Ermenegildo Zegna's Q4 2024: Contradictions in China's Luxury Growth, Tom Ford Integration, and Wholesale Strategy

These are the key contradictions discussed in Ermenegildo Zegna N.V.'s latest 2024Q4 earnings call, specifically including: Growth Expectations in China, Integration Progress of Tom Ford Fashion, China's Growth Prospects, and Wholesale Channel Strategy:



Revenue and Gross Margin:
- Ermenegildo Zegna Group reported revenues of €1.947 billion for 2024, up 2% year-on-year, with a 67% gross margin.
- The growth was primarily driven by Zegna brand organic growth and a better inventory management, with DTC revenues reaching 78% of the combined brand revenues.

Adjusted EBIT and Segment Performance:
- The Group achieved an adjusted EBIT of €184 million, reflecting a challenging sector environment and strategic decisions to streamline the wholesale business.
- The performance was impacted by a 21% organic revenue decline at Thom Browne and a loss at Tom Ford Fashion, although both brands showed improvement in the second half of the year.

Tom Ford Fashion Show and Brand Recognition:
- The Tom Ford Fall/Winter '25 Fashion Show received significant acclaim, with double the media impact of the brand's latest show.
- This success was attributed to the innovative collection and strong execution, which also saw consumer interest and positive reception from key opinion leaders.

Market Challenges and Strategic Adjustments:
- The Group faced challenging conditions in China, particularly in Hong Kong, impacting Q1 2025 trends, and anticipates a negative trend for the region in '25.
- The company is focusing on reducing wholesale footprint and enhancing DTC and customer-centricity, with plans to achieve €2.2 billion to €2.4 billion in revenues and €250 million to €300 million in adjusted EBITDA by 2027.