Ermenegildo Zegna's Q1 2025: Unraveling Key Contradictions in Market Performance and Growth Expectations

Greater China market performance, Thom Browne wholesale outlook, EBIT growth expectations, earnings growth expectations, and the impact of Haider Ackermann on Zegna are the key contradictions discussed in Ermenegildo Zegna's latest 2025Q1 earnings call.



Revenue Performance and Regional Trends:
- Ermenegildo Zegna N.V. reported revenue of EUR 459 million for Q1 2025, a 1% decline both year-on-year and in organic terms.
- The revenue decline was mostly due to a 9% decrease in the Textile product line and a 12% drop in Greater China revenues.
- The Americas and APAC regions remained strong, with the Americas showing a 9% organic growth.

Brand Performance and Channel Strategy:
- The Zegna brand achieved 3% growth, driven by direct-to-consumer (DTC) channels, particularly in EMEA and the U.S.
- Tom Ford Fashion saw a 3% organic growth, driven by the positive impact of Haider Ackermann's first fashion show and DTC growth.
- Thom Browne reported a 9% organic decline due to ongoing streamlining of the wholesale channel, with DTC up 3%.

Impact of Tariffs and Pricing Strategy:
- The company is considering a mid single-digit pricing increase in the U.S. to offset the 10% increase in tariffs without significantly impacting volumes.
- Despite the tariff increase, there was no significant change in global demand, with some improvement noted after product launches.

Strategic Outlook andCost Management:
- The company is focused on low single-digit EBIT growth for 2025, driven by cost management and discretionary expense reductions.
- The strategy involves selective distribution and a shift towards DTC sales, which is expected to continue driving growth.