Earnings call: Ermenegildo Zegna reports a revenue decline of 8%

Ermenegildo Zegna N.V. (ZGN), a global luxury fashion house, faced a challenging third quarter in 2024, with revenues declining 8% year-on-year to €397 million. The company, known for its high-end menswear and fashion brands, including ZEGNA and Thom Browne, has been particularly affected by market difficulties in the Greater China region.

Despite these setbacks, the company reported a year-to-date revenue increase of 2% on a reported basis, though organic growth showed a 4% decline due to recent acquisitions and foreign exchange impacts. Chairman and CEO Gildo Zegna emphasized long-term strategies and careful planning in the face of these challenges.

Key Takeaways

Ermenegildo Zegna reported a decrease in Q3 2024 revenues, with significant challenges in the Greater China region.
ZEGNA brand achieved 3% organic growth, driven by direct-to-consumer sales, with strong performance in the Americas and EMEA.
Thom Browne and Tom Ford (NYSE:F) Fashion experienced significant revenue declines, with strategic shifts and market challenges affecting their performance.
The Group opened new stores and converted wholesale locations to retail, impacting revenue timing.
Consumer confidence in China remains subdued, with some signs of recovery expected in the long term.
The company remains focused on enhancing the direct-to-consumer channel and adapting strategies to ongoing market challenges.

Company Outlook

ZEGNA anticipates a flattish wholesale performance for 2024, with potential recovery in the Americas.
Long-term strategies include streamlining operations and unveiling new collections for Thom Browne and Tom Ford by mid-2025.
Detailed guidance on store openings and revenue will be provided in January 2025.

Bearish Highlights

Greater China region posed significant challenges, with a notable decline in revenues and traffic.
Thom Browne’s and Tom Ford’s wholesale revenues saw sharp declines.
The strategic shift from wholesale to direct-to-consumer for Thom Browne led to a 27% organic revenue fall.

Bullish Highlights

Direct-to-consumer revenues for ZEGNA grew by 4% organically, representing a majority of the brand’s total revenues.
ZEGNA brand saw strong double-digit growth in the EMEA, Americas, and Japan.
Early trends in October indicate a slight improvement compared to Q3 for Thom Browne.

Misses

Q3 revenues declined by 8% year-on-year, with a 7% decline in organic terms.
Tom Ford Fashion’s revenues dropped by 11% organically in Q3 due to wholesale performance and delivery timing issues.

Q&A Highlights

Discussion focused on ZEGNA brand’s direct-to-consumer growth and the strategic focus on enhancing store productivity and customer engagement in China.
Management expressed optimism about growth potential in 2025, particularly for Thom Browne and Tom Ford.
Price strategy across the brands aims at moderate increases to offset inflation and currency fluctuations, without major structural repositioning.

Ermenegildo Zegna’s third-quarter performance reflects the complex dynamics of the global luxury fashion market, particularly in the challenging Greater China region. While the company has faced declines, particularly in its Thom Browne and Tom Ford brands, there are positive signs of resilience and growth in other areas, particularly in direct-to-consumer sales. The company’s strategic focus on long-term growth and adaptation to market conditions, coupled with a cautious yet optimistic outlook for recovery in key markets, will be critical as it moves into 2025. With new collections on the horizon and a focus on iconic products, Zegna aims to strengthen its position in the luxury fashion industry. The full-year 2024 revenue call on January 27, 2025, will provide further insights into the company’s performance and strategic direction.

InvestingPro Insights

As Ermenegildo Zegna N.V. (ZGN) navigates through challenging market conditions, InvestingPro data offers additional context to the company’s financial landscape. Despite the recent revenue decline, ZGN maintains a market capitalization of $2.06 billion, reflecting its significant presence in the luxury fashion sector.

One of the InvestingPro Tips highlights ZGN’s impressive gross profit margins, which is corroborated by the data showing a gross profit margin of 65.36% for the last twelve months as of Q2 2024. This robust margin underscores the company’s ability to maintain pricing power and efficiency in its core operations, even in the face of market headwinds.

Another relevant InvestingPro Tip indicates that ZGN has raised its dividend for 3 consecutive years. This commitment to shareholder returns is further supported by a current dividend yield of 1.47% and a dividend growth rate of 9.97% over the last twelve months. This trend aligns with the company’s long-term strategic focus mentioned in the earnings report.

However, investors should note that ZGN is trading near its 52-week low, with the stock price at 52.49% of its 52-week high. This aligns with the reported challenges in the Greater China region and the overall revenue decline in Q3 2024.

For readers interested in a more comprehensive analysis, InvestingPro offers 8 additional tips for ZGN, providing a deeper understanding of the company’s financial health and market position.

Full transcript – Ermenegildo Zegna NV (NYSE:ZGN) Q3 2024:

Operator: Good afternoon, or good morning, everyone. Before we begin, I need to point out that management on the call will make certain forward-looking statements included at the beginning of today’s presentation. Please note that today’s material and presentation are available under zegnagroup.com’s website. I will now hand over to Gildo Zegna, Chairman and CEO of the Group.

Gildo Zegna: Good morning, and good afternoon to everybody. Thank you for joining today Conference Call on Ermenegildo Zegna Q3 2024 Revenues. Since we just spoke a month ago to discuss our H1 results in details and provide an in-depth update on our strategy and the important action we are taking to navigate the challenges currently facing our sector. I will not take much of your time today. I want to give just a few comments on Q3 and talk a bit about some recent trends. As anticipated, Q3 DTC performance was impacted by an increasingly challenging environment, especially in the Greater China region. The quarter also saw a softer wholesale performance, which was negatively impacted by the ongoing door rationalization at Thom Browne. By the conversion of SIS [ph], which are wholesale to concession which are retail, and by some different timing deliveries for Zegna and Tom Ford Fashion. August was the most challenging month in the quarter. With September, we saw a slight improvement. ZEGNA brand recorded double-digit performance in Americas and EMEA, also thanks to the success of the second drop of deliveries of Fall Winter 2024. During the past weeks, we had some important events that I wish to talk about. Most recently, I’m very pleased to say that we finally inaugurated the Zegna Monte Carlo store and we also opened Beijing, Shin Kong Place in October. This in addition to other important stores we opened in Q3, including Honolulu, Ala Moana and New York Meatpacking District.

and a: In Hong Kong, the brand launched with also Thom Browne attending the world of Thom Browne a multi-category installation across Joyce, Pacific Place landmark and Lane Crawford, that is our partner. But not only events, I’m proud to anticipate that Thom was honored by the CFDA of America with nomination for 2024 menswear and 2024 womenswear Designer of the Year and as you know, the award will take place on October 28 in New York. Let me finally comment on the Golden Week in China. Golden Week performance for the Group was a bit ahead of our expectations and showed an improvement compared to the Q3 downtrend. However, as you can imagine, revenues in the week were still below last year result. Zegna saw a higher quality traffic, which means that even if traffic was down conversion and average ticket was up. This is coherent with the strategy we are pursuing for the brand. Thom Browne show some small initial positive signs, but they continue to remain cautious on the overall outlook, knowing that uncertainties are still there. For Tom Ford Fashion Golden Week has a minor impact since the lower exposure of the brand to China. To conclude, I wish to leave you with a comment and a promise. 2024 has turned out to be a different year from what I believe the whole sector initially planned. We face this different outlook with the conviction that we must work for the long-term. In this environment, as you know, we took some important decisions and actions to reinforce our brands for the long-term, but that will have some short-term impacts on our results. Importantly, we streamlined the Thom Browne wholesale business and focused the brand on DTC, while also making some important investment in marketing, merchandising and retail talents. At Tom Ford Fashion, we appointed Haider Ackermann as Creative Director in order to bring the brand to its full potential. Haider new collection will be in store next year by June, July. Looking at 2025, I believe that we will start this year then next year in a much better shape, even though the other remains uncertain. Planning carefully, investing in our brands, both in terms of marketing and in some selected openings, and attracting the right talent is what we will continue to do moving forward. This is the only way we can continue to strengthen our Group and deliver on our ambitions. Year 2025 could be unpredictable either way, so we are prepared for both ways. But I know that we are facing it stronger by staying the course through this cycle. Thank you. Let me now hand over to Gianluca, please.

Gianluca Tagliabue: Thank you, Gildo. Good afternoon, everybody. Let’s start from Page 7 of the presentation with our key highlights. Here we report the revenues for the first nine months equal €1,357 million, up 2% year-on-year on a reported basis, plus 3% in constant currency, -4% in organic terms. Let me remind you the changes in the perimeter that are neutralized by the organic growth metric. First, the Tom Ford Fashion business which is consolidated since April 29 of last year. Second, the acquisition of the Korean businesses for Thom Browne occurred July 1 of last year. Therefore, this business is included in the organic perimeter starting from Q3 of this year when we compare it to Q3 of last year. And third, effect on the organic growth metric is the acquisition of Zegna Korea business, which occurred on January 1 of this year. Therefore, when we refer to organic growth, we neutralize the year-on-year delta perimeter resulting from this three acquisition and also we neutralize the forex impact. During this call, I will refer mainly to the organic performance, which better reflect the underlying performance of the business. In the nine-month, the Zegna segment contributed €944 million with the ZEGNA brand up 5% organic, Thom Browne segment at €220 million, Tom Ford Fashion segment at €214 million. In the third quarter, the Group reached €397 million in revenues down 8% year-on-year reported -6% in constant, -7% in organic. Let’s move to Page 8 of the presentation where we analyze our result of revenues by segment. Let’s focus here on the third quarter figures. As I commented, revenues were €397, down 7% on an organic basis. The Zegna segment, which includes both ZEGNA brand as well as textile and the miner third-party B2B business recorded -1% in organic terms due to the deterioration of textile and the minor other third-party brands, while ZEGNA brand continued to deliver a positive organic growth. Thom Browne and Tom Ford segment recorded respectively -27% and -11% in the quarter. I would comment specifically on their performances on the following pages that are specific by brand. Let’s move to Page 9 where you see the revenue by brand and product line. ZEGNA brand, which represents 60% of Group’s revenues in the nine months, showed a solid performance also in Q3 with a +3% organic growth driven by DTC channel at +4%. In particular, in EMEA, Europe and Middle East and Africa, Americas, and Japan where the brand recorded solid double-digit growth. Let me also add that in EMEA, we have seen both Europe as well as the Middle East both performing very well. Moving to Thom Browne. In Q3, Thom Browne reported €53 million revenues, -27% organic, mainly due to the decision to streamline the wholesale business as discussed thoroughly during the past calls. On top of this, Q3 revenues have always – have been also more difficult in the Greater China region. While on the positive side, Japan continued to show very strong double-digit positive growth and Korea follows with a good positive performance. On Tom Ford Fashion, Q3 revenues reached €65 million, minus 11% organic due to a negative contribution of the wholesale channel, also related to a change in the timeline of deliveries, while the DTC channel of Tom Ford Fashion recorded positive results at plus 3% organic, as I will describe later in the page detailing this brand performance. The textile performance was negative, minus 15%, sequentially deteriorating from the prior quarters. I remember that in the first half, the organic growth for textile was basically flat at minus 0.6%, and this Q3 has been affected by a decrease in B2B demand from luxury goods brands outside of the group, which was purchased from our textile platform. The other revenues line can now be considered marginal, being at €4 million in the quarter after the acquisition of the Tom Ford International and the change in the accounting of Tom Ford products. Moving to Page 10, which is the revenue breakdown by geography. Starting with EMEA. In Q3, EMEA recorded minus 2% organic growth, composed by a double-digit growth at ZEGNA brand, so a positive double-digit for Zegna retail, driven by Zegna retail, more than offset by the decline in wholesale Thom Browne, and to a lower extent, also wholesale of Tom Ford Fashion. Americas recorded minus 3% organic growth in Q3, showing a deceleration compared to the first six months entirely related to the wholesale channel performance. Indeed, compared to the first semester of 2024, the DTC channel continued to perform very well, boosted by Zegna ongoing double-digit growth. The wholesale channel showed negative performance in the region for all the three brands due to different timing in deliveries and to some conversions from wholesale doors into directly operated stores, both for Zegna and Thom Browne. As an example, we call out the conversion of Harry Rosen stores in Canada for Zegna and Nordstrom (NYSE:JWN) for Thom Browne. Greater China region revenues declined by 22% in Q3. And as we commented broadly, this is due to a very subdued consumer confidence in the region, which got worse in the summer months, especially in August, as Gildo said. Among the three brands, Zegna outperformed the group average in the region. In the rest of Asia Pacific, Japan continued to show a solid double-digit performance positive, both for Zegna and Thom Browne. Looking at the results by nationality clusters, which I know you are always interested in, we’re referring to specifically to Zegna DTC, we saw U.S. cluster that kept growing on a solid double digit also in Q3, and GCR residents were weaker in Q3, down in the mid-teen range. Moving to Page 11, the revenue breakdown by distribution channel. Just very quick comments, since then we will comment more on a by brand basis. In Q3, overall, DTC channel grew 1% organic, with positive growth of ZEGNA and TOM FORD FASHION brands, counterbalanced by the decline of Thom Browne retail. Wholesale performance in Q3 was negative at minus 24%. We already highlighted the reasons. Just a quick comment on the impact from conversions that in Q3 was significant in particular for ZEGNA brand. Converting stores from wholesale to retail, as you know, creates a time difference in revenues since the conversion of wholesale determines an upfront slowdown of seasonal selling to the client, while the associated retail revenues are generated afterwards. Let’s move to Page 12, of breakdown by distribution channel for specifically the ZEGNA brand. In Q3, Zegna DTC revenues grew by 4% organic, accounting at this point, 83% of the brand revenues. As I already mentioned, EMEA, Americas and Japan continue to report solid double-digit growth rates for ZEGNA brand, while Greater China region sequentially deteriorated and saw a double-digit decrease in traffic, not offset by a health increase in the average ticket. In the quarter, the brand opened six net new stores, including New York Meatpacking, Honolulu and some conversions from wholesale into retail among which we call out, as I said, the Harry Rosen store in Canada and also one store in Riyadh, Saudi Arabia that has been converted from wholesale to retail. Moving to wholesale. The ZEGNA brand recorded minus 5% organic in Q3 as a result of the conversion we discussed before and some different timing in deliveries. I would confirm here what I already said during Q2 call, I expect Zegna wholesale to report flattish on a year-on-year basis for full year 2024 inorganic terms, which means that it will be single-digit negative on a reported basis. Let’s move to Page 14, that is the breakdown of Thom Browne by channel. In Q3, DTC for Thom Browne was minus 30% organic. As I said at the beginning, the organic method for Thom Browne in Q3 at this point includes also the Korean market contribution since it has been acquired on July 1 of last year. And the performance is composed of a double-digit growth of Thom Browne DTC in Japan, a positive Korea for Thom Browne retail, which was more than offset by the negative performance in Greater China region. In the quarter, the brand opened four stores in Asia Pacific. In Q3, wholesale for Thom Browne declined 46%, similar to the Q1 numbers for the same reasons you know and we already commented. I just add that we expect to have this trend at the end of the year down around one-third versus last year, so in the minus 35% area. We expect that the streamline of the wholesale business to focus on the DTC for Thom Browne will continue until spring 2025 collection. Let’s move to Tom Ford revenues split by distribution channel. Page 14, here, even more than before I look at the organic performance that takes into consideration the performance starting from end of April, that was the deal closing date of last year. In Q3 of 2024 Tom Ford Fashion reported plus 3% organic in the DTC channel with a strong performance in EMEA, a solid performance in U.S. counterbalanced by Asia Pacific. During the quarter, Tom Ford Fashion opened six net new stores, including Beijing China World, which is the first flagship in this country and Saks 5th avenue women. Wholesale reported 30% organic, down in the quarter but was impacted by a different timing in deliveries, both some anticipation into Q2 and some delays that impacted the quarter performance. As I think, as always, wholesale is better to look at on a year-to-date basis because it neutralizes the ups and downs by quarter. And you see that year-to-date, the number of wholesale for Tom Ford Fashion is minus 11%, and that is a much more insightful number to see the performance of Tom Ford Fashion on this channel. I will stop now on the next slide, where you can see the facade of the recently opened Meatpacking district New York Zegna store, and I will hand it over to Paola for the Q&A session.

Paola Durante: Thank you. Thank you, Gianluca. Thank you, Gildo. And we can open up the Q&A session. So I ask the operator to open, to give us the first question.

Operator: Thank you. [Operator Instructions] Our first question comes from Oliver Chen with TD Cowen. Oliver, please go ahead.

Oliver Chen: Hi. Hi, good morning. Thank you for the details. The China comments were very helpful. You mentioned subdued consumer confidence in China, potentially getting worse. What are you seeing there in terms of what you think happens next? And will things get worse before they get better? And then Americas has been resilient. It continues to be that story of great DTC offset by negative wholesale trends. Negative wholesale trends should eventually get easy compares? Just would love your thoughts on what you’re seeing with wholesale, and if that channel in the Americas will improve over time. Thank you.

Paola Durante: Okay. Hi, Oliver, and thank you for your questions that are both I believe for Mr. Zegna. The first one is on the China consumer confidence and how we see China in these days and in the future. And the second, the U.S. market and the resiliency and the wholesale trend.

Gildo Zegna: Yes. As a matter of fact, I will be leaving for China tomorrow. So I surely will have more color after my trip, but that shows how important China remains to us and how we believe in this important luxury market. Surely, China has gone through some challenging moment in 2024, which I believe that it will continue at least for the first part of 2025. I think we have to be a little bit cautious in terms of the expectation for both Thom Browne and Zegna. But I think it’s quite premature to make further comment. I think that we should look at some positive signs also and that should make us more confident for the long-term. And for instance, on Zegna, we continue to see the ASP and ATV growing nicely. Our customers are younger in age compared to before, not only because they buy the iconic Triple Stitch, but because the brand overall is attracting new younger customers. And I think this is a very, very strong sign. It means that our new strategy of rebranding is working. We always said that it was a little bit slower as compared to other market like United States, but I think that we are – it’s gaining more and more traction. Our stores network in China has been fairly renewed. And we have a practically top tier location in most of the mall. And we have a very strong relationship and trust with the top landlords. In that regard, we might have to do some more newer relocation in the coming years, but I think that the good work has been already done. And as an example, VILLA ZEGNA, which is a personalized way to move the brand forward as we did in New York, was held in Shanghai, and the good thing is that the customer we saw with VILLA ZEGNA came back to buy in the store, which is another important sign. Our Uber-Luxury and made-to-measure incident is growing, which is positive. This is a unique characteristic. None of the luxury players have a made-to-measure projects and culture and stuff like the one we have, and the Uber-Luxury, it means bringing made-to-measure even higher with the [indiscernible] collection will be unveiled in the first quarter of next year. And we think that it will be helpful for China as well. So Uber-Luxury made-to-measure will continue to be important also in China. And as I said, the One Brand strategy is not only a logo, but it’s a deep cultural change for our brand and for our people in the stores that are moving more and more from a transaction-driven to interaction-driven with the customer. So to conclude on China, we are not yet where we aim to be, but the path is clear, and we are now completing the last step moving forward. That’s it for China. America, America, we are seeing solid, solid double-digit numbers. And I think that is the American customer is in love with what we do. All the things I’ve said for China are ahead, and we just delivered our drop four collection and is really shaking out well, the two iconic pieces, the Monte jacket and the – sorry, the Monte shoes and the Conte jacket are flying out, really. And so we are very pleased about the development that there is no reason why this development should stop in the next two months. We are retail guys. So retail is every day. So we have another two months to just to do our best. And I think that everything is in place to do so, not only for Zegna but for the other two brands.

Paola Durante: The question was also on the wholesale trend. And I think Oliver, if I’m correct, you said that this can also bode well for next year with an easier base of comparison. But there, of course, there are some conversions as has been commented by Gianluca on this quarter wholesale performance as well as also some different timing in deliveries. For the year-end, I think we commented during Gianluca’s speech, and very important for the wholesale is to look at the nine months. So the year-to-date performance more than the quarterly performance where we, as Gianluca said, we expect to be on organic, so excluding the conversion basis, flattish as we already commented on Zegna while including the conversion some point below, some negative two points. I don’t know if we answered all your question, Oliver, or if you have any follow-up?

Oliver Chen: That’s very helpful. Thank you. Best regards.

Paola Durante: Thank you. Operator, if you can go to the second one.

Operator: Thank you. Our next question comes from Anthony Charchafji with BNP Paribas (OTC:BNPQY). Please go ahead.

Anthony Charchafji: Yes, thank you. It’s Anthony Charchafji from BNP Paribas. I have a few questions. So the first one would be on the current trading in October, if you can give us the current growth rate compared to the minus 7% you’ve done in Q3? My second question would be in terms of margin with China underperforming. But on the other side, you have the stronger wholesale shrinkage, I would say, that should help. What can we expect for H2 in term of margin? I see that consensus is expecting an EBIT up 10% year-on-year in H2. So if you can give a comment on profitability for the year? And my last question would be just to confirm that you’re guiding minus 35% for Thom Browne wholesale for the full year, which would imply positive in Q4 on a plus 42% comp base? Thank you.

Paola Durante: No, it’s okay. I’ll repeat. So the first question is actually on the current trend in October and what we are seeing in particularly compared to the Q3 numbers that we just published. And this is – I’ll leave it to Gildo to answer. And then I might take the second question on the EBIT. And the third is on Thom Browne, and these are the three that I signed. So if we…

Gildo Zegna: So where are we in October? October is only a few weeks, and we’re looking forward for the remaining part. So we will see. But I think that overall has been slightly better as a group than Q3, but we don’t want to get too excited. It’s still more two months ahead to cover, as I said. And the current environment is still volatile and uncertain at least on – in one part of the world. So that’s what I can tell you.

Paola Durante: Okay. So the second question, sorry, Anthony, we don’t comment on EBIT full year and we never provide the guidance or what we can say is that today, the consensus for sure is more reasonable, a bit more reasonable, but there is still important months ahead of us. So no further comments, as you know, on the expectation for full year. On Thom Browne…

Gianluca Tagliabue: Anthony, Gianluca. So I confirm the guidance on 35% down for Thom Browne on the year basis. After nine months, if you look at the reported numbers, it’s minus 39%, and organic minus 38%, which means implicitly that in Q4, there is still a decline, not a growth, a decline, but to a lower extent than the year-to-date nine-month metric. So that is the answer.

Paola Durante: I don’t know if we answered all the questions, Anthony, sorry.

Anthony Charchafji: Yes. Thank you very much. Thank you.

Paola Durante: Thank you. Sorry. Thanks. The third one…

Operator: The next question comes from Chris Huang with UBS. Please go ahead, Chris.

Chris Huang: Hello. Hi, it’s Chris from UBS. I have three. The first one, just to come back on the cluster comments you made for the ZEGNA brand DTC. If I understood correctly, the Chinese cluster slowed from high single-digit negative in Q2 from mid-teens negative in Q3. So my question would be, what are the nationalities accelerated because sequentially, the DTC channel was growing at 4%. And then within that, the weakness quarter-over-quarter of the Chinese, is it driven by Mainland China, Hong Kong or Macau or some other markets? If you can comment on that. Secondly, also on the Zegna brand DTC, it grew 4% in the third quarter. Of course, we saw few more store openings compared to last year. So if you can kind of help us understand a little bit more in terms of the like-for-like and space breakdown. And last not least, on the Chinese consumer as well. So I know in the past, you commented that around 90% of the Chinese plan globally was in Greater China. Are you seeing any change in that? Because I think in the press release, you commented that Japan continues to be strong. But just trying to understand if there’s any impact we need to be aware of, given the currency moves in Japan. Thank you.

Paola Durante: Okay. Chris, I hope I guess we get all your questions because you speak very, very fast. So the first one is on the Chinese cluster, given that the comments we made, and so I leave it to Gianluca to answer. And I think also on the second one on the comp store growth. And I think also the third one in Japan. So I think these are three questions for Gianluca. Thank you, Chris.

Gianluca Tagliabue: So in terms of nationalities, we have seen a very positive Q3 for Europeans. So not in Europe, but domestic European residents, which have seen an acceleration compared to the prior quarters. We have continued seeing a positive, very positive double-digit of Americans, both in U.S. and outside. Also in U.S., we have experienced a double-digit growth of Americans in Q3. And the other engine of growth has been Middle Eastern, which are buying not only locally but also outside of Middle East. So these are the three engines of our DTC growth by nationality perspective. And I confirm that GCR residents were mid-teens negative and, of course, it’s driven by Mainland China because it’s the most – the vast majority. And I skip immediately to the last question that you raised. You remember correctly, we have always said that Chinese, and when we talk about Chinese, our elementary metric is always Greater China, because we report that geography. Yes, we see this residents buying 90% locally. And of course, we have seen more spending in outside, namely in Japan, where we have seen a solid growth of Chinese spending across the year and also in Q3. But that part is minimal because it’s only 10% that they are spending for us. It’s different than buying bags or for our case, it’s more a local purchase than – rather than, and definitely we are – since we talk with our colleagues elsewhere, it’s definitely also more – purchase abroad is more related, more stronger on the women’s side rather than menswear, where the client tend to buy more local with trusted customer advice. So I think that this goes back to your first and last question. On the comp, we don’t report comp, so that is a metric. Of course, we see it internally, but the delta perimeter is not the only reason for our positive DTC, for Zegna, I mean, for the ZEGNA brand. So of course, that we have grown the network, we have converted some stores, we have open stores, but that is on top of the positive comp base on a year-to-date basis. The same – yes, yes, Paola was asking if this is valid for year-to-date as well as for Q3, yes, it’s valid also for Q3 for Zegna DTC the comp is positive.

Paola Durante: Okay. Thank you. And Chris, I don’t know if you have any follow-up or if we answered to all your questions?

Chris Huang: That’s very clear. Thank you very much.

Gianluca Tagliabue: Sorry. It’s positive despite the GCR issues that we commented.

Paola Durante: Yes. It’s very positive despite…

Gianluca Tagliabue: Positive despite the GCR, which is definitely for us and for most of the environment is becoming a headwind.

Paola Durante: Okay. So we can move to the next question. Thank you.

Operator: The next question comes from Ben Rada Martin with Goldman Sachs. Ben, please go ahead.

Ben Rada Martin: Great. Thanks very much, Gildo, Gianluca, and Paola. I’ve just got two today, please. My first is just on the China retail store footprint. I know you had some comments the last call. Looking at a range of potential plans on the table, potentially consolidating some stores or pushing back rollouts. I wonder if there’s been any progress on the thinking of that, especially with a shift in some of the trends and some positivity around stimulus. And my second would just be on pricing price list in particular. I was wondering…

Paola Durante: Can I stop? Ben, sorry, can I stop you a second? Is it possible for you to speak a little bit closer to the mic, because it’s a little bit difficult for us to get your questions. I think the first one was on China retail expansion.

Ben Rada Martin: [Indiscernible] evolution in China.

Paola Durante: Yes. And evolution for the three brands and so forth. If I understood well, but if possible, thank you. Sorry, Ben, if I interrupt.

Ben Rada Martin: Yes. No problem at all. Hopefully that’s a little bit better.

Paola Durante: Much better. Thank you.

Ben Rada Martin: Great. And then my second one was just on price lists across the three brands. I wonder if you can now talk to the kind of contribution you expect across 2025 across the three main brands for price list. Thanks.

Paola Durante: Thank you. Thank you. I think on the price, for sure, I’ll leave it to Gianluca on the China evolution, I’ll pass on immediately to Gildo. Gildo, on China, the revolution.

Gildo Zegna: Okay. On China, on Zegna, I already said that we are, I would say, almost done in the transformation of our stores with the new brands. And I think that the challenge is to increase the productivity in the store and to keep doing a good job with new customers. You do remember that a good part of Zegna business, but COVID was aspirational, thanks to the Zegna. So we are passed that. And so we are looking for a higher spending client, which we are getting, but it takes a while. But I think we are on the right avenue. In terms of Thom Browne, I think Rodrigo has done a thorough job in the past few months in order to strengthen the organizational structure and we have a good head of retail that has made many changes in staffing in order to support the new opening, because, we – as you recall, in the past couple of years, we opened several stores. And even this last event that have taken place, Korea, Hong Kong, and he had an event three months ago in China, was to foster also with the presence of Thom, the new face of Thom Browne, which is more women and more accessories and more personalization. Mind you, personalization is something that we believe not only in Zegna, but in the three brands. And I think that it’s not only events, it’s creating private rooms where you get a one-to-one approach with customer, privacy, exclusivity. And so this goes well both in men’s and women. And so Thom Browne, I think that is ready for surely a positive year in 2025 in China to gain what did not happen in 2024. As far as Tom Ford is concerned, it’s a different situation. TOM FORD brand is very strong in America and has a long way to go in Asia. But I think that Lelio has put his head of the top Asian market. People that are retailers and they are preparing for growth in 2025, the China World is a good example. We’re going to have another big store opening in Singapore. And so this is the work that he has to do for sure. We have to wait another season to fully express our best for the brand, in particular in ladies and in accessories with the new designer, Haider Ackermann. And so we expect surely more of Tom Ford in the second half of 2025 than the first half. But this is the strategy we are pursuing with the three brands. So I think that whatever happens in China, I think that we will be at the best situation that we’ve been in 2024.

Paola Durante: And in terms of openings, we will be more, for sure, detailed in when we release full year revenues results at the end of January. Clearly, that will be the time in which maybe for sure, actually, we will provide some more guidance, details to you in terms of new openings per brand.

Gildo Zegna: But we are – sorry, I just want to focus that the key in China is having the right connection with landlords. And I think that thanks to the three brands, we talk to the right people, the landlord trust our Group. And so I think that is giving us the chance to do well and to foster our position in a moment in which the China – Chinese market is changing for everybody.

Paola Durante: Perfect. In terms of price and price policy…

Gianluca Tagliabue: Yeah. I make a general statement and then I give you a few flavor. So in general, for the three brands, we believe that at this point, the price architecture is right, is balanced. We have gone through a reposition, especially on the Zegna side. I think now the one brand strategy sees a proper reflection in terms of price architecture. Having said this, I think going forward, we need to – we see moderate price increases in order to offset cost inflation and currency fluctuations. But we are not at this point having in mind a structural repositioning of the prices. On the Zegna side, we see more positive tailwind coming from mix. We still see opportunities also next year with the release of new products on Uber-Luxury side. So it’s more mixed than price for Zegna. On Thom Browne, we have decided to be moderating the price increases in the last years, and maybe more than other peers. And this, for instance, has been helping us namely in Japan, where we have been experiencing an isolation [ph]. So I think this is, in a nutshell, our situation on the platform.

Gildo Zegna: One positive aspect is the learning curve of buying icons. What we have seen in Zegna, we created a platform of icon. And now, we are building a franchise on that platform. And I think that also Tom Ford and Thom Browne have icons. It’s just a matter to push them, support them, exhibit them. And I think that it’s pretty straightforward for the former. So I think that at the end, we know what we’re doing. We have the means. It’s just a matter of execution, because the slow part of preparing what we need has been done. Now, we just met to speed up the execution and just going when the market is ready. So the majority of the market are ready. The biggest one is not yet, but we look forward when it will be.

Paola Durante: Okay. Thank you. I don’t know if we answered to all the questions, actually, maybe even a little bit wider, but any follow-up, otherwise, we see if there are other questions on the call.

Ben Rada Martin: That was great. Thanks very much.

Paola Durante: Thank you. Thank you to you operator.

Operator: We have no further questions.

Paola Durante: Okay. So thank you for everybody for participating to this call. Just a couple of notes to end. First of all, I would like to anticipate that starting from next year, we will slightly change the format of our investors call with – in particularly with regard to the management attendance. For sure, Gianluca, myself and Alice, we continue to be present on all the interims call, while our CEO, Gildo will attend only to selected ones during the year. This will be much more in line with best practice for our sector. Let me do anticipate that he will be present, so on the forthcoming full year 2024 – 2025. Sorry, no, the full year 2024 revenues call, which will be on January 27, 2025. So you have seen – sure, you have seen on our press release and on our website that we release our calendar – financial calendar for next year. So the first call will be on January 27. And with this, I now end today’s call. I thank you again for all the questions, always very interesting for us. Of course, Alice and myself, we are here for any follow-up. And in the meantime, I wish you all the best. Grazie Mille.

Gildo Zegna: Thank you. Good bye.

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

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