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Results of Operations

Fiscal Year 2024 Key Financial Highlights

Revenues

In FY 2024 the Group recorded revenues of €1,946.6 million (+2.2% YoY and -1.9% organic). The ZEGNA brand recorded revenues of €1,163.7 million (+4.9% YoY and +5.5% organic). Thom Browne reported revenues of €314.7 million (-16.8% YoY and -20.5% organic). TOM FORD FASHION recorded revenues of €314.5 million (+33.5% YoY and -0.7% organic). Textile revenues were €138.2 million (-8.5% YoY and -7.5% organic) and Other revenues were €15.5 million (-48.4% YoY and -32.1% organic).

Full details of the Group’s revenues are included in the Annual Report on Form 20-F for the year ended December 31, 2024, which has been filed with the U.S. Securities and Exchange Commission today.

Gross Profit, Operating Profit and Profit

Gross profit in FY 2024 reached €1,296.6 million, up from €1,224.3 million in FY 2023, with a gross profit margin of 66.6%, compared to 64.3% in FY 2023. This was primarily driven by the increased proportion of direct-to-consumer ("DTC") revenues at the Group level, which reached 78% of revenues from branded products (compared to 73% in FY 2023).

Selling, general, and administrative (SG&A) expenses were €1,008.3 million (51.8% of revenues) in FY 2024, compared to €901.4 million (47.3% of revenues) in FY 2023. The higher incidence on revenues reflects investments in talent, the store network, and organization to support the long-term growth of each of the Group’s brand.

Marketing expenses in FY 2024 were €121.4 million, compared to €114.8 million in FY 2023, with the incidence on revenues substantially in line in FY 2024 (6.2%) compared to FY 2023 (6.0%).

As a result of the above, the Group reported an operating profit of €166.9 million compared to €208.1 million in FY 2023.

The Group’s profit in FY 2024 was €90.9 million (4.7% margin), compared to €135.7 million (7.1% margin) in FY 2023. In 2024, the Group’s effective tax rate returning to a more standard level of 30%, compared to a lower effective tax rate of 20% in FY 2023 (mainly as a result of higher non-taxable income), resulted in an increase in taxes of €6.3 million. Foreign exchange losses increased by €6.1 million, mainly related to the impact of U.S. Dollar appreciation versus the Euro.

Adjusted EBIT and Adjusted EBIT Margin

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

Analysis by Segment

In FY 2024, Adjusted EBIT for the Zegna segment was €187.6 million, down from €193.5 million in FY 2023. Adjusted EBIT for the Thom Browne segment was €27.3 million, down from €59.0 million in FY 2023. The Tom Ford Fashion segment reported an Adjusted EBIT of negative €10.1 million, compared to negative €1.7 million in FY 2023.

Zegna segment

In FY 2024, the Zegna segment (which includes the ZEGNA brand, Textile and Other) generated revenues of €1,348.8 million² (+2.0% YoY and +2.5% organic).

Adjusted EBIT for the Zegna segment was €187.6 million in FY 2024 with an Adjusted EBIT Margin of 13.9% compared to 14.6% in FY 2023. The slight decrease in margin was mainly driven by the investments made in talent, in the retail network and by challenging environment in GCR.

Thom Browne segment

In FY 2024, the Thom Browne segment generated revenues of €314.8 million² (-17.2% YoY and -20.8% organic).

Adjusted EBIT for the Thom Browne segment was €27.3 million in FY 2024, with an Adjusted EBIT Margin of 8.7% compared to 15.5% in FY 2023. The decrease was a consequence of the decline in revenues and investments made to reinforce the retail organization.

Tom Ford Fashion segment

In FY 2024, the Tom Ford Fashion ("TFF") segment generated revenues of €314.5 million² (+33.5% YoY and -0.7% organic).

Adjusted EBIT for the Tom Ford Fashion segment was negative €10.1 million in FY 2024, compared to negative €1.7 million in FY 2023. The operating performance was mainly affected by the investments in talent, both at HQ and at the regional level, in the store network, and the reinforcement of various business functions including compliance and IT, all of which will support the brand’s future growth.

Corporate

Corporate costs amounted to €20.0 million in FY 2024 compared to €30.4 million in FY 2023. The decrease is mainly due to lower costs for short-term and long-term remuneration.

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

Capital expenditure

Capital expenditure (capex) rose to €125.5 million in FY 2024, compared to €77.9 million in FY 2023. The increase is mainly attributable to the expansion of the DTC channel for all the brands, the reinforcement of the Group’s IT infrastructure, and the initial investments in the new shoe production plant in Parma (Italy).

Trade Working Capital

Trade Working Capital was €460.0 million at December 31, 2024, up 2.5% from €448.9 million at December 31, 2023. The performance was positively influenced by solid inventory management, as inventories remained stable compared to the previous year.

Net Financial Indebtedness/(Cash Surplus)

Net Financial Indebtedness was €94.2 million at December 31, 2024, compared to €10.8 million at December 31, 2023. The increase primarily reflects the cash-out for M&A transactions (mainly related to the acquisition of the additional 2% equity interest in Thom Browne and the acquisition of the Korean businesses of both Thom Browne and ZEGNA), dividends and other items (mainly related to fair value hedging), partially offset by the positive Free Cash Flow generation of €10.1 million.

Free Cash Flow

Notwithstanding the decrease in operating profit, the higher capex compared to FY 2023, and an increase in payments of lease liabilities due to the expansion of the store network at each brand, the Group continued to maintain positive cash flow generation in FY 2024, which reached €10.1 million, compared to €71.8 million in FY 2023.

Mid-term targets

To reflect the current business environment, the Group has updated its medium-term targets. In 2027, the Group expects to reach:

• Revenues in the range of €2,200-€2,400 million

• Adjusted EBIT of €250-€300 million

Subsequent events

Proposal of dividend distribution
On March 26, 2025, the Board of Directors of Ermenegildo Zegna Group proposed to make a dividend distribution of €0.12 per share to holders of the Company’s ordinary shares, equal to a total dividend distribution of approximately €30 million. The dividend proposal is subject to the finalization and adoption of the annual statutory accounts of the Company (provided that the distribution is permitted under Dutch law) and to the approval of the Company’s shareholders at the 2025 annual general meeting, which is expected to be held on June 26, 2025.

Upcoming Events

Next financial releases

• April 24, 2025: Q1 2025 Revenues

• July 30, 2025: H1 2025 Preliminary Revenues

• September 5, 2025: H1 2025 Financial Results

• October 23, 2025: Q3 2025 Revenues

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

Conference Call

As previously announced, today, at 9:00 a.m. ET (2:00 p.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/default.aspx).

To participate in the call, please dial:

Italy: +39 06 9450 1060
United States: +1 646 233 4753
United Kingdom: +44 20 3936 2999

Access Code: 767620

Webcast link: https://events.q4inc.com/attendee/447377645

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

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 7,100 employees and recorded revenues of €1.95 billion in 2024.

Forward Looking Statements

This communication, including the section titled "Mid-term targets", 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; pandemics or other 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 , including credit risks; 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.

FY 2024 - Group Revenues Tables

Revenues by Segment

Intersegment eliminations include revenues from products that the Textile and Other product lines (included in the Zegna segment) sell to the Group’s brands.

Revenues by brand and product line

Revenues by distribution channel

Revenues by geographic area

Group Monobrand⁽¹⁾ Store Network at December 31, 2024 and 2023

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 Accounting Standards. 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 Accounting Standards 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 years ended December 31, 2024 and 2023.

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 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 December 31, 2024 and 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.

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 years ended December 31, 2024 and 2023:

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 or organic growth)

In addition to presenting our revenues on a current currency basis, we also present certain revenue information on an organic growth basis (organic or organic growth). 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 performance, the following adjustments are made to revenues:

We believe the presentation of revenues on an organic basis 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 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 performance to Constant Currency, excluding the effects of foreign exchange, and to organic performance, which excludes also acquisitions and disposals and changes in license agreements where the Group operates as a licensee, by segment, by brand and product line, by distribution channel and by geographic area for the year ended December 31, 2024 compared to the year ended December 31, 2023 (FY 2024 vs FY 2023)

Segment

Brand and product line

Distribution channel

Geographic area

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 years ended December 31, 2024 and 2023:

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20250327313236/en/

Contacts

Paola Durante, Chief of External Relations
Alice Poggioli, Investor Relations Director
Clementina Tito, Head of Corporate Communication

ir@zegna.com / corporatepress@zegna.com