global average of the Zegna core brand. So, basically, where are we now?

Chris Gao: How does the sales density in China look like compared with global average? Because we know that there will be a couple of store optimizations in the midterm for Zegna core brand. Also, we'll also continue with product innovations, strong engagements with our core community. Do you have any, you know, preliminary color that how the midterm sensitivity recovery in China will look like? This is my second question. The third question is a quick follow-up on Japan, South Korea. Maybe that is not the biggest collateral regions, but still, actually people also cares about the demand trends. Basically, how do you see the demand moving in Q1 2026 of Japan and South Korea and also the outlook? Thank you.

Speaker #12: How does the sales density in China look like compared with global average? So because we know that there will be a couple of store optimizations in the midterm for Zegna core brand.

Speaker #12: Also, we'll continue with product innovations and strong engagements with our core community. So, do you have any preliminary color on how the midterm sales density recovery in China will look like?

Speaker #12: So, this is my second question. And the third question is a quick follow-up on Japan and South Korea. Maybe that is not the biggest cluster or region, but still, actually, people also care about the demand trend.

Speaker #12: So basically, how do you see the demand moving in Q1 '26 for Japan and South Korea, and also the outlook? Thank you.

Gildo Zegna: Okay. Chris, three long questions. Of course, there are some details that we might better discuss after we provide the Q1 results at the end of April. 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.

Paola Durante: Okay. Chris, three long questions. Of course, there are some details that we might better discuss after we provide the Q1 results at the end of April. 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.

Speaker #2: Okay. So, three long questions. Of course, there are some details that we might better discuss after we provide Q1 results, in the end of April.

Speaker #2: But in any case, on the Chinese demand, the question was: is the current improvement also from new demand from new consumers, or if we can?

Gianluca Tagliabue: It's pretty balanced. We are seeing both new clients coming in also through the Triple Stitch that we remember. It was one of the areas of untapped opportunity in China. We see new customers coming in, as well as the execution of the brand elevation that is bringing in Zegna Friends or Doers. I think we are working on both sides of the customer spectrum. This is on China, there is not one angle only, it's both. The second was?

Speaker #8: It's pretty balanced. It's pretty balanced. We are seeing both new clients coming in also through the third stage that we remember. It was one of the areas of untapped opportunity in China.

Speaker #8: And so we see new customers coming in, as well as the execution of the brand elevation that is bringing in Zegna, France, or Dewar's.

Speaker #8: So, I think we are working on both sides of the customer spectrum. So this is on China. So, there is not one angle only.

Gildo Zegna: Yeah, I will increase also the personalization because we opened the Calibro Salotto in China and in the rest of Asia, and we want to make those productive. Those are enhancing the possibility to have, you know, a potential new customer that want privacy in what they buy. They want to find products slightly different than they find in a store. I think that this is something that we expect improvement this year, in particular in China. The second question was on sales density in China, but I would leave this specific comment on the call end of April. On Japan and Korea, if you see some improvements.

Speaker #8: It's both. The second was.

Speaker #10: Yeah, I will increase also the personalization, because we opened a couple of Salotto in China and in the rest of Asia. And we want to make those productive.

Speaker #10: So those are enhancing the possibility to have a potential new customer that wants privacy. In what they buy, they want to find products slightly different than they find in the store.

Speaker #10: So, I think that is something that we expect—improvement this year, in particular in China.

Paola Durante: The second question was on sales density in China, but I would leave this specific comment on the call end of April. On Japan and Korea, if you see some improvements.

Speaker #2: The second question was sales density in China, but I would leave this specific comment on the call end of April. And then on Japan and Korea, if we see some improvements.

Gianluca Tagliabue: I confirm that they are growing well, both. Rest of APAC in general, it's growing well, and specifically for Zegna and Thom Browne. Tom Ford is smaller. It's much smaller in that area compared to Zegna and Thom Browne. Both brands are in the current trading, they are performing well.

Speaker #12: Yes, we do.

Speaker #8: I confirm that they are growing well, both. The rest of APAC in general is growing well, and specifically for Zegna and Thom Browne. Tom Ford is smaller.

Speaker #8: It's much smaller in that area. Compared to Zegna and Tom Brown. But both brands are in the current trading. They are performing well.

Gildo Zegna: I think that the recent opening of the Ginza shop of Thom Browne shows a very good result, and I think that also the Ginza shop of Zegna we see good traction also with the local. You know, in the past few years, there were lots of Chinese, now less Chinese and more local. It seems also Korea is coming back after a couple of years of slowdown. Southeast Asia also, I would say we see some improvements in that part of the world. Actually, we have strengthened our organization and we put attention to make it happen because there is a room for growth for all the three brands. Thank you, Chris.

Speaker #10: But I think that there is an opening of the Ginder shop of Tom Brown, shows very good result. And I think that also the Ginder shop of Zegna, we see good traction also with the local.

Speaker #10: In the past few years, there were lots of Chinese. Now, fewer Chinese and more locals. And it seems also Korea is coming back after a couple of years of slowdown.

Speaker #10: And Southeast Asia also, I would say we see some improvements in that part of the world. And actually, we have strengthened our organization, and we put attention to make it happen because there is room for growth for all the three brands.

Paola Durante: Thank you, Chris.

Chris Gao: Thank you. Very helpful.

Speaker #2: Thank you, Chris.

Speaker #12: Thank you. Very helpful.

Gildo Zegna: Thank you. See you. Next one, if there is.

Speaker #2: Thank you. See you, and the next one, if there is.

Operator: Thank you. Our final question from the phone lines today comes from Maria Mehta with Bernstein. Maria, please go ahead.

Speaker #11: Thank you. Our final question from the phone lines today comes from Maria Mehta with Bernstein. Maria, please go ahead.

Gildo Zegna: Maria.

Paola Durante: Maria.

Maria Mehta: Good afternoon, and thank you for taking my questions. I have two. First one 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. Then the second one is on marketing. Obviously, you've managed to maintain marketing spend flat despite all the activations and the two brand turnarounds that are ongoing. I was wondering how you were seeing marketing spend for 2026 forward. Thank you.

Speaker #12: Maria.

Speaker #13: Good afternoon, and thank you for taking my questions. I have two. The first one 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.

Speaker #13: I was just wondering if you're seeing the same thing for this quarter. And then the second one is on marketing. Obviously, you've managed to maintain marketing spend flat despite all the activations and the two brand turnarounds that are ongoing.

Speaker #13: And I was wondering how you were seeing marketing spend for 2026 as well. Thank you.

Paola Durante: Okay. The first one is current trend in Europe. The second one is the marketing spending, because we hear you a little bit faint. If I'm not right, please correct me. The first question is what we are seeing in terms of current trend in Europe.

Speaker #2: Okay. The first one is current trend in Europe. And the second one is the marketing spending because we hear you a little bit far.

Speaker #2: If I'm not right, please correct me. The first question is, what are we seeing in terms of the current trend in Europe.

Gildo Zegna: No, but the second one is?

Paola Durante: Marketing spending. How we allocate the marketing spending in 2025 and the budget for 2026.

Speaker #10: The second one is?

Speaker #2: Marketing spending. How is allocated marketing spending in '25 and the budget for 2026?

Gildo Zegna: Well, listen, in Europe, both Gianluca and 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 2020 or 2025. We see a good resilience of the local. We still see a good traffic by foreigners. No major differences from what we saw in particular in Q4. You know, we have some new resort stores that in Windsor they did fairly well. We did some events, you know, in particular what we will resume to do trade shows, you know, in particular, taking advantage of our made to measure service.

Speaker #10: Well, at least in Europe, looking at budget, and I were traveling quite a bit across the major European capitals. And we see a good trend.

Speaker #10: We don't see any different trend as compared to the last second half of '20 or '25. And we see a good residence of the local.

Speaker #10: We still see good traffic by foreigners. It's so, no major differences from what we saw in particular in Q4. We have some new resort stores that in winter did fairly well.

Speaker #10: We did some events in particular where we resumed to do tram shows, in particular taking advantage of our made-to-measure service. And so, as planned, I would say.

Gildo Zegna: As planned, I would say no particular worries on that side. Hopefully, you know, we will see for the summer enough foreigners so that that's the thing to watch. So far, okay.

Speaker #10: No particular worries on that side. Hopefully, we will see for the summer enough foreigners, so that’s the thing to watch. But so far, okay.

Paola Durante: Marketing?

Gildo Zegna: I think we said that we are heading into 2026 with an incidence of around 6% of marketing spending on revenues. That is our rule of thumb, and could be slightly more, slightly less, but that is our normal landing spot. We have market initiatives that we said are important. You know, we move from sport in a way to more cultural arts. I think this initiative in particular with the art world, I mean, from Biennale to Art Basel to the, what's his name? The Aspen Art Museum.

Speaker #2: Marketing.

Speaker #8: Marketing, we said that we are heading into 2026 with an incidence of around 6% of marketing spending on revenues. That is our rule of thumb.

Speaker #8: Then it would would be slightly more slightly less. But that is our normal lending spot.

Speaker #10: Yeah, we have market initiatives that we said are important. We moved from sport in a way to more culture art. And I think this initiative in particular with the art world, I mean, our from Biennale to Arbaso to what's his name?

Paola Durante: Aspen Art Museum.

Gildo Zegna: Yeah, the Aspen. Yeah, Frieze. I think that will help us nurturing and entertaining customers that should be resilient. I think it's a good way to share some values that are related also to the world of Oasi Zegna. I think that environment and arts, I mean, are something that we are putting money into the marketing budget for this year. I emphasize every time we do a show, we create an event. I think that this would be additional business that we can create that is very resilient.

Speaker #10: The Aspen. Yeah, the Aspen. Yeah, Freak. I think that will help us nurturing and entertaining 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 what is Zegna.

Speaker #10: And so I think that environment and arts, 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.

Speaker #10: And so I think that this would be additional business that we can create that is very resilient.

Paola Durante: Thank you.

Speaker #2: Thank you. Are you—if you don't have any follow-up questions, Maria, I think we'll go to the last. Thank you, Maria. To you, operator.

Gildo Zegna: Thank you.

Paola Durante: If you don't have any follow-up question, Maria, I think,

Gildo Zegna: No follow-up. Thank you very much.

Maria Mehta: No follow-up. Thank you very much.

Paola Durante: We close as the last. Thank you, Maria, to you. Operator?

Operator: We have no further questions on the phone line, so Paola, I will hand back to you.

Speaker #11: We have no further questions on the phone line. So, Paola, I'll hand back to you.

Paola Durante: Thank you. Thank you to all of you for the many questions today. As usual, if you have a follow-up, we are here, Alice, and myself. Alice, first of all. We will join fairly soon because we have our call on 30 April for the Q1 results, and our silent period starts on 1 April. I wish you a little bit in advance, but happy Easter to you all. Thank you. Good night.

Speaker #2: Thank you. So, thank you to all of you for the many questions today. As usual, if you have a follow-up, we are here.

Speaker #2: Licha and myself, Licha first of all. And we will join fairly soon, because we have our call on April 30 for the first quarter results.

Speaker #2: And our silent period starts on April 1st. I wish you a little bit in advance, but happy Easter to you all. Thank you.

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

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