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Ermenegildo Zegna Group Reports First Half 2024 Revenues of €960 Million With Profit at €31 Million and Adjusted EBIT at €81 Million

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Ermenegildo Zegna Group reported H1 2024 revenues of €960.1 million, up 6% from H1 2023. Profit was €31.3 million (3.3% margin) compared to €52.1 million in H1 2023. Adjusted EBIT reached €80.9 million with an 8.4% margin, down from 13.3% in H1 2023. The company made significant investments across its three brands:

- ZEGNA: Continued focus on One Brand Strategy
- Thom Browne: Reinforced organization at HQ and key regions
- TOM FORD FASHION: Appointed Haider Ackermann as new Creative Director

Despite challenging market conditions, the company remains confident in its long-term strategy. Gross profit margin improved to 66.4%, up 220bps from H1 2023, driven by increased DTC sales and better inventory management.

Il Gruppo Ermenegildo Zegna ha riportato ricavi per H1 2024 di €960,1 milioni, con un aumento del 6% rispetto a H1 2023. L'utile è stato di €31,3 milioni (margine del 3,3%) rispetto a €52,1 milioni in H1 2023. L'EBIT rettificato ha raggiunto €80,9 milioni, con un margine dell'8,4%, in calo rispetto al 13,3% in H1 2023. L'azienda ha effettuato investimenti significativi nei suoi tre marchi:

- ZEGNA: Continuazione della strategia One Brand
- Thom Browne: Rafforzamento dell'organizzazione presso la sede centrale e nelle regioni chiave
- TOM FORD FASHION: Nomina di Haider Ackermann come nuovo Direttore Creativo

Nonostante le difficili condizioni di mercato, l'azienda rimane fiduciosa nella sua strategia a lungo termine. Il margine di profitto lordo è migliorato al 66,4%, con un incremento di 220 punti base rispetto a H1 2023, grazie all'aumento delle vendite DTC e a una migliore gestione dell'inventario.

El Grupo Ermenegildo Zegna reportó ingresos de €960,1 millones en H1 2024, un aumento del 6% en comparación con H1 2023. La ganancia fue de €31,3 millones (margen del 3,3%) en comparación con €52,1 millones en H1 2023. El EBIT ajustado llegó a €80,9 millones con un margen del 8,4%, por debajo del 13,3% en H1 2023. La empresa realizó inversiones significativas en sus tres marcas:

- ZEGNA: Continuación de la estrategia One Brand
- Thom Browne: Refuerzo de la organización en la sede y regiones clave
- TOM FORD FASHION: Nombramiento de Haider Ackermann como nuevo Director Creativo

A pesar de las difíciles condiciones del mercado, la empresa sigue confiando en su estrategia a largo plazo. El margen de beneficio bruto mejoró al 66,4%, un aumento de 220 puntos básicos en comparación con H1 2023, impulsado por el aumento de las ventas DTC y una mejor gestión de inventarios.

에르메네질도 제냐 그룹은 2024년 상반기 매출이 €960.1 백만에 달한다고 보고하였으며, 이는 2023년 상반기 대비 6% 증가한 수치입니다. 이익은 €31.3 백만 (3.3% 마진)으로 2023년 상반기의 €52.1 백만과 비교됩니다. 조정된 EBIT는 €80.9 백만에 도달하였으며, 8.4%의 마진으로 2023년 상반기 13.3%에서 감소하였습니다. 이 회사는 세 개의 브랜드에 걸쳐 중대한 투자를 하였습니다:

- ZEGNA: 원 브랜드 전략에 지속적인 집중
- 톰 브라운: 본사 및 주요 지역에서 조직 강화
- TOM FORD FASHION: 하이더 아커만을 새로운 크리에이티브 디렉터로 임명

어려운 시장 여건에도 불구하고 이 회사는 장기 전략에 대한 확신을 유지하고 있습니다. 총 이익 마진은 66.4%로 개선되었으며, 이는 2023년 상반기 대비 220bp 증가한 수치로, DTC 판매 증가와 재고 관리 개선에 힘입은 결과입니다.

Le Groupe Ermenegildo Zegna a rapporté un chiffre d'affaires de €960,1 millions pour le premier semestre 2024, soit une augmentation de 6 % par rapport au premier semestre 2023. Le bénéfice s'est élevé à €31,3 millions (marge de 3,3 %) contre €52,1 millions au premier semestre 2023. L'EBIT ajusté a atteint €80,9 millions, avec une marge de 8,4 %, en baisse par rapport à 13,3 % au premier semestre 2023. L'entreprise a effectué d'importants investissements dans ses trois marques :

- ZEGNA : Poursuite de la stratégie One Brand
- Thom Browne : Renforcement de l'organisation au siège et dans les régions clés
- TOM FORD FASHION : Nommer Haider Ackermann comme nouveau Directeur Créatif

Malgré des conditions de marché difficiles, l'entreprise reste confiante dans sa stratégie à long terme. La marge brute de profit a été améliorée à 66,4 %, en hausse de 220 points de base par rapport au premier semestre 2023, grâce à une augmentation des ventes DTC et une meilleure gestion des stocks.

Die Ermenegildo Zegna Gruppe meldete für das H1 2024 einen Umsatz von €960,1 Millionen, was einem Anstieg von 6% im Vergleich zum H1 2023 entspricht. Der Gewinn betrug €31,3 Millionen (3,3% Marge) im Vergleich zu €52,1 Millionen im H1 2023. Das bereinigte EBIT erreichte €80,9 Millionen mit einer Marge von 8,4%, was einen Rückgang von 13,3% im H1 2023 bedeutet. Das Unternehmen tätigte erhebliche Investitionen in seine drei Marken:

- ZEGNA: Fortsetzung der One Brand Strategie
- Thom Browne: Verstärkung der Organisation am Hauptsitz und in wichtigen Regionen
- TOM FORD FASHION: Ernennung von Haider Ackermann als neuen Kreativdirektor

Trotz herausfordernder Marktbedingungen bleibt das Unternehmen zuversichtlich in Bezug auf seine langfristige Strategie. Die Bruttogewinnmarge verbesserte sich auf 66,4%, was einem Anstieg von 220 Basispunkten im Vergleich zum H1 2023 entspricht, getrieben durch erhöhte DTC-Verkäufe und eine bessere Lagerverwaltung.

Positive
  • Revenues increased 6% year-over-year to €960.1 million
  • Gross profit margin improved to 66.4%, up 220 basis points from H1 2023
  • ZEGNA brand recorded 5.9% organic growth
  • TOM FORD FASHION achieved 4.7% organic growth
  • Direct-to-consumer revenues increased from 72% to 76% of branded group revenues
Negative
  • Profit decreased to €31.3 million from €52.1 million in H1 2023
  • Adjusted EBIT margin declined to 8.4% from 13.3% in H1 2023
  • Thom Browne revenues decreased by 19.4% year-over-year
  • SG&A expenses increased to 51.8% of revenues from 46.0% in H1 2023
  • Free Cash Flow turned negative at €6.6 million compared to positive €14.0 million in H1 2023

Ermenegildo Zegna Group's H1 2024 results show a mixed performance. While revenues increased by 6% to €960.1 million, profit margin decreased from 5.8% to 3.3%. The gross profit margin improved by 220 basis points to 66.4%, indicating better pricing power and inventory management.

However, the Adjusted EBIT margin declined significantly from 13.3% to 8.4%, primarily due to increased investments in brand strengthening and talent acquisition. This strategic decision to invest heavily during a "normalization phase" in the luxury industry could pay off in the long term but presents short-term challenges.

The negative Free Cash Flow of €6.6 million, compared to positive €14 million last year and increased Net Financial Indebtedness to €65.5 million warrant attention. These figures suggest tighter liquidity, which could limit future strategic flexibility if not managed carefully.

Zegna's performance reflects the broader luxury market's normalization after the post-pandemic boom. The group's strategy of heavy investment during this phase is bold but risky. The significant organic growth of 5.9% for the ZEGNA brand shows resilience, but Thom Browne's 26.7% organic decline is concerning.

The increase in direct-to-consumer (DTC) revenues from 72% to 76% is a positive trend, aligning with industry shifts towards greater brand control and higher margins. However, the substantial increase in marketing expenses (from 5.3% to 7% of revenues) and SG&A costs (from 46% to 51.8%) indicate aggressive expansion which could pressure profitability in the short term.

The appointment of Haider Ackermann as TOM FORD FASHION's Creative Director is a strategic move that could reinvigorate the brand, but its current negative Adjusted EBIT needs close monitoring.

Zegna's retail strategy shows a clear focus on strengthening its direct-to-consumer (DTC) channels. The increase in DTC revenues to 76% of branded group revenues is significant, as it allows for better control over brand presentation and customer experience. This aligns with broader luxury retail trends of reducing wholesale dependence.

The substantial increase in capital expenditure to €60.1 million, largely for DTC expansion and a new footwear plant, indicates a long-term growth strategy. However, this comes at the cost of short-term profitability and cash flow. The company's inventory management has improved slightly, but the increase in Trade Working Capital to €475.6 million suggests some operational inefficiencies.

The geographical performance breakdown is notably absent from this report, which would be important to understand given the varying recovery rates of luxury markets globally. Overall, Zegna's retail strategy appears sound but execution and market response in the coming quarters will be critical.

  • Revenues of €960.1 million, up 6% from H1 2023 (+8% at constant currency and -2.7% organic1)
  • Profit of €31.3 million (3.3% profit margin) compared to €52.1 million in H1 2023 (5.8% profit margin)
  • Gross profit margin of 66.4% up 220bps from 64.2% in H1 2023
  • Adjusted EBIT1 of €80.9 million with an Adjusted EBIT Margin of 8.4% (13.3% in H1 2023)
  • Important investments to further strengthen Group’s brands concentrated in H1 2024

MILAN--(BUSINESS WIRE)-- Ermenegildo Zegna N.V. (NYSE:ZGN) (the “Company” and, together with its consolidated subsidiaries, the “Ermenegildo Zegna Group” or “the Group”) today announced profit of €31.3 million in H1 2024 compared to €52.1 million in H1 2023. In H1 2024, Adjusted EBIT was equal to €80.9 million compared to €119.9 million in H1 2023.

Ermenegildo “Gildo” Zegna, Group Chairman and CEO, said: “The first half of 2024 was marked by important investments in all three of our brands to further strengthen and foster ongoing value creation for each of them. We continued to double down on the successful ZEGNA One Brand Strategy, recently exemplified by the VILLA ZEGNA event in New York. We have taken decisive actions to reinforce the Thom Browne organization both at HQ and in key regions. And, at TOM FORD FASHION, we recently announced Haider Ackermann as the new TOM FORD Creative Director – a pairing that we are confident will take the brand to new heights.

I believe these steps are what is needed for our Group as the luxury industry goes through an important normalization phase and continues to face macroeconomic and geopolitical uncertainties around the world. Our first half operating results – with Adjusted EBIT Margin at 8.4% vs. 13.3% in H1 2023 – were also affected by our decision to continue investing in key projects, some of which were concentrated in the first six months of the year. Along with these investments, we have also implemented cost controls while continuing to operate with appropriate caution. Even though the overall environment is expected to remain even more challenging, I am confident that our projects and actions are the right ones to unleash the untapped long-term potential of all three of our brands.”

________________________________________

1 Revenues on organic growth basis (organic or organic growth) and on a constant currency basis (constant currency), are non-IFRS financial measures. Constant currency growth is calculated excluding foreign exchange. Organic growth is calculated excluding (a) foreign exchange, (b) acquisitions & disposals, (c) changes in license agreements where the Group operates as a licensee. See the non-IFRS financial measures section starting on page 8 of this press release for the definition and reconciliation of non-IFRS financial measures.

Results of Operations

 

For the six months ended June 30,

(€ thousands, except percentages)

2024

 

Percentage of revenues

 

2023

 

Percentage of revenues

Revenues

960,122

 

 

100.0

%

 

903,059

 

 

100.0

%

Costs of sales

(322,678

)

 

(33.6

%)

 

(323,228

)

 

(35.8

%)

Gross profit

637,444

 

 

66.4

%

 

579,831

 

 

64.2

%

Selling, general and administrative expenses

(497,612

)

 

(51.8

%)

 

(415,792

)

 

(46.0

%)

Marketing expenses

(66,751

)

 

(7.0

%)

 

(47,530

)

 

(5.3

%)

Operating profit

73,081

 

 

7.6

%

 

116,509

 

 

12.9

%

Financial income

12,106

 

 

1.3

%

 

15,601

 

 

1.7

%

Financial expenses

(29,267

)

 

(3.0

%)

 

(44,592

)

 

(4.9

%)

Foreign exchange losses

(7,684

)

 

(0.8

%)

 

(7,003

)

 

(0.8

%)

Result from investments accounted for using the equity method

314

 

 

—

%

 

(2,237

)

 

(0.2

%)

Profit before taxes

48,550

 

 

5.1

%

 

78,278

 

 

8.7

%

Income taxes

(17,218

)

 

(1.8

%)

 

(26,162

)

 

(2.9

%)

Profit

31,332

 

 

3.3

%

 

52,116

 

 

5.8

%

Half Year 2024 Key Financial Highlights

Revenues

In H1 2024 the Group recorded revenues of €960.1 million, +6.3% YoY and -2.7% organic. The ZEGNA brand recorded €566.1 million, +4.6% YoY and +5.9% organic growth. Thom Browne revenues were €166.7 million, -19.4% YoY and -26.7% organic. TOM FORD FASHION recorded €148.5 million of revenues, +132.0% YoY and +4.7% organic growth while Textile revenues were €71.8 million (-1.7% YoY and -0.6% organic).

Gross Profit, Operating Profit and Profit

Gross profit in H1 2024 reached €637.4 million compared to €579.8 million in H1 2023 with a gross profit margin of 66.4% compared to 64.2% in H1 2023. This improvement was driven by two main factors: first, channel mix, given the increasing proportion of direct-to-consumer (“DTC”) revenues which rose from 72% in H1 2023 to 76% in H1 2024 of branded group revenues (excluding Textile and Other businesses), and second, better inventory management.

Selling, general, and administrative (SG&A) expenses were €497.6 million (51.8% of revenues) in H1 2024, compared to €415.8 million (46.0% of revenues) in H1 2023. The SG&A higher incidence on revenues largely reflects investments made in talents to support the future growth of all the Group’s brands, as well as to develop the store network, and the consolidation of Tom Ford Fashion segment results for the entire six months (compared to approximately two months in H1 2023).

Marketing expenses in H1 2024 were €66.8 million (7.0% of revenues) compared to €47.5 million (5.3% of revenues) in H1 2023. The increase in incidence of the marketing expenses is largely due to a higher number of events concentrated in the first part of the year compared to H1 2023.

As a result of the above, the Group reported an operating profit of €73.1 million compared to €116.5 million in H1 2023 and a profit of €31.3 million, with a 3.3% profit margin, compared to €52.1 million in H1 2023 (5.8% profit margin).

Adjusted EBIT and Adjusted EBIT Margin

The table below shows the reconciliation of Profit to Adjusted EBIT and the calculation of the profit margin and the Adjusted EBIT Margin in H1 2024 and 2023. Adjusted EBIT is the main performance metric used by the Group’s management at the consolidated and reporting segment level.

 

For the six months ended June 30,

(€ thousands, except percentages)

2024

 

2023

Profit

31,332

 

52,116

Income taxes

17,218

 

26,162

Financial income

(12,106)

 

(15,601)

Financial expenses

29,267

 

44,592

Foreign exchange losses

7,684

 

7,003

Result from investments accounted for using the equity method

(314)

 

2,237

Operating profit

73,081

 

116,509

Adjustments:

 

 

 

Net impairment of leased and owned stores

4,979

 

—

Severance indemnities and provisions for severance expenses

1,436

 

738

Legal costs for trademark dispute

1,388

 

649

Transaction costs related to acquisitions

26

 

4,975

Costs related to the Business Combination

—

 

1,059

Special donations for social responsibility

—

 

100

Net income related to lease agreements

—

 

(4,126)

Adjusted EBIT

80,910

 

119,904

 

 

 

 

Revenues

960,122

 

903,059

Profit margin (Profit / Revenues)

3.3%

 

5.8%

Adjusted EBIT Margin (Adjusted EBIT / Revenues)

8.4%

 

13.3%

Analysis by Segment

In H1 2024, Adjusted EBIT for the Zegna segment was €84.7 million from €99.7 million in H1 2023. Adjusted EBIT for the Thom Browne segment was €20.2 million, from €31.5 million in H1 2023. The Tom Ford Fashion segment reported an Adjusted EBIT of negative €11.9 million, versus positive €4.3 million in H1 2023. The latter comparison, however, is not meaningful since H1 2023 consists of approximately just two months of TOM FORD FASHION results (consolidated since April 29, 2023).

 

For the six months ended June 30,

 

Change

(€ thousands, except percentages)

2024

 

2023

 

2024 vs 2023

 

%

Revenues

 

 

 

 

 

 

 

Zegna

660,538

 

644,310

 

16,228

 

2.5%

Thom Browne

166,935

 

207,959

 

(41,024)

 

(19.7%)

Tom Ford Fashion

148,493

 

64,027

 

84,466

 

131.9%

Eliminations

(15,844)

 

(13,237)

 

(2,607)

 

n.m. (*)

Total revenues

960,122

 

903,059

 

57,063

 

6.3%

 

________________________________________

(*) Throughout this document “n.m.” means not meaningful.

 

For the six months ended June 30,

 

Change

(€ thousands, except percentages)

2024

 

2023

 

2024 vs 2023

 

%

Adjusted EBIT

 

 

 

 

 

 

 

Zegna

84,695

 

99,718

 

(15,023)

 

(15.1%)

Thom Browne

20,186

 

31,521

 

(11,335)

 

(36.0%)

Tom Ford Fashion

(11,913)

 

4,303

 

(16,216)

 

n.m.

Corporate

(11,965)

 

(15,626)

 

3,661

 

23.4%

Eliminations

(93)

 

(12)

 

(81)

 

n.m.

Total

80,910

 

119,904

 

(38,994)

 

(32.5%)

 

 

 

 

 

 

 

 

Adjusted EBIT Margin

 

 

 

 

 

 

 

Zegna

12.8%

 

15.5%

 

 

 

 

Thom Browne

12.1%

 

15.2%

 

 

 

 

Tom Ford Fashion

(8.0%)

 

6.7%

 

 

 

 

Zegna segment

In H1 2023, the Zegna segment (which includes ZEGNA brand, Textile and Third Party Brands) generated revenues of €660.5 million2, +2.5% YoY (+3.5% organic growth).

Adjusted EBIT for the Zegna segment was €84.7 million in H1 2024 with an Adjusted EBIT Margin of 12.8% compared to 15.5% in H1 2023. This performance was primarily driven by the increase in marketing expenses, due to a higher concentration of events and projects in the first half of 2024 compared to the first six months of the prior year, investments in talents and on the stores network expansions.

Thom Browne segment

In H1 2024, the Thom Browne segment generated revenues of €166.9 million, -19.7% YoY (-27.0% organic).

Adjusted EBIT for the Thom Browne segment was €20.2 million in H1 2024, with an Adjusted EBIT Margin of 12.1% compared to 15.2% in H1 2023. The decrease was led by a lower operating leverage due to the decline in revenues.

Tom Ford Fashion segment

In H1 2024, the Tom Ford Fashion (“TFF”) segment generated revenues of €148.5 million, +131.9% YoY and +4.7% organic growth. Adjusted EBIT for this segment in H1 2024 was negative €11.9 million, compared to positive €4.3 million in H1 2023. Given that the Tom Ford Fashion segment was consolidated for only approximately two months in H1 2023, the comparison between H1 2024 and H1 2023 results is not meaningful.

Additionally, since the acquisition, the Group has started to strengthen the TFF organization – investing in talent, store networks, marketing and in IT systems – to support its future growth, which also explain the increase in costs in H1 2024.

Corporate costs

Corporate costs amounted to €12.0 million in H1 2024 compared to €15.6 million in H1 2023. The decrease is largely due to a lower impact of incentive plans.

________________________________________

2 Before inter-segment eliminations.

Capital Expenditure, Trade Working Capital, Net Financial Indebtedness/(Cash Surplus) and Free Cash Flow

Capital expenditure

 

For the six months ended June 30,

(€ thousands)

2024

 

2023

Payments for property, plant and equipment

47,926

 

25,699

Payments for intangible assets

12,151

 

8,801

Capital expenditure

60,077

 

34,500

Capital expenditure (capex) in H1 2024 achieved €60.1 million compared to €34.5 million in H1 2023. This increase is mainly attributable to the first part of investments for the new footwear production plant in Parma (Italy) and the expansion in the DTC channel mainly for ZEGNA and Tom Ford Fashion.

Trade Working Capital

(€ thousands)

At June 30, 2024

 

At December 31, 2023

 

At June 30, 2023

Trade Working Capital

475,642

 

448,909

 

465,419

of which trade receivables

216,670

 

240,457

 

217,208

of which inventories

540,791

 

522,589

 

545,176

of which trade payables and customer advances

(281,819)

 

(314,137)

 

(296,965)

Trade Working Capital was €475.6 million at June 30, 2024, 2.2% higher compared to €465.4 million at June 30, 2023. The increase is mainly attributable to a lower level of trade payable (-5.1% vs. June 30, 2023) partially counterbalanced by a better management of inventories and stable receivables.

Net Financial Indebtedness/(Cash Surplus)

(€ thousands)

At June 30, 2024

 

At December 31, 2023

 

At June 30, 2023

Net Financial Indebtedness/(Cash Surplus)

65,509

 

10,810

 

17,033

Net Financial Indebtedness was €65.5 million at June 30, 2024, compared to €17.0 million at June 30, 2023, reflecting the net cash outflows mainly related to capex and investments in controlled entities.

Free Cash Flow

 

For the six months ended June 30,

(€ thousands)

2024

 

2023

Net cash flows from operating activities

120,448

 

107,583

Payments for property, plant and equipment

(47,926)

 

(25,699)

Payments for intangible assets

(12,151)

 

(8,801)

Payments of lease liabilities

(66,950)

 

(59,115)

Free Cash Flow

(6,579)

 

13,968

In H1 2024 the Group generated negative Free Cash Flow of €6.6 million compared to positive €14.0 million in H1 2023, primarily driven by the increase in capex.

Conference Call

As previously announced, today, at 8a.m. ET (2p.m. CET), the Group will host a live webcast and conference call.
To access the webcast please visit our website (https://ir.zegnagroup.com/financial-calendar/events/).
To participate in the call, please dial:

Italy: +39 06 9450 1060
United States: +1 646 787 9445
United Kingdom: +44 20 3936 2999

Access Code: 594212

Webcast link: https://events.q4inc.com/attendee/321182422

An online archive of the broadcast will be available on the website shortly after the live call and will be available for twelve months.

Upcoming Announcements

The Ermenegildo Zegna Group’s next scheduled announcement is October 22, 2024 Q3 2024 Revenues (*)

________________________________________

(*) Unaudited figures

To receive email alerts of the timing of future financial news releases, as well as future announcements, please register at https://ir.zegnagroup.com.

About Ermenegildo Zegna Group

Founded in 1910 in Trivero, Italy, the Ermenegildo Zegna Group (NYSE:ZGN) is a global luxury company with a leading position in the high-end menswear business. Through its three complementary brands, the Group reaches a wide range of communities and market segments across the high-end fashion industry, from ZEGNA’s timeless luxury to the modern tailoring of Thom Browne, to luxury glamour with TOM FORD FASHION. The Ermenegildo Zegna Group is internationally recognized for its unique Filiera, owned and controlled by the Group, which is made up of the finest Italian textile producers fully integrated with unique luxury manufacturing capabilities, to ensure superior excellence, quality and innovation capacity. The Ermenegildo Zegna Group has more than 7,000 employees and recorded revenues of €1.9 billion in 2023.

Forward Looking Statements

This communication contains forward-looking statements that are based on beliefs and assumptions and on information currently available to the Company. In particular, statements regarding future financial performance and the Group’s expectations as to the achievement of certain targeted metrics at any future date or for any future period are forward-looking statements. In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing,” “target,” “seek”, “aspire,” “goal,” “outlook,” “guidance,” “forecast,” “prospect” or the negative or plural of these words, or other similar expressions that are predictions or indicate future events or prospects, although not all forward-looking statements contain these words. Any statements that refer to expectations, projections or other characterizations of future events or circumstances, including strategies or plans, are also forward-looking statements. These statements involve risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements, and, as such, undue reliance should not be placed on them. Actual results may differ materially from those expressed in forward-looking statements as a result of a variety of factors, including: the recognition, integrity and reputation of our brands; our ability to anticipate trends and to identify and respond to new and changing consumer preference; the COVID-19 pandemic or similar public health crises; international business, regulatory, social and political risks; the conflict in Ukraine and sanctions imposed onto Russia; the occurrence of acts of terrorism or similar events, conflicts, civil unrest or situations of political instability; developments in Greater China and other growth and emerging markets; our ability to implement our strategy; recent and potential future acquisitions; disruption to our manufacturing and logistics facilities; risks related to the sale of our products through our direct-to-consumer channel, as well as through points of sale operated by third parties; our dependence on our local partners to sell our products in certain markets; fluctuations in the price or quality of, or disruptions in the availability of, raw materials; our ability to negotiate, maintain or renew our license or co-branding agreements with high end third party brands; tourist traffic and demand; our dependence on certain key senior personnel as well as skilled personnel; our ability to protect our intellectual property rights; disruption in our information technology, including as a result of cybercrime; the theft or unauthorized use of personal information of our customers, employees or other parties; fluctuations in currency exchange rates or interest rates; the level of competition in the industry in which we operate; global economic conditions and macro events, including inflation; failures to comply with applicable laws and regulations; climate change and other environmental impacts and our ability to meet our customers’ and other stakeholders’ expectations on environment, social and governance matters; the enactment of tax reforms or other changes in tax laws and regulations; and other risks and uncertainties, including those described in our filings with the SEC.

Most of these factors are outside the Company’s control and are difficult to predict. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by the Company and its directors, officers or employees or any other person that the Company will achieve its objectives and plans in any specified time frame, or at all. The forward-looking statements in this communication represent the views of the Company as of the date of this communication. Subsequent events and developments may cause that view to change. However, while the Company may elect to update these forward-looking statements at some point in the future, the Company disclaims any obligation to update or revise publicly forward-looking statements. You should, therefore, not rely on these forward-looking statements as representing the views of the Company as of any date subsequent to the date of this communication.

First Half 2024 - Group Revenues Tables

Revenues by Segment (Unaudited)

 

For the six months ended June 30,

 

H1 2024 vs H1 2023

 

For the three months ended June 30,

 

Q2 2024 vs Q2 2023

(€ thousands, except percentages)

2024

 

2023 (1)

 

%

 

Organic

 

2024

 

2023 (1)

 

%

 

Organic

Zegna

660,538

 

644,310

 

2.5%

 

3.5%

 

335,638

 

324,986

 

3.3%

 

2.7%

Thom Browne

166,935

 

207,959

 

(19.7%)

 

(27.0%)

 

87,869

 

94,708

 

(7.2%)

 

(17.8%)

Tom Ford Fashion

148,493

 

64,027

 

131.9%

 

4.7%

 

83,473

 

64,027

 

30.4%

 

4.7%

Eliminations

(15,844)

 

(13,237)

 

n.m.

 

n.m.

 

(10,015)

 

(8,974)

 

n.m.

 

n.m.

Total revenues

960,122

 

903,059

 

6.3%

 

(2.7%)

 

496,965

 

474,747

 

4.7%

 

(0.4%)

________________________________________

(1)

Revenues from Pelletteria Tizeta, a manufacturing company of the Group, which were allocated to the Zegna segment in H1 2023, are now presented within the Tom Ford Fashion segment in H1 2024. As a result, the related revenues in H1 2023 have been reclassified from the Zegna segment to the Tom Ford Fashion segment to conform to the current period presentation.

Revenues by Brand and Product Line (Unaudited)

 

For the six months ended June 30,

H1 2024 vs H1 2023

 

For the three months ended June 30,

Q2 2024 vs Q2 2023

(€ thousands, except percentages)

2024

 

2023

 

%

 

Organic

 

2024

 

2023

 

%

 

Organic

ZEGNA brand

566,067

 

541,319

 

4.6%

 

5.9%

 

283,197

 

269,430

 

5.1%

 

5.0%

Thom Browne

166,721

 

206,951

 

(19.4%)

 

(26.7%)

 

87,514

 

94,399

 

(7.3%)

 

(17.9%)

TOM FORD FASHION

148,493

 

64,015

 

132.0%

 

4.7%

 

83,473

 

64,015

 

30.4%

 

4.7%

Textile

71,836

 

73,072

 

(1.7%)

 

(0.6%)

 

38,593

 

39,254

 

(1.7%)

 

(0.5%)

Other (1)

7,005

 

17,702

 

(60.4%)

 

(32.9%)

 

4,188

 

7,649

 

(45.2%)

 

(23.0%)

Total revenues

960,122

 

903,059

 

6.3%

 

(2.7%)

 

496,965

 

474,747

 

4.7%

 

(0.4%)

________________________________________

(1)

Other mainly includes revenues from agreements with third party brands.

Revenues by Distribution Channel (Unaudited)

 

For the six months ended June 30,

H1 2024 vs H1 2023

 

For the three months ended June 30,

Q2 2024 vs Q2 2023

(€ thousands, except percentages)

2024

 

2023

 

%

 

Organic

 

2024

 

2023

 

%

 

Organic

Direct to Consumer (DTC)

 

 

ZEGNA brand

486,561

 

465,710

 

4.5%

 

5.1%

 

246,946

 

236,114

 

4.6%

 

4.0%

Thom Browne

89,976

 

82,924

 

8.5%

 

(12.8%)

 

45,257

 

40,075

 

12.9%

 

(11.6%)

TOM FORD FASHION

93,062

 

34,751

 

167.8%

 

1.3%

 

49,361

 

34,751

 

42.0%

 

1.3%

Total Direct to Consumer (DTC)

669,599

 

583,385

 

14.8%

 

2.4%

 

341,564

 

310,940

 

9.8%

 

1.7%

As a percentage of branded products (1)

76 %

 

72 %

 

 

 

 

 

75 %

 

73 %

 

 

 

 

Wholesale branded

 

 

ZEGNA brand

79,506

 

75,609

 

5.2%

 

10.4%

 

36,251

 

33,316

 

8.8%

 

11.8%

Thom Browne

76,745

 

124,027

 

(38.1%)

 

(36.0%)

 

42,257

 

54,324

 

(22.2%)

 

(22.4%)

TOM FORD FASHION

55,431

 

29,264

 

89.4%

 

8.7%

 

34,112

 

29,264

 

16.6%

 

8.7%

Total Wholesale branded

211,682

 

228,900

 

(7.5%)

 

(14.9%)

 

112,620

 

116,904

 

(3.7%)

 

(5.0%)

As a percentage of branded products

24 %

 

28 %

 

 

 

 

 

25 %

 

27 %

 

 

 

 

Textile

71,836

 

73,072

 

(1.7%)

 

(0.6%)

 

38,593

 

39,254

 

(1.7%)

 

(0.5%)

Other (2)

7,005

 

17,702

 

(60.4%)

 

(32.9%)

 

4,188

 

7,649

 

(45.2%)

 

(23.0%)

Total revenues

960,122

 

903,059

 

6.3%

 

(2.7%)

 

496,965

 

474,747

 

4.7%

 

(0.4%)

________________________________________

(1)

 

Branded products refer to the products sold under the three brands that the Group operates, through the DTC or wholesale branded distribution channels.

(2)

 

Other mainly includes revenues from agreements with third party brands.

Revenues by Geographical Area (Unaudited)

 

For the six months ended June 30,

 

H1 2024 vs H1 2023

 

For the three months ended June 30,

 

Q2 2024 vs Q2 2023

(€ thousands, except percentages)

2024

 

2023

 

%

 

Organic

 

2024

 

2023

 

%

 

Organic

EMEA (1)

336,591

 

322,680

 

4.3%

 

(1.5%)

 

180,029

 

172,572

 

4.3%

 

2.8%

Americas (2)

246,046

 

190,112

 

29.4%

 

6.7%

 

131,869

 

117,705

 

12.0%

 

4.5%

Greater China Region

266,324

 

306,835

 

(13.2%)

 

(11.7%)

 

126,925

 

142,309

 

(10.8%)

 

(10.0%)

Rest of APAC (3)

109,990

 

82,190

 

33.8%

 

5.4%

 

57,556

 

41,463

 

38.8%

 

5.9%

Other (4)

1,171

 

1,242

 

(5.7%)

 

(17.5%)

 

586

 

698

 

(16.0%)

 

(21.2%)

Total revenues

960,122

 

903,059

 

6.3%

 

(2.7%)

 

496,965

 

474,747

 

4.7%

 

(0.4%)

________________________________________

(1)

 

EMEA includes Europe, the Middle East and Africa.

(2)

 

Americas includes the United States of America, Canada, Mexico, Brazil and other Central and South American countries.

(3)

 

Rest of APAC includes Japan, South Korea, Singapore, Thailand, Malaysia, Vietnam, Indonesia, Philippines, Australia, New Zealand, India and other Southeast Asian countries.

(4)

 

Other revenues mainly include royalties.

Group Monobrand (1) Store Network at June 30, 2024

 

At June 30, 2024

 

At December 31, 2023

 

At June 30, 2023

Stores

ZEGNA

 

Thom Browne

 

TOM FORD FASHION

 

Group

 

ZEGNA

 

Thom Browne

 

TOM FORD FASHION

 

Group

 

ZEGNA

 

Thom Browne

 

TOM FORD FASHION

 

Group

EMEA (2)

75

 

9

 

7

 

91

 

71

 

9

 

4

 

84

 

69

 

10

 

4

 

83

Americas

64

 

20

 

12

 

96

 

59

 

7

 

12

 

78

 

55

 

7

 

11

 

73

Greater China Region

82

 

35

 

11

 

128

 

79

 

33

 

10

 

122

 

79

 

32

 

11

 

122

Rest of APAC

58

 

38

 

26

 

122

 

44

 

37

 

25

 

106

 

43

 

17

 

25

 

85

Total Direct to Consumer (DTC)

279

 

102

 

56

 

437

 

253

 

86

 

51

 

390

 

246

 

66

 

51

 

363

EMEA (2)

46

 

7

 

16

 

69

 

55

 

7

 

14

 

76

 

59

 

7

 

12

 

78

Americas

67

 

3

 

50

 

120

 

63

 

3

 

50

 

116

 

63

 

3

 

51

 

117

Greater China Region

13

 

10

 

—

 

23

 

13

 

10

 

—

 

23

 

13

 

11

 

—

 

24

Rest of APAC

4

 

4

 

5

 

13

 

20

 

5

 

6

 

31

 

22

 

22

 

7

 

51

Total Wholesale

130

 

24

 

71

 

225

 

151

 

25

 

70

 

246

 

157

 

43

 

70

 

270

Total

409

 

126

 

127

 

662

 

404

 

111

 

121

 

636

 

403

 

109

 

121

 

633

________________________________________

(1)

 

Monobrand store count includes our DOSs (which are divided into boutiques and outlets) and our Wholesale monobrand stores (including also monobrand franchisees).

(2)

 

Does not include any stores in Russia at June 30, 2024, December 31, 2023 or at June 30, 2023. Although some stores may still be operating at June 30, 2024, they have not been supplied by the Group since February 2022 and have therefore been excluded from the Group’s store count.

Ermenegildo Zegna N.V.

SEMI-ANNUAL CONDENSED CONSOLIDATED STATEMENT OF PROFIT

for the six months ended June 30, 2024 and 2023

(Unaudited)

 

 

 

For the six months ended June 30,

(€ thousands)

 

2024

 

2023

Revenues

 

960,122

 

903,059

Cost of sales

 

(322,678)

 

(323,228)

Gross profit

 

637,444

 

579,831

Selling, general and administrative expenses

 

(497,612)

 

(415,792)

Marketing expenses

 

(66,751)

 

(47,530)

Operating profit

 

73,081

 

116,509

Financial income

 

12,106

 

15,601

Financial expenses

 

(29,267)

 

(44,592)

Foreign exchange losses

 

(7,684)

 

(7,003)

Result from investments accounted for using the equity method

 

314

 

(2,237)

Profit before taxes

 

48,550

 

78,278

Income taxes

 

(17,218)

 

(26,162)

Profit

 

31,332

 

52,116

Attributable to:

 

 

 

 

Shareholders of the Parent Company

 

25,085

 

45,967

Non-controlling interests

 

6,247

 

6,149

 

 

 

 

 

Basic earnings per share in €

 

0.10

 

0.19

Diluted earnings per share in €

 

0.10

 

0.19

Ermenegildo Zegna N.V.

SEMI-ANNUAL CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

at June 30, 2024 and at December 31, 2023

(Unaudited)

 

(€ thousands)

At June 30, 2024

 

At December 31, 2023

Assets

 

 

 

Non-current assets

 

 

 

Intangible assets

594,936

 

572,274

Property, plant and equipment

176,094

 

159,608

Right-of-use assets

561,176

 

533,952

Investments accounted for using the equity method

19,066

 

18,765

Deferred tax assets

165,254

 

160,878

Other non-current financial assets

36,121

 

33,898

Total non-current assets

1,552,647

 

1,479,375

Current assets

 

 

 

Inventories

540,791

 

522,589

Trade receivables

216,670

 

240,457

Derivative financial instruments

4,345

 

11,110

Tax receivables

36,112

 

31,024

Other current financial assets

99,451

 

90,917

Other current assets

105,967

 

95,260

Cash and cash equivalents

225,316

 

296,279

Total current assets

1,228,652

 

1,287,636

Total assets

2,781,299

 

2,767,011

Liabilities and Equity

 

 

 

Equity attributable to shareholders of the Parent Company

852,678

 

840,294

Equity attributable to non-controlling interests

61,527

 

60,602

Total equity

914,205

 

900,896

Non-current liabilities

 

 

 

Non-current borrowings

218,132

 

113,285

Other non-current financial liabilities

141,239

 

136,556

Non-current lease liabilities

497,543

 

471,083

Non-current provisions for risks and charges

20,323

 

19,849

Employee benefits

35,727

 

29,645

Deferred tax liabilities

77,843

 

73,885

Other non-current liabilities

4,758

 

9,689

Total non-current liabilities

995,565

 

853,992

Current liabilities

 

 

 

Current borrowings

167,963

 

289,337

Other current financial liabilities

—

 

22,102

Current lease liabilities

133,554

 

122,642

Derivative financial instruments

2,741

 

897

Current provisions for risks and charges

13,111

 

16,019

Trade payables and customer advances

281,819

 

314,137

Tax liabilities

41,957

 

41,976

Other current liabilities

230,384

 

205,013

Total current liabilities

871,529

 

1,012,123

Total equity and liabilities

2,781,299

 

2,767,011

Ermenegildo Zegna N.V.

SEMI-ANNUAL CONDENSED CONSOLIDATED CASH FLOW STATEMENT

for the six months ended June 30, 2024 and 2023

(Unaudited)

 

 

For the six months ended June 30,

(€ thousands)

2024

 

2023

Operating activities

 

 

 

Profit

31,332

 

52,116

Income taxes

17,218

 

26,162

Depreciation, amortization and impairment of assets

113,527

 

86,983

Financial income

(12,106)

 

(15,601)

Financial expenses

29,267

 

44,592

Foreign exchange losses

7,684

 

7,003

Write downs and other provisions

1,450

 

962

Write downs of the provision for obsolete inventory

7,775

 

19,292

Result from investments accounted for using the equity method

(314)

 

2,237

Other non-cash expenses, net

36,124

 

18,839

Change in inventories

(21,568)

 

(79,454)

Change in trade receivables

21,286

 

(26,851)

Change in trade payables including customer advances

(28,354)

 

3,710

Change in other operating assets and liabilities

(42,268)

 

2,870

Interest paid

(19,587)

 

(13,480)

Income taxes paid

(21,018)

 

(21,797)

Net cash flows from operating activities

120,448

 

107,583

Investing activities

 

 

 

Payments for property, plant and equipment

(47,926)

 

(25,699)

Payments for intangible assets

(12,151)

 

(8,801)

Payments for purchases of non-current financial assets

(1,319)

 

(585)

Proceeds from disposals of current financial assets and derivative instruments

15,707

 

221,869

Payments for acquisitions of current financial assets and derivative instruments

(21,444)

 

(6,023)

Business combinations, net of cash acquired

(14,608)

 

(108,575)

Acquisition of investments accounted for using the equity method

—

 

(11,228)

Net cash flows (used in)/from investing activities

(81,741)

 

60,958

Financing activities

 

 

 

Proceeds from borrowings

154,713

 

65,000

Repayments of borrowings

(174,223)

 

(173,407)

Payments of lease liabilities

(66,950)

 

(59,115)

Payments for acquisition of non-controlling interests

(23,502)

 

—

Proceeds from the exercise of warrants

—

 

4,409

Sales of shares held in treasury

—

 

3,654

Dividends paid to non-controlling interests

(1,444)

 

(6,068)

Net cash flows used in financing activities

(111,406)

 

(165,527)

Effects of exchange rate changes on cash and cash equivalents

1,736

 

(2,295)

Net (decrease)/increase in cash and cash equivalents

(70,963)

 

719

 

 

 

 

Cash and cash equivalents at the beginning of the period

296,279

 

254,321

Cash and cash equivalents at the end of the period

225,316

 

255,040

Non-IFRS Financial Measures

The Group’s management monitors and evaluates operating and financial performance using several non-IFRS financial measures including: adjusted earnings before interest and taxes (“Adjusted EBIT”), Adjusted EBIT Margin, Net Financial Indebtedness/(Cash Surplus), Trade Working Capital, Free Cash Flow, revenues on a constant currency basis (constant currency) and revenues on an organic growth basis (organic or organic growth). The Group’s management believes that these non-IFRS financial measures provide useful and relevant information regarding the Group’s financial performance and financial condition, and improve the ability of management and investors to assess and compare the financial performance and financial position of the Group with those of other companies. They also provide comparable measures that facilitate management’s ability to identify operational trends, as well as make decisions regarding future spending, resource allocations and other strategic and operational decisions. While similar measures are widely used in the industry in which the Group operates, the financial measures that the Group uses may not be comparable to other similarly named measures used by other companies nor are they intended to be substitutes for measures of financial performance or financial position as prepared in accordance with IFRS. A definition, explanation of relevance and a reconciliation of each non-IFRS financial measure to the most directly comparable measure calculated and presented in accordance with IFRS are set out below.

Adjusted EBIT and Adjusted EBIT Margin

Adjusted EBIT is defined as profit or loss before income taxes plus financial income, financial expenses, foreign exchange losses and the result from investments accounted for using the equity method, adjusted for income and costs which are significant in nature and that management considers not reflective of underlying operating activities, including, for one or all of the periods presented and as further described below, net impairment of leased and owned stores, severance indemnities and provisions for severance expenses, legal costs for trademark dispute, transaction costs related to acquisitions, costs related to the Business Combination, special donations for social responsibility and net income related to lease agreements.

Adjusted EBIT Margin is defined as Adjusted EBIT divided by revenues of the applicable period.

The Group’s management uses Adjusted EBIT and Adjusted EBIT Margin for internal reporting to assess performance and as part of the forecasting, budgeting and decision-making processes as they provide additional transparency regarding the Group’s underlying operating performance. The Group’s management believes these non-IFRS financial measures are useful because they exclude items that management believes are not indicative of the Group’s underlying operating performance and allow management to view operating trends, perform analytical comparisons and benchmark performance between periods and among segments. The Group’s management also believes that Adjusted EBIT and Adjusted EBIT Margin are useful for investors and analysts to better understand how management assesses the Group’s underlying operating performance on a consistent basis and to compare the Group’s performance with that of other companies. Accordingly, management believes that Adjusted EBIT and Adjusted EBIT Margin provide useful information to third party stakeholders in understanding and evaluating the Group’s operating results.

The following table presents a reconciliation of Profit to Adjusted EBIT and the calculation of the profit margin and the Adjusted EBIT Margin for the six months ended June 30, 2024 and 2023:

 

For the six months ended June 30,

(€ thousands, except percentages)

2024

 

2023

Profit

31,332

 

52,116

Income taxes

17,218

 

26,162

Financial income

(12,106)

 

(15,601)

Financial expenses

29,267

 

44,592

Foreign exchange losses

7,684

 

7,003

Result from investments accounted for using the equity method

(314)

 

2,237

Operating profit

73,081

 

116,509

Adjustments:

 

 

 

Net impairment of leased and owned stores (1)

4,979

 

—

Severance indemnities and provisions for severance expenses (2)

1,436

 

738

Legal costs for trademark dispute (3)

1,388

 

649

Transaction costs related to acquisitions (4)

26

 

4,975

Costs related to the Business Combination (5)

—

 

1,059

Special donations for social responsibility (6)

—

 

100

Net income related to lease agreements (7)

—

 

(4,126)

Adjusted EBIT

80,910

 

119,904

 

 

 

 

Revenues

960,122

 

903,059

Profit margin (Profit / Revenues)

3.3%

 

5.8%

Adjusted EBIT Margin (Adjusted EBIT / Revenues)

8.4%

 

13.3%

________________________________________

(1)

 

Net impairment of leased and owned stores of €4,979 thousand for the six months ended June 30, 2024 includes (i) impairment of €3,036 thousand related to right-of-use assets, and (ii) impairment of €1,943 thousand related to property, plant and equipment.

(2)

 

Relates to severance indemnities of €1,436 thousand and €738 thousand for the six months ended June 30, 2024 and 2023, respectively.

(3)

 

Relates to legal costs of €1,388 thousand and €649 thousand for the six months ended June 30, 2024 and 2023, respectively, in connection with a legal dispute between Adidas AG (“adidas”) and Thom Browne, primarily in relation to the use of trademarks.

(4)

 

Relates to transaction costs of €26 thousand and €4,975 thousand, for the six months ended June 30, 2024 and 2023, respectively, primarily for consultancy and legal fees related to the acquisition of the ZEGNA business in South Korea and for 2023 only, to the TFI Acquisition and the acquisition of a 25% interest in Norda.

(5)

 

Costs related to the Business Combination of €1,059 thousand for the six months ended June 30, 2023 relate to the grant of equity awards to management in 2021 with vesting subject to the public listing of the Company’s shares and certain other performance and/or service conditions.

(6)

 

Relates to donations to support initiatives related to humanitarian emergencies in Turkey of €100 thousand for the six months ended June 30, 2023.

(7)

 

Net income related to lease agreements of €4,126 thousand for the six months ended June 30, 2023 relates to the derecognition of lease liabilities following a change in terms of a lease agreement in Hong Kong.

Net Financial Indebtedness/(Cash Surplus)

Net Financial Indebtedness/(Cash Surplus) is defined as the sum of financial borrowings (current and non-current) and derivative financial instrument liabilities, net of cash and cash equivalents, derivative financial instrument assets, securities (recorded within other current financial assets in the semi-annual condensed consolidated statement of financial position).

The Group’s management believes that Net Financial Indebtedness/(Cash Surplus) is useful to monitor the level of net liquidity and financial resources available to the Group. The Group’s management believes this non-IFRS financial measure aids management, investors and analysts to analyze the Group’s financial position and financial resources available, and to compare the Group’s financial position and financial resources available with that of other companies.

The following table sets forth the calculation of Net Financial Indebtedness/(Cash Surplus) at June 30, 2024, at December 31, 2023 and June 30, 2023:

(€ thousands)

At June 30, 2024

 

At December 31, 2023

 

At June 30, 2023

Non-current borrowings

218,132

 

113,285

 

112,747

Current borrowings

167,963

 

289,337

 

283,077

Derivative financial instruments — Liabilities

2,741

 

897

 

2,186

Total borrowings, other financial liabilities and derivatives

388,836

 

403,519

 

398,010

Cash and cash equivalents

(225,316)

 

(296,279)

 

(255,040)

Derivative financial instruments — Assets

(4,345)

 

(11,110)

 

(17,985)

Other current financial assets (1)

(93,666)

 

(85,320)

 

(107,952)

Total cash and cash equivalents, other current financial assets and derivatives

(323,327)

 

(392,709)

 

(380,977)

Net Financial Indebtedness/(Cash Surplus)

65,509

 

10,810

 

17,033

________________________________________

(1)

 

Includes (i) the Group’s investments in securities amounting to €105,752 thousand and (ii) a financial receivable from an associated company of €2,200 thousand at June 30, 2023.

Trade Working Capital

Trade Working Capital is defined as current assets less current liabilities adjusted for derivative assets and liabilities, tax receivables and liabilities, cash and cash equivalents, borrowings, lease liabilities, and certain other current assets and liabilities.

The Group’s management uses Trade Working Capital to understand and evaluate the Group’s liquidity generation/absorption. The Group’s management believes this non-IFRS financial measure is important supplemental information for investors in evaluating liquidity in that it provides insight into the availability of net current resources to fund our ongoing operations. Trade Working Capital is a measure used by management in internal evaluations of cash availability and operational performance.

The following table sets forth the calculation of Trade Working Capital at June 30, 2024, at December 31, 2023 and June 30, 2023:

(€ thousands)

At June 30, 2024

 

At December 31, 2023

 

At June 30, 2023

Current assets

1,228,652

 

1,287,636

 

1,262,741

Current liabilities

(871,529)

 

(1,012,123)

 

(1,021,920)

Working capital

357,123

 

275,513

 

240,821

Less:

 

 

 

 

 

Derivative financial instruments - Assets

4,345

 

11,110

 

17,985

Tax receivables

36,112

 

31,024

 

17,734

Other current financial assets

99,451

 

90,917

 

109,918

Other current assets

105,967

 

95,260

 

99,680

Cash and cash equivalents

225,316

 

296,279

 

255,040

Current borrowings

(167,963)

 

(289,337)

 

(283,077)

Current lease liabilities

(133,554)

 

(122,642)

 

(121,761)

Derivative financial instruments - Liabilities

(2,741)

 

(897)

 

(2,186)

Other current financial liabilities

—

 

(22,102)

 

(23,373)

Current provisions for risks and charges

(13,111)

 

(16,019)

 

(15,458)

Tax liabilities

(41,957)

 

(41,976)

 

(46,928)

Other current liabilities

(230,384)

 

(205,013)

 

(232,172)

Trade Working Capital

475,642

 

448,909

 

465,419

of which trade receivables

216,670

 

240,457

 

217,208

of which inventories

540,791

 

522,589

 

545,176

of which trade payables and customer advances

(281,819)

 

(314,137)

 

(296,965)

Trade Working Capital increased by €26,733 thousand from €448,909 thousand at December 31, 2023 to €475,642 thousand at June 30, 2024, primarily related to (i) lower trade payables and customer advances of €32,318 thousand, and (ii) higher inventories of €18,202 thousand, partially offset by (iii) lower trade receivables of €23,787 thousand. The increase in inventories was driven by ZEGNA and TOM FORD FASHION to support growth of the business, including the effects of new store openings and the conversion of ZEGNA stores in South Korea from wholesale to DTC, as well as foreign exchange impact (mainly the United States Dollar and the Chinese Renminbi) and a build up of Textile inventories for the upcoming season, partially offset by a reduction in Thom Browne driven by improved inventory management. The changes in trade receivables and in trade payables and customer advances were primarily driven by seasonality, and the change in trade receivables also reflects the impact of the conversion of several stores from wholesale to DTC.

Free Cash Flow

Free Cash Flow is defined as net cash flows from operating activities less payments for property, plant and equipment (net of proceeds from disposals), intangible assets and lease liabilities.

The Group’s management believes that Free Cash Flow is a useful metric for management, investors and analysts to evaluate and monitor the Group’s ability to generate cash, including in comparison to other companies. Free Cash Flow is not representative of residual cash flows available for discretionary purposes.

The following table sets forth the Free Cash Flow for the six months ended June 30, 2024, and 2023:

 

For the six months ended June 30,

(€ thousands)

2024

 

2023

Net cash flows from operating activities

120,448

 

107,583

Payments for property, plant and equipment

(47,926)

 

(25,699)

Payments for intangible assets

(12,151)

 

(8,801)

Payments of lease liabilities

(66,950)

 

(59,115)

Free Cash Flow

(6,579)

 

13,968

Revenues on a constant currency basis (constant currency)

In addition to presenting our revenues on a current currency basis, we also present certain revenue information on a constant currency basis (constant currency), which excludes the effects of foreign currency translation from our subsidiaries with functional currencies different from the Euro.

We calculate constant currency revenues by applying the current period average foreign currency exchange rates to translate prior period revenues of foreign subsidiaries expressed in local functional currencies different than the Euro.

We use revenues on a constant currency basis to analyze how our underlying revenues have changed between periods independent of the effects of foreign currency translation.

Revenues on a constant currency basis are not a substitute for revenues on a current currency basis or any IFRS-related measures, however we believe that revenues excluding the impact of foreign currency translation provide additional useful information to management and to investors in analyzing and evaluating our revenues and operating performance.

Revenues on an organic growth basis (organic growth or organic)

In addition to presenting our revenues on a current currency basis, we also present certain revenue information on an organic growth basis (organic growth or organic). Organic growth is calculated as the change in revenues from period to period, excluding the effects of (a) foreign exchange, (b) acquisitions and disposals and (c) changes in license agreements where the Group operates as a licensee.

In calculating organic growth, the following adjustments are made to revenues:

(a)

 

Foreign exchange – Current period average foreign currency exchange rates are used to translate prior period revenues of foreign subsidiaries expressed in local functional currencies different than the Euro.

(b)

 

Acquisitions and disposals – Revenues generated by businesses and operations acquired in the current year are excluded. Revenues generated by businesses and operations acquired in the prior year are excluded from the current year for the same period that corresponds to the pre-acquisition period in the prior year. Additionally, where a business or operation was a customer prior to an acquisition, the related pre-acquisition revenues are excluded from the current and prior periods. Revenues generated by businesses and operations disposed of in the current year or prior year are excluded from both periods as applicable.

(c)

 

Changes in license agreements where the Group operates as a licensee – Revenues generated from license agreements where the Group operates as a licensee that are new or terminated in the current year or prior year are excluded from both periods (except if the effects are already included in acquisitions and disposals). Additionally, revenues generated from license agreements where the Group operates as a licensee that experienced a structural change in the scope or perimeter in the current year or prior year are excluded from both periods, including changes to product categories, distribution channels or geographies of the underlying license agreements.

We believe the presentation of organic growth is useful to better understand and analyze the underlying change in the Group’s revenues from period to period on a consistent perimeter and constant currency basis.

Revenues on an organic growth basis are not a substitute for revenues on a current currency basis or any IFRS-related measures, however we believe that revenues excluding the effects of (a) foreign exchange, (b) acquisitions and disposals and (c) changes in license agreements where the Group operates as a licensee provide additional useful information to management and to investors in analyzing and evaluating our revenues and operating performance.

The tables below show a reconciliation of reported revenue growth to constant currency, excluding the effects of foreign exchange, and to organic, which excludes also acquisitions and disposals and changes in license agreements where the Group operates as a licensee, by segment, by product line, by distribution channel and by geographic area for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 (H1 2024 vs H1 2023) and for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 (Q2 2024 vs Q2 2023).

Segment

 

H1 2024 vs H1 2023

 

Revenues
Growth

 

less
Foreign
exchange

 

Constant
Currency

 

less

Acquisitions and disposals

 

less

Changes in license agreements where the Group operates as a licensee

 

Organic

Zegna

2.5%

 

(1.9%)

 

4.4%

 

0.7%

 

0.2%

 

3.5%

Thom Browne

(19.7%)

 

(1.2%)

 

(18.5%)

 

8.5%

 

—%

 

(27.0%)

Tom Ford Fashion

131.9%

 

(1.4%)

 

133.3%

 

128.6%

 

—%

 

4.7%

Total

6.3%

 

(1.8%)

 

8.1%

 

11.6%

 

(0.8%)

 

(2.7%)

 

Q2 2024 vs Q2 2023

 

Revenues
Growth

 

less
Foreign
exchange

 

Constant
Currency

 

less

Acquisitions and disposals

 

less

Changes in license agreements where the Group operates as a licensee

 

Organic

Zegna

3.3%

 

(1.1%)

 

4.4%

 

1.1%

 

0.6%

 

2.7%

Thom Browne

(7.2%)

 

(1.0%)

 

(6.2%)

 

11.6%

 

—%

 

(17.8%)

Tom Ford Fashion

30.4%

 

(1.0%)

 

31.4%

 

26.7%

 

—%

 

4.7%

Total

4.7%

 

(1.1%)

 

5.8%

 

6.7%

 

(0.5%)

 

(0.4%)

Product line

 

H1 2024 vs H1 2023

 

Revenues
Growth

 

less
Foreign
exchange

 

Constant
Currency

 

less

Acquisitions and disposals

 

less

Changes in license agreements where the Group operates as a licensee

 

Organic

ZEGNA brand

4.6%

 

(2.1%)

 

6.7%

 

0.8%

 

—%

 

5.9%

Thom Browne

(19.4%)

 

(1.2%)

 

(18.2%)

 

8.5%

 

—%

 

(26.7%)

TOM FORD FASHION

132.0%

 

(1.3%)

 

133.3%

 

128.6%

 

—%

 

4.7%

Textile

(1.7%)

 

(1.0%)

 

(0.7%)

 

(0.1%)

 

—%

 

(0.6%)

Other

(60.4%)

 

(0.2%)

 

(60.2%)

 

(0.3%)

 

(27.0%)

 

(32.9%)

Total

6.3%

 

(1.8%)

 

8.1%

 

11.6%

 

(0.8%)

 

(2.7%)

 

Q2 2024 vs Q2 2023

 

Revenues
Growth

 

less
Foreign
exchange

 

Constant
Currency

 

less

Acquisitions and disposals

 

less

Changes in license agreements where the Group operates as a licensee

 

Organic

ZEGNA brand

5.1%

 

(1.2%)

 

6.3%

 

1.3%

 

—%

 

5.0%

Thom Browne

(7.3%)

 

(1.0%)

 

(6.3%)

 

11.6%

 

—%

 

(17.9%)

TOM FORD FASHION

30.4%

 

(1.0%)

 

31.4%

 

26.7%

 

—%

 

4.7%

Textile

(1.7%)

 

(1.2%)

 

(0.5%)

 

—%

 

—%

 

(0.5%)

Other

(45.2%)

 

—%

 

(45.2%)

 

—%

 

(22.2%)

 

(23.0%)

Total

4.7%

 

(1.1%)

 

5.8%

 

6.7%

 

(0.5%)

 

(0.4%)

Distribution channel

 

H1 2024 vs H1 2023

 

Revenues
Growth

 

less
Foreign
exchange

 

Constant
Currency

 

less

Acquisitions and disposals

 

less

Changes in license agreements where the Group operates as a licensee

 

Organic

Direct to Consumer (DTC)

 

 

 

 

 

 

 

 

 

 

 

ZEGNA brand

4.5%

 

(2.3%)

 

6.8%

 

1.7%

 

—%

 

5.1%

Thom Browne

8.5%

 

(4.2%)

 

12.7%

 

25.5%

 

—%

 

(12.8%)

TOM FORD FASHION

167.8%

 

(2.9%)

 

170.7%

 

169.4%

 

—%

 

1.3%

Total Direct to Consumer (DTC)

14.8%

 

(2.7%)

 

17.5%

 

15.1%

 

—%

 

2.4%

Wholesale branded

 

 

 

 

 

 

 

 

 

 

 

ZEGNA brand

5.2%

 

(0.7%)

 

5.9%

 

(4.5%)

 

—%

 

10.4%

Thom Browne

(38.1%)

 

—%

 

(38.1%)

 

(2.1%)

 

—%

 

(36.0%)

TOM FORD FASHION

89.4%

 

(0.1%)

 

89.5%

 

80.8%

 

—%

 

8.7%

Total Wholesale branded

(7.5%)

 

(0.2%)

 

(7.3%)

 

7.6%

 

—%

 

(14.9%)

Textile

(1.7%)

 

(1.0%)

 

(0.7%)

 

(0.1%)

 

—%

 

(0.6%)

Other

(60.4%)

 

(0.2%)

 

(60.2%)

 

(0.3%)

 

(27.0%)

 

(32.9%)

Total

6.3%

 

(1.8%)

 

8.1%

 

11.6%

 

(0.8%)

 

(2.7%)

 

Q2 2024 vs Q2 2023

 

Revenues
Growth

 

less
Foreign
exchange

 

Constant
Currency

 

less

Acquisitions and disposals

 

less

Changes in license agreements where the Group operates as a licensee

 

Organic

Direct to Consumer (DTC)

 

 

 

 

 

 

 

 

 

 

 

ZEGNA brand

4.6%

 

(1.3%)

 

5.9%

 

1.9%

 

—%

 

4.0%

Thom Browne

12.9%

 

(2.9%)

 

15.8%

 

27.4%

 

—%

 

(11.6%)

TOM FORD FASHION

42.0%

 

(1.8%)

 

43.8%

 

42.5%

 

—%

 

1.3%

Total Direct to Consumer (DTC)

9.8%

 

(1.6%)

 

11.4%

 

9.7%

 

—%

 

1.7%

Wholesale branded

 

 

 

 

 

 

 

 

 

 

 

ZEGNA brand

8.8%

 

(0.3%)

 

9.1%

 

(2.7%)

 

—%

 

11.8%

Thom Browne

(22.2%)

 

—%

 

(22.2%)

 

0.2%

 

—%

 

(22.4%)

TOM FORD FASHION

16.6%

 

(0.4%)

 

17.0%

 

8.3%

 

—%

 

8.7%

Total Wholesale branded

(3.7%)

 

(0.2%)

 

(3.5%)

 

1.5%

 

—%

 

(5.0%)

Textile

(1.7%)

 

(1.2%)

 

(0.5%)

 

—%

 

—%

 

(0.5%)

Other

(45.2%)

 

—%

 

(45.2%)

 

—%

 

(22.2%)

 

(23.0%)

Total

4.7%

 

(1.1%)

 

5.8%

 

6.7%

 

(0.5%)

 

(0.4%)

Geographic area

 

H1 2024 vs H1 2023

 

Revenues
Growth

 

less
Foreign
exchange

 

Constant
Currency

 

less

Acquisitions and disposals

 

less

Changes in license agreements where the Group operates as a licensee

 

Organic

EMEA (1)

4.3%

 

(0.1%)

 

4.4%

 

6.9%

 

(1.0%)

 

(1.5%)

Americas (2)

29.4%

 

0.1%

 

29.3%

 

24.4%

 

(1.8%)

 

6.7%

Greater China Region

(13.2%)

 

(2.9%)

 

(10.3%)

 

1.4%

 

—%

 

(11.7%)

Rest of APAC (3)

33.8%

 

(8.5%)

 

42.3%

 

37.8%

 

(0.9%)

 

5.4%

Other (4)

(5.7%)

 

—%

 

(5.7%)

 

11.8%

 

—%

 

(17.5%)

Total

6.3%

 

(1.8%)

 

8.1%

 

11.6%

 

(0.8%)

 

(2.7%)

 

Q2 2024 vs Q2 2023

 

Revenues
Growth

 

less
Foreign
exchange

 

Constant
Currency

 

less

Acquisitions and disposals

 

less

Changes in license agreements where the Group operates as a licensee

 

Organic

EMEA (1)

4.3%

 

0.3%

 

4.0%

 

2.0%

 

(0.8%)

 

2.8%

Americas (2)

12.0%

 

(0.2%)

 

12.2%

 

8.4%

 

(0.7%)

 

4.5%

Greater China Region

(10.8%)

 

(1.5%)

 

(9.3%)

 

0.8%

 

(0.1%)

 

(10.0%)

Rest of APAC (3)

38.8%

 

(9.7%)

 

48.5%

 

42.9%

 

(0.3%)

 

5.9%

Other (4)

(16.0%)

 

(0.1%)

 

(15.9%)

 

5.3%

 

—%

 

(21.2%)

Total

4.7%

 

(1.1%)

 

5.8%

 

6.7%

 

(0.5%)

 

(0.4%)

________________________________________

(1)

 

EMEA includes Europe, the Middle East and Africa.

(2)

 

Americas includes the United States of America, Canada, Mexico, Brazil and other Central and South American countries.

(3)

 

Rest of APAC includes Japan, South Korea, Singapore, Thailand, Malaysia, Vietnam, Indonesia, Philippines, Australia, New Zealand, India and other Southeast Asian countries.

(4)

 

Other revenues mainly include royalties.

Capital expenditure

Capital expenditure is defined as the sum of cash outflows that result in additions to property, plant and equipment and intangible assets.

The following table shows a breakdown of capital expenditure by category for the six months ended June 30, 2024 and 2023.

 

For the six months ended June 30,

(€ thousands)

2024

 

2023

Payments for property, plant and equipment

47,926

 

25,699

Payments for intangible assets

12,151

 

8,801

Capital expenditure

60,077

 

34,500

 

Paola Durante, Chief of External Relations

Alice Poggioli, Investor Relations Director

Clementina Tito, Head of Corporate Communication

ir@zegna.com / corporatepress@zegna.com

Source: Zegna Group

FAQ

What were Ermenegildo Zegna Group's (ZGN) revenues for H1 2024?

Ermenegildo Zegna Group reported revenues of €960.1 million for H1 2024, up 6% from H1 2023.

How did ZGN's profit in H1 2024 compare to H1 2023?

ZGN's profit in H1 2024 was €31.3 million (3.3% margin), down from €52.1 million (5.8% margin) in H1 2023.

What was ZGN's Adjusted EBIT for H1 2024?

ZGN's Adjusted EBIT for H1 2024 was €80.9 million with an 8.4% margin, compared to €119.9 million with a 13.3% margin in H1 2023.

How did the ZEGNA brand perform in H1 2024?

The ZEGNA brand recorded revenues of €566.1 million in H1 2024, showing 4.6% year-over-year growth and 5.9% organic growth.

What major change was announced for TOM FORD FASHION in H1 2024?

Ermenegildo Zegna Group announced the appointment of Haider Ackermann as the new Creative Director for TOM FORD FASHION.

Stock ZGN logo
Ermenegildo Zegna N.V.

NYSE:ZGN

ZGN Rankings

#1834 Ranked by Market Cap
#1649 Ranked by Dividends

ZGN Latest News

Sep 4, 2024
TOM FORD Announces Appointment of Haider Ackermann as Creative Director
Jul 25, 2024
Ermenegildo Zegna Group Revenues Reach €960 Million¹ in H1 2024, Up 6% Year-on-Year
Jun 26, 2024
Ermenegildo Zegna Group Reports Voting Results of the Annual General Meeting Held on June 26, 2024
May 21, 2024
Ermenegildo Zegna Group Announces Publication of the Convocation Notice for Its 2024 Annual General Meeting
Apr 23, 2024
Ermenegildo Zegna Group Reported Q1 2024 Revenues of €463 Million¹, up 8%² YoY, Driven by Zegna Brand and the Integration of Tom Ford Fashion

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