ZGN

Good afternoon, good morning, everyone. Thank you for joining the Ermenegildo Zegna Group first quarter 2026 revenues call. Please note that today's material and presentation are available under the zegnagroup.com website. Before we begin, we need to point out that the team will make certain forward-looking statements during the call. The group actual results may be materially different from those expressed or implied by these forward-looking statements. Also, these statements are subject to a number of risks and uncertainties, including those described in our SEC filings. Please refer to the Forward-looking statements cautionary statement included at page two of today's presentation. I'll now hand over to Paola Durante, Chief of External Relations and Sustainability.

Thank you. Thank you, operator, and good morning, good afternoon, everyone. Welcome to our first quarter 2026 revenue call. Today, I'm joined by our Group CEO, Gianluca Tagliabue, who will lead our call shortly. I will begin with a brief comment on our Q1 revenues before handing the floor to Gianluca. Let's therefore move directly to page seven of the presentation. As always, you know, I will comment on organic revenue trend, because, you know, they better reflect the underlying business dynamics, excluding foreign exchange impacts. Q1 2026, the group reported EUR 470 million in revenues, which is up 7%, marking a sequential acceleration compared to the previous quarter.

The performance was boosted by the DTC channel, which was up 14% at group level, with remarkable results across all the three brands. Growth was positive in all regions, led by Americas with a nice 17% growth and a positive GCR, Greater China Region, at +5%. Let's turn to page eight, where I will focus on the performance by brand. Zegna recorded in the quarter EUR 310 million, up 11% in sequential improvement compared to Q4 last year. This improvement has been driven by a solid DTC performance, which was solid across all regions.

Thom Browne, EUR 58 million revenues in Q1, reported a 3% decline, which is a combination of a strong DTC performance, which was up double digits, which has been offset by the contraction in the wholesale TOM FORD FASHION, eur 68 million in revenues, +5% organic, also in this case, boosted by DTC. Very quick, on the textile, performance was +3%, which reflects an ongoing soft demand in the sector. I will not focus on other revenues that, you know, are an increasing marginal business, so quarter-on-quarter percentage are not meaningful. Directly on page nine, I will look at the revenues by geographic area. EMEA first. EMEA in the quarter represented 33% of our group revenues, up 1% with DTC solidly up across, sorry, all brands.

This strong DTC performance has been counterbalanced by the decline in those sales. The Americas in the quarter represented 29% of group revenues and recorded, as I already mentioned, a 17% growth in acceleration, boosted by double-digit growth across all the three brands. Greater China region, 26% of group revenues in the quarter and reported a +5% increase with a positive contribution from DTC at all brands. Finally, rest of APAC, which you know for us is a smaller region, 12% of group revenues, has reported 8% growth, driven by particularly Korea and Japan. That has been solidly positive across all the three brands. Page 10, not much comments here, just a couple of numbers, if I may.

The first one is, which I would like to underline, the DTC channel performance in the first quarter, +14% at group level. The fact that DTC now accounts for 85% of our group branded revenue. As you know, branded revenues exclude the textile and other revenues, which are by nature B2B businesses. Wholesaler performance continues to reflect the decision, our decision to improve the quality of the network and to protect our icons. Let's now move to Zegna brand, page 11. In the first quarter of 2026, Zegna DTC revenues, which accounted for 88% of brand revenues, sequentially accelerated compared to the previous quarter and fostered a 14% organic growth. This performance was led by continued strong double-digit growth in the Americas and in EMEA.

EMEA in particular, with strong contribution of both tourists and locals. Rest of APAC and Greater China region improved sequentially with the Chinese cluster that has turned positive in the quarter. At the end of March, the brand reduced its network by three direct operating stores. Looking at wholesale, the Zegna revenues were down 5%. The performance is a reflection of the decision to reduce the brand exposure to this channel to protect exclusivity and iconicity. Thom Browne at page 12. In the first quarter of this year, Thom Browne reported a 20% DTC growth in acceleration, also thanks to the successful launch in March of a limited edition of sneakers in collaboration with ASICS. This launch boosted revenues worldwide and drove both existing and new customers to the stores.

It has been an important driver of the brand's Q1 performance, DTC performance, but not the only one. In terms of store network, in the quarter, Thom Browne opened two DOS. On the wholesale, as you see, the wholesale channel reported a 59% decline, which is a continuous reflection of the decision to tighten control over distribution and enhance the quality of the channel. This performance, though, has been also partially impacted by a different timing in deliveries, with some shifts from Q1 to Q2 2026 versus last year. First quarter trend should not be taken as a proxy for full year. As already anticipated in our previous call, we expect that Thom Browne wholesale in 2026 will be down double digit, but less than what we have seen in the first quarter this year.

TOM FORD FASHION, let's move to page TOM FORD FASHION recorded a flat 9% growth in DTC, which has been driven by a consistent growth, a consistent performance across all regions, in particular in the Americas, that, you know, is the most important market for the brand, also benefiting from the success of the new spring collection. This good brand, very good brand momentum has also been further supported by the show in Paris that you remember was a successful show in March this year. During the TOM FORD FASHION opened two DOS, the directly operated stores. Wholesale declined 3%, just a normal reflection of our decision to focus on the DTC channel. Page 14, you can find a summary of the group store network, not much to add.

Before leaving the floor to Gianluca, let me today take a moment to highlight our main 2025 sustainability achievements. Full details of that and on our sustainability report you can find on our website. In 2025, we reached some important goals in sustainability. I'm not going to rank all, but let's say I would like to highlight four of them. The first one is that at group level, 42% of top priority raw material has been sourced from traceable and lower impact sources. This is a very good result, I would say. Actually, we aim in 2026 to reach to grow further this percentage to 50%.

We also reached last year the gender equality certification for the Italian entities of Zegna brand, and also we have been included in the A-list recognition in the CDP climate. Last, but very important, let me mention also a project that goes beyond sustainability, but it does embrace our legacy a unique know-how. In 2025, our internal academy, we call it the Accademia dei Maestri, trained more than 50 Maestri, craftspeople, which has a distinctive expertise, and we prepare them to pass their knowledge on to future generations. A very important project, which is really part of our legacy and of our, included in our values. With this, I hand over to Gianluca for his final remarks.

Thank you, Paola. Before we move to the Q&A, I would like to share a few final remarks. Let me begin with a brief update on the main recent projects and events across our three brands. I would like to start today with Thom Browne and comment on the recent Thom Browne ASICS launch. As Paola already mentioned, in early March, the brand introduced a three-color limited edition sneaker, which resonated strongly among both existing and new clients. This was a relevant contributor to the DTC growth in the quarter. This successful launch reflects not only a strong creative project, but also a solid go-to-market execution. Now, we aim to leverage this momentum and the launch as else recruiting new clients. Our goal is to make them, or at least a portion of them, Thom Browne repeat clients.

We see jersey and knitwear as the expected second purchase items in the journey to make them loyal customers of the brand. We will soon launch a high summer capsule with a focus on colorful knitwear, jersey shirts, a project that will promote a retail first and merchandising-driven approach to support Thom Browne DTC revenues. On the other hand, as Paola mentioned, while wholesale performance in Q1 is not indicative of the full year trend, we continue to streamline this channel in order to improve its quality and further focus on Thom Browne DTC. Moving now to Zegna brand. The brand vision is clearly defined, and the team continues to double down on it with strong coherence.

At the end of March, during Art Basel Hong Kong, a flagship event within Art Basel, of which Zegna is a global sponsor, the brand successfully hosted a Foundersuite in the city. Foundersuite are smaller scale villas, Zegna Villas, built on the same concept: intimate, by invitation only spaces, where our most important guests, the Friends of the Brand, are immersed in the Zegna legacy through highly personalized experiences. This includes special collections that are exclusive to the event and not available in the regular stores. Guests learn about Zegna's legacy and history in a physical space when the brand international community naturally comes together. Building on this same philosophy of immersive and highly curated brand experiences, Zegna engagement journey will continue in the months ahead.

In June, the brand will further scale this approach in the U.S., hosting Summer 2027 fashion show in Los Angeles alongside the Villa Zegna experience. The decision to locate the next fashion show and villa in Los Angeles reflect both the growing relevance of the U.S. market for Zegna brand and the city's role as a global center of cultural influence. TOM FORD FASHION, we already commented during the last call on the success of the most recent fashion show, which further confirmed Haider Ackermann's ability to interpret the TOM FORD codes for fashion and its DNA in a way that is at once unique, contemporary, and deeply personal. Under his creative direction, the brand has defined its path and articulated a clear bridge between its past and its future. We are now working to translate this momentum and brand energy into in-store revenue generation.

The positive Q1 results in DTC confirm that we are moving in the right direction, but we are fully aware that there is still work to be done and that we have to work to further build on this progress. The brand has opened in Q1 two stores in Mexico, entering a market we see as offering a strong potential. Early feedbacks have been encouraging from these stores. Before concluding, let me add some comments on the situation in the Middle East and on current trading. As you know, the group operates 16 DOS in the Middle East region, alongside a limited number of franchisee store. All our stores are open and operational, and our teams continue to work with dedication and a strong sense of engagement in an environment that is obviously complex.

Over the past weeks, we have implemented immediate actions to contain inventory levels and adjust discretionary costs. Thanks to our people's connection with clients and the strength of our brands, in particular Zegna brand, the revenue decline in the region, although down double-digit, is more contained than the decrease in average mall's traffic. Considering Middle Eastern cluster, so the resident overall, which includes Middle East clients spending locally and spending abroad, since the beginning of the conflict, the impact is even more limited, being substantially flat to last year. This demonstrates the relevance of the strategy we have implemented over the years in the region with investments that laid the foundation for this relative resilience. While the current situation requires close monitoring, our long-term conviction in the region remains unchanged.

Middle East continues to be a key market for the luxury goods sector and a strategic area of focus for our growth, to which we remain committed. On current trading, first of all, it is important to underline that we are only one month into Q2, so any indication is by definition partial. Looking at DTC performance for Zegna brand, we are seeing trends broadly in line with Q1, excluding the Middle East. In the Middle East, April continues to show a double-digit negative trend, but at a lower rate than what we hear from the market and the competition. On Thom Browne, we are very pleased that the ASICS collaboration is now almost sold out across the regions. As expected, the revenue trend therefore will normalize in Q2 by adjusting the ASICS effect.

While we continue to see positive signs, we are also mindful that we need to further build and strengthen this momentum in the coming months, also leverage on the new clients that the collaboration brought to the brand. TOM FORD FASHION, i would say the spring/summer collection has been well received. April continues to confirm this good trend. These early months of the year reflect the outcome of a vision and the long-term strategy defined in the last years. Executed with discipline. We are aware that important work lies ahead, and we remain fully engaged in delivering on our commitments, knowing that the overall context remains challenging. With that, we open to the Q&A session.

Thank you, Gianluca. Operator, can you please open the Q&A?

We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand. To withdraw your question, press star one again. Please stand by while we compile the Q&A roster. Your first question comes from the line of Chris Huang with UBS. Your line is now open. Please go ahead.

Hi, thanks for taking my question. It's Chris from UBS. First of all, congrats on the very strong results. I will stick to two questions. The first one, just wanted to come back on the Chinese consumer comment you made on the Zegna brand. I think Paola, you mentioned that it was back to positive territory in Q1, which was very impressive. Could you maybe kind of elaborate a little bit more on what you have been doing in the region? And, you know, following that positive start of the year in Q1, would you expect this positive momentum to continue throughout the rest of the year? That's my first one. Secondly, can we just talk a little bit about Thom Browne?

I think obviously Q1 was a very strong quarter boosted by the ASICS collaboration. Are you able to quantify how much incremental revenues that collaboration brought to the brand in Q1? Also, if you could very helpfully break down the like-for-like versus space component. I mean, if we look simply at the number of stores, probably like-for-like is in the range of low to mid-teens, if that's correct. What does that mean for the H1 margins? Thank you very much.

Thank you, Chris. Okay, I'll ask Gianluca to comment on the Chinese market around Thom Browne.

Hi, Chris. Yeah, you're right. Talking about cluster and market for its.

Yeah.

Chinese, it's very similar knowing that most of the demand is local. Chinese cluster for Zegna, yes, did turn positive in the quarter, so we see this as a positive indication. When you look at the full year, we stay cautious because we see this not as a steady, every week same performance. We see some volatility in the results, so we cannot yet say we are entirely into a stable growth momentum. That's why we reaffirmed that we are still looking in the planning, probably in a cautiously way, still looking at Greater China more as a flat environment on a comp basis. We are seeing within China big momentum in Hong Kong. We will also take advantage of this momentum with an important opening along the year with Harbour City in Zegna.

Less of a strong momentum in mainland China. Still we see the Tier 1 cities holding much better than the Tier 2 cities. This is in actual the environment of what we see in China. Of course, I think that what has been said in the last sessions with me, with Gildo, in several moments, we have been executing China on the same ground. We were later. I think finally we see some signs of traction. Yes, ASICS. You asked on ASICS. ASICS is not the only driver of the +20% growth in DTC. It's an important contributor, but definitely it's a big contributor also the rest. It's not that taking away ASICS we go to zero. It's an important contributor, but substantial growth comes from non-ASICS.

In terms of space and comp, when you say low to mid, I think you are not making properly right calculation. In terms of comp, Zegna and TOM FORD are the vast majority is comp. The vast majority is comp. On Thom Browne, there is probably an equivalent component of comp and space. Yeah.

Thank you. Second.

Your next question comes from the line of Natasha Banoori with Morgan Stanley. Your line is now open. Please go ahead.

Hi, this is Natasha Banoori from Morgan Stanley. Thank you for taking my questions, Paola and Gianluca. I have two. Just first of all, can you remind us on the contribution from pricing this year? I believe it's mid-single digits. Then maybe if you could break down how volume and mix and pricing have trended in Q1. Then my second question on the Zegna brand specifically, what are you seeing in terms of new versus existing clients in Q1, especially in the U.S., and anything to call out in terms of performance by product categories? Thank you.

Thank you, Natasha. Sorry, the second question, just to clarify, okay, the contribution by category, but the first part of the question on Zegna was on?

New clients and.

Yes, new versus existing clients.

New versus existing. Sorry, I didn't get that. Okay.

By brand, and then I will deep dive on Zegna. Zegna, the big driver is definitely AUR with a, with a mid, low mid, as you said, price component. There is a bigger component of mix, big component of mix, whether it's elevated luxury leisure wear or the component of Triple Stitch noble floor. There is definitely a mix component that is elevating the AUR. On Thom Browne and TOM FORD, the AUR is less of a topic. It's also volume, the driver. In terms of new existing, we are seeing an increased number of new coming into the Zegna brand. I think the brand momentum, whether it's one product or another, the brand overarching momentum is attracting new clients to the brand.

Across all regions, yeah?

Regions. I think we are seeing more new and what we are working a lot is also the retention of new. For instance, I make you an example because we always think of new through the Triple Stitch. It's not only that. We launched in Q1 the collection of fragrances. That is also another entry door to the brand, the Memorie.

For the first time.

Which is of course, is a brand that well resonated, product story that well resonate in the brand because it talks about the story of the brand. We are opening new DOERS to come into the brand and Memorie, that is fragrance collection, is a perfect example of that.

In terms of price, the price mix, also Su Misura and all the personalized collection also through the Villa Zegna and the suite are also an important contributor.

Yeah. Su Misura is definitely growing a lot. We have always mentioned this, the Zegna spaces, whether are the suites which are temporary location that we do outside of the stores for a week, where we present our unique collection, whether it's a villa, which is the pinnacle of that temporary location. We present collections that are unique, can be bought on ready-to-wear, typically are bought on a make to measure basis, but they carry an intrinsic higher price. That is a big driver and unique differentiating factors of the brand. We are working to make the make to measure also a bigger component of business also on TOM FORD and Thom Browne. Of course, starting from a lower base, but for instance, we launched new collection of Su Misura make to measure on TOM FORD in the recent months. We opened to women tailoring.

We opened leather outerwear on Su Misura, on TOM FORD. That business of Su Misura, which intrinsically carries a new higher AUR, is definitely a driver. Going back to the last point, which is on new versus existing, I talked about Zegna. I think it's important also to remark on Thom Browne, ASICS, which has been an important driver to engage with new customers or re-engage with customers that used to buy at Thom Browne. We, this has been an important hook. When we talk about Thom Browne in the first quarter, driven also by ASICS, the numbers, but definitely this is a legacy for the remaining quarter. We need to work as a team to make sure that the new clients also prospect, because we basically sold out the product.

Say there is someone that didn't find the product, we can engage them, bringing them back and use this as a driver, as a way to bring them back into the Thom Browne brand.

Thank you. Next question, please.

Your next question comes from the line of Bhumi Kanabar, Jefferies. Your line is now open. Please go ahead.

Bhumi. Can I just confirm that when you include the Middle Eastern cluster, it was flat versus last year, but then when you're talking to locals, double-digit down?

Sorry, Bhumi, it was difficult to hear the beginning of us talking. Can you repeat?

Yes. Sorry. Just a clarification for the first question. Can you just confirm what the Middle Eastern cluster did year-on-year when you're including tourists and locals? The second one, can you just talk about how much Su Misura now is as a percentage of Zegna branded sales versus as a percentage of TOM FORD and Thom Browne sales, and where you hope that will get?

Bhumi, unfortunately, it's very difficult to hear you, and I'm sorry, but.

Robert,

The first-

If I rephrase, I think she was asking more clarity about the Middle East cluster.

Yeah, the cluster, not Middle East, the first one.

Personalization in each brand, I think.

Gianluca is much better in understanding.

You asked about the incidence of personalization in the different brands. Am I right?

Yes. Yes.

Yeah. Good.

Good. Okay, Middle East cluster on the clarification that we commend.

Yeah, we said that the Middle East cluster, so all the residents in Middle East year to date, Not year to date, sorry, from the date of the conflict have been flat.

Yeah. Year to date is positive. Clearly it was positive.

Year to date is positive because January, February was very positive. This is what we said before, and this implies basically that they have purchased less locally and they've purchased more abroad. This abroad is partially going mostly to Europe.

Mm-hmm.

What we see on the Middle East residents.

Personalization, we don't really provide the details by brand, but you know that we say that, in terms of Su Misura, for Zegna brand is around 10% growing, but around that level, and this is, the number that, we can report.

On the other two brands is minimal so far, but as we said before, we are working.

Are they can increase the collection to increase the capacity of the network to sell Su Misura? That is an untapped potential for the two brands.

Great. Thank you very much.

Thank you, Bhumi. Sorry for not understanding immediately. Next one.

Your next question comes from the line of Chiara Battistini with JPMorgan. Your line is now open. Please go ahead.

Thank you very much. Thank you for taking my questions. I have a couple, please. First one on the performance in EMEA at group level. I was wondering, I know you mentioned wholesale drug and DTC outperformance. I was wondering if you could give us a bit better color in terms of quantifying how much DTC was actually up in the quarter in EMEA, and possibly what was the EMEA performance excluding the Middle East in Q1? That's the first question.

Second question, and I know this is a current trading update, but I was wondering on not even with a specific indication, but really how should we be thinking about the operating leverage that I guess the Zegna brand should be seeing tracking on the mid-teens growth in terms of how much margins we should be extrapolating, margin expansion we should be extrapolating versus the level of the investment. Any indication on how to think about margin progression in H1 given the strong performance would be very helpful. Thank you very much.

In terms of your first question, Chiara, what has been EMEA performance including wholesale, I would say that has been very solid, double digits for all the three brands. In terms of Middle East in the quarter, EMEA excluding Middle East is basically not much different.

Let's give you this. If you see that our overall group at 7.4%, you exclude Middle East from this year, next year, it goes up slightly, but not even one point.

On the operating leverage, given Zegna performance, I think the question was on Zegna for the rest of the year. I leave to Gianluca.

I think that so far let's not enter into revised outlook. We confirm what we see out there in terms of consensus, which is floating between EUR 185 million-EUR 190 million for adjusted EBIT. Let's remember, that's the reason why we sat there saying that we have a margin in percentage which is moving sideways to last year, excluding the hit by tax, because we have two factors. We're investing heavily in IT, in one group, increasing the backbone across the brands of same system, same processes. This is a moment of investment for the group. Second, we have currency headwind. We have seen in Q1 5 points. We don't expect 5 points for the year. It will be somewhere close to 2 points. We have anyway headwinds on currency.

We don't want to push the price lever too much, and therefore part of that will impact the bottom line. Therefore, that's the reason why we are cautious in saying that we will enjoy too much of a operating leverage. We want to continue growing at our pace, setting the ground for long-term foundation. Of course, IT is one of those. Not stretching too much the price lever is another thing.

Thank you.

That's great. Thank you.

Thank you, Chiara. Next.

Your next question comes from the line of Maria Meita with Bernstein. Your line is now open. Please go ahead.

Hello, and thank you for taking my questions. I have three. First, at TOM FORD, what is the split between womenswear and menswear today? On womenswear specifically, I know that Haider Ackermann has been focused on ready-to-wear specifically in his first collection, but I was wondering if he's now working on that iconic leather goods sort of model the next bag that will be popular at TOM FORD. Finally, it's a longer-term question, but today, how confident are you in your 2027 guidance? Because consensus from what I see is below on both top line and bottom line. What levers do you, do you so plan to achieve the results in your guidance? Thank you.

Thank you, Maria. I'll leave to Gianluca on the split men to women, TOM FORD, the 70/30. This is 70/30 men to women, but on the leather goods and our plan TOM FORD FASHION, I ask Gianluca to comment more. It's part of the journey, as Maria said, we started already to wear, and we are also going to reinforce the leather goods part.

I think we are definitely ahead on the leather wear rather than leather goods. I think that we are seeing good momentum on leather wear, mostly men, but also some good results on the women's side. Definitely, that is one of the driver of the growth. Another one is knitware, which is becoming more and more important for the brand. Of course, there are the iconic parts, which is the suits, tuxedo, and so on and so forth. We recognize that we are still looking for iconic pieces on the women bags. On shoes, we are seeing some good results. I think that we are still working hard on the bag. Definitely is one key work stream for the group in the months to come.

That is if you look it from the other side, still an untapped potential. We see the opportunity to find a good platform there and make an offer that is TOM FORD in the DNA. That is what all the team from design to merchandising is working. When we feel we have all the stars aligned, then the amplification of the message and marketing will come.

I would say very important to the work that has been done on the brand. Overall, this is really the starting point.

On ready-to-wear, I think we are seeing that is the driver of the growth so far.

2027 guidance, how confident we are that we

We confirm that the targets that we have stated and we declared stated are valid on. We said on the lower part of range. I remember we put a range of revenues and a margin. We're still comfortable on that lower part. Of course, why we said lower part, because from when we set the guidance, which was one year ago, March of 2025, the currencies have taken definitely a swing, and therefore it would not be realistic to state more than the lower part of the guidance. We are still focused on delivering on that lower part of the range. Of course, we are still with a big question mark of what will be the outcome in the next months of Middle East.

We are still seeing that lower range as our goal for this.

Okay. Next.

Your next question comes from the line of Chris Gao with CLSA. Your line is now open. Please go ahead.

Hi. Thank you for taking my question. This is Chris Gao from CLSA. Right. Firstly, still about a follow-up about the current trading. Just want to be more precise. How do we see the 2Q to date trends compare with March exit rates? This is the first thing. Also if you have more clarity on the D2C and the Zegna core brands could be highly appreciated. Also on the GP margin trends for the first half. How should we think of this? Definitely, we believe you have strong support from your outstanding D2C sales growth, right? While industry-wise, there are still headwinds from foreign exchange and input cost volatility from geopolitical tensions.

How should we think of, you know, the first half GP margin trends? I understand this was a revenue call, but just any, you know, preliminary color could be highly appreciated. My, my second question is about the new customer type of contribution comment that management made just now. We're very happy to see there are more new customers contributing to the growth. I just wanna confirm, one, if it is also the case among the Chinese cluster and also among these new client acquisitions, do you see these new clients are more from Zegna Friends, are more into the DOERS or more are categorized as aspirational customers? Just want to understand the profile of these newly acquired customers. Thank you very much.

Thank you, Chris. Yes. You said two questions. I think they're a little bit more than that, but let's start with the current trend and exit rate. To comment in particular on the DTC and Zegna, and I ask Gianluca to provide some colors.

Hi, Chris. Give some color on, well, how we enter in Q2. In DTC, we finished Q1 with a +14%. Excluding Middle East, of course, where the performance is negative compared to last year. DTC overall is trending in line with Q1. We don't see major difference. The performance in Middle East is double-digit down, but substantially less than what we hear. It's the -50% that is out in the market in terms of traffic. We are experiencing a double-digit decline, but much more muted than what we hear out there at a -50%. Well, there will be a difference, as we said before, the decline of Thom Browne wholesale in Q1 is not to be replicated in Q2. We have said that will be the overall year, full year growth will be much less than that, in the range of between 20% and 30%.

DTC Thom Browne also.

DTC Thom Browne will be adjusted for the partial growth contribution coming from ASICS. What was the other? On margin, I think not today, we are not talking about first half or second half margin because today we want to focus on revenues. In terms of new customers and DOERS. We are seeing growth everywhere. We continue experiences a growth on Friends, on DOERS, thanks to the personalization, the elevation of the offer. As I said before, we are seeing more and more new clients coming in from the different DOERS that I mentioned before. Also in China. Before, I didn't mention another entry door is also the two three two. That is the new platform of shoes that we put on the side of the Triple Stitch. We don't have one arrow only.

We have multiple weapons to bring new clients into the brand. I think we see a stable and healthy pattern of growth across the different clusters. We are not banking only on new. We are not banking only on Zegna Friends.

Maybe the only things that you already mentioned previously is the fact that in first half, the impact from currency will be higher than in the second half.

Yeah. We had the 5 points in the first quarter. I think hopefully, the headwind will stabilize. We expect on the full year, probably close to 2 points on the year.

Thank you. Operators. Thank you. Please, next.

Your next question comes from the line of Adrien Duverger with Goldman Sachs. Your line is now open. Please go ahead.

Hey, good afternoon, Gianluca and Paola. Thank you very much for taking my questions. I know you've commented on the consumer environment across regions, but could you please provide a bit more color on the performance by cluster? My second question would be on the wholesale channel. What are the trends that you're seeing so far in the first half of 2026? How is the confidence across your partners, and what are you seeing with the order books? The last question is just a quick follow-up on your comments on margins. You've reiterated your guidance for margin to be sideways, ex tax, for the full year. Could you help us frame the phasing for investments between the first half and the second half, please? Thank you very much.

Thank you, Adrien. First on performance by cluster.

Hi, Adrien. Cluster. North Americans continued very solid on a double-digit basis. We keep on seeing good momentum. Walking away from the cluster for a moment since we are talking there, we are banking on this by keep on expanding the network there. We are opening Scottsdale and San Diego with Zegna. Taking aside Zegna for a moment, we are investing also in TOM FORD. It's Bal Harbour, it's San Diego, and it's Costa Mesa, Southern California. Cluster for Zegna, good. Market, important, we continue investing in that market. As I said before, the Chinese cluster turned positive in the quarter. In terms of European are solid, double down growth.

Double up.

Double down growth.

Double digit.

Double digit.

Double down.

Double-digit growth, European cluster. What we see, again, moving away from the cluster a moment, something that probably is positive for the brand in Europe as a market, not as a cluster. We are seeing good growth of locals and also foreigners, which probably I've seen some mixed reports elsewhere. We are seeing also good momentum coming from foreigners in Europe. As I said before, the Middle East cluster was positive, double-digit in Q1. Of course, becoming flat from March, beginning March onwards. This is the answer on the cluster. On wholesale, I think it's a strategic self-inflicted limitations we are putting ourselves. We could definitely open the gate for more and more revenues. We are on wholesale, we expect still the business to go down.

As I said before, Thom Browne will not be -58%, will be halfways there. What has been the performance of Zegna brand and TOM FORD, it will still be TOM FORD probably single-digit negative in the year, and we expect Zegna to be around low double-digit in the year for wholesale. It's not a question of order book, it's a question of strategic decision to contain the distribution on some products. We could easily open the gate to have more than the business we are doing on wholesale. In terms of margin, as I said, it's sideways, as we stay there for the time being. We don't provide more details than that today. As I said before, I think that the consensus that is out there is realistic.

Of course, with a big question mark about the volatility on Middle East. I think that in the consensus it is based somehow some disruption from Middle East.

Thank you.

Thank you very much.

Ciao again, thank you so much. Okay, next.

Your next question comes from the line of Anthony Charchafji with BNP. Your line is now open. Please go ahead.

Good morning. Thank you for taking my question. It's Anthony Charchafji from BNP. On China, the momentum is improving and at Zegna, it's a market that is more skewed to tailoring, but also your shoe business is still and was still very resilient last year. Would you be able to share what category outperformed between tailoring, shoes, and outerwear? Also by clientele, it's also a market skewed to top spender, Zegna Friends. Did the growth with this top cluster improve and is catching up with the American and European Zegna Friend growth? My second question is on the store closure in China for Zegna.

Given that you are planning to close 10 stores in 2026, I'm curious to know if the first closures are seeing positive effect in the remaining stores nearby, so basically a neutral impact on top line. My third question would be on Zegna DTC between price mix and volume. In the recent year, the growth have been driven massively by price and mix with rather subdued volume. I'm just curious to know if you have a date in mind or a year in mind where you expect the volume to kick in at some point. My last question is on Zegna wholesale.

You decided last year to increase the quantity of iconic product to your partners, such as the Conte, the Triple Stitch, and the Oasi Lino luxury collection. Given that you guided Zegna wholesale down low double digits, is there any shift to have in mind from the wholesale to retail store, basically your retail performance being a bit boosted by a shift to your iconic product? Thank you.

Hi, Anthony. Let's start from China. China is not definitely a skewed to tailoring market. It's not that we are banking on tailoring and it's not tailoring the driver. I think that the category there that are driving the growth are luxury leisure, all the different categories of luxury leisure. Shoes is definitely both on the Triple Stitch 232. The personalization, we have had a very good, partially taken in Q1, partially will be seen in Q2, good campaign of make to measure. I think it's not tailoring the driver of the stabilization of or +5% actually of GCR. It's, you know, it's all the rest.

In terms of cluster, the comment I made before about the balanced growth across cluster is the same for GCR. We are seeing good momentum for new clients, as I said before, on the different entry door that are Triple Stitch 232 fragrances. We are seeing good results also on the loyal, big spending clients. I think that what is true for the brand as a whole is also holding true for Zegna in China. In terms of price mix, of course, we said price low single digit. AUR driven by mix are drivers. On Zegna, probably, also the number of ticket is up.

Yeah, absolutely.

Also the number of ticket is up, definitely in some areas with some softness in traffic, but the execution and especially the conversion is driving the growth also in the number of tickets. As it refers to Zegna wholesale, yes, it's a decision to contain the distribution of iconic items, the ones that you mentioned. Of course, we are taking advantage of some step back in also distribution in our DOERS, whether it's existing DOERS or opening DOERS. In U.S., for instance, some new openings that we have, as I mentioned before, I mentioned before Scottsdale. Scottsdale could be a door that is also taking advantage of some business that today is not in our DTC network.

Of course, we all know that there are some clients, especially in the U.S., that have been going through difficulties, and we pay the consequences last year on our credit. Definitely, we're very careful in feeding that business in a very solid way, and therefore there is a very deliberate decision to focus and channel business that was in wholesale in-door stores. In any single location, whether it's Scottsdale, whether it will be in Florida next year, whether it will be San Diego. There are definitely locations where we are opening, and we don't have retail stores where we want to catalyze the business that today is held somewhere else.

Yes. There was a question on the positive impact from closures in China, of course.

That is definitely our everyday goal for the store anytime we close a location to have a retention plan. Yes. I think that so far you cannot retain 100% of the business because it would be illogical. We have realistic goals of retention in any door we close, and we are holding to that plan.

Some of the DOERS will. Maybe just a follow-up on the first one on the Zegna Friends or the clusters. Something we didn't mention is that the Zegna Friends for Zegna are growing double digits also this quarter. It's true that we have also new and clients, but also our existing clients, both DOERS and Zegna Friends are doing very well. Very well. Next.

Thank you.

Thank you. Thank you, Anthony.

Your next question comes from the line of Oliver Chen with TD Cowen. Your line is now open. Please go ahead.

Hi, Paola and Gianluca. The Zegna brand has been impressive. Which regions or geographies drove outperformance just at the core Zegna brand? Then as we think about China tourism overall, how has China tourism been relative to your expectations? Third question on the Middle East, you've done better than peers based on strategies you've undertaken. What have those strategies been in terms of lesser, you know, traffic issues relative to competition? Thank you.

Thank you, Oliver. Okay, on the Zegna brand, what regions is has drove the sequential acceleration, the performance?

Hi, Oliver. We never talk about. I was there last week, so Latin America, Mexico is booming. Brazil is booming, percentage terms. It's definitely not the biggest market, but we always talk about America, and we need to also point out, of course, U.S., but also Mexico and Latin America are doing extremely well. As I said before, Europe, continental Europe, is doing particularly well for us, both locals and foreigners. Until end of February, Middle East was booming. Japan and Korea, which we always mentioned, it's not our forte per se, but we are seeing good traction on Japan and Korea across the three brands. Also driven by Chinese tourists. We are not seeing a lot of Chinese back on the west side in Europe.

The driver of success in Europe are for own locals is Middle Eastern, is South Americans, is North Americans. In Milan, in London, in Paris, in Madrid. Madrid is becoming a very important city for us. We are opening a new flagship in Madrid in the second half of the year, which is becoming a very important destination for South America, which is a very fertile ground for the brand. I think this answers to your first question. The third, I forgot it.

The Middle East, what has drove our better performance versus competition, what we have done, what, of course, is a success that has happened years ago, the relations that we have with our customers?

I think it's about resilience. I think that our brand, we always said we are marathon runners. We are not sprinters. We might not grow so fast, but we run steadily. I think that our intimacy, the relationship that our teams have with the customers, the fact that they know their lifestyle. We are not transactional, therefore, I think that this keeps the business more resilient and steady in the good and bad days. I think we are reaping the effects of very long-term relationship with clients, the strategies that we have built. I think this is the reaction of having also in difficult times a good resilience and the fact of probably being a client, a brand of destination these clients also visit us elsewhere.

Maybe they don't visit us in Middle East, they visit us elsewhere.

Thank you.

Okay.

No more questions?

There are no further questions at this time.

Okay.

You're all good.

Alicia.

Okay. Hello, everyone. Alicia speaking. Thank you for attending today's call. I would like to remind you that our next release and conference call will take place on July 23rd for H1 preliminary revenues. The silent period will begin on July 1st. If you need any other further clarification, please do not hesitate to contact us. Have a nice rest of the day. Ciao.

A nice hopefully long weekend. I don't know who will have a weekend tomorrow. Thank you to also from myself.

Myself. Ciao.

Ciao.

This concludes today's call. Thank you for attending. You may now disconnect.

Good afternoon, and good morning, everyone. Thank you for joining the Ermenegildo Zegna Group H1 2025 Financial Results Call. Please note that today's material and presentation are available under the zegnagroup.com website. Joining us today, the Zegna Group leadership team, including Gianluca Tagliabue, Group CFO and COO; and Paola Durante, Chief of External Relations. Before we begin, we need to point out that the team will make certain forward-looking statements during the call. The group actual results may be materially different from those expressed or implied by these forward-looking statements. Also, these statements are subject to a number of risks and uncertainties, including those described in our SEC filings. Please refer to the forward-looking statements' cautionary statement included at Page 2 of today's presentation. I will now hand over to Paola Durante.

Thank you. Thank you, operator, and good morning, and good afternoon, everybody. Thank you for being here today on our H1 2025 results conference call. As already has been said by the operator, I'm Paola Durante. And here with me there is Gianluca Tagliabueour, our CFO and COO; and Alice Poggioli, IR Director. I will briefly comment on first 6 months financial results, and then we'll leave the floor to Gianluca for some final remarks. First half 2025 revenues have been confirmed at EUR 928 million, minus 2% organic, driven by a good -- a very good plus 6% DTC organic performance. But I will skip commenting more on revenues since we have already seen and commented during our call at the end of July. So let's then move on the presentation at Page 7. First of all, we start deep diving on our metrics, looking at gross profit. First half 2025 gross profit reached EUR 626 million with a margin on sales of 67.5%. The 110 basis points margin improvement has been driven mainly by a better channel mix since the DTC revenues generated 82% of our group branded revenues, which is higher -- 6 percentage points higher compared to the 76% in the first 6 months of 2024. And as you know, you perfectly know, DTC gross margin is higher than the wholesale. Moving to selling, general and administrative costs. You know that these costs are, on the other hand, the other face of the coin when strengthening the DTC channel. These costs reached in the first 6 months, EUR 502 million, in line with the EUR 498 million in the first 6 months of 2024. The incidence on revenues has grown to 54.1%, which compares to 51.8%. And this higher incidence on revenue has been largely driven due to 3 main effects. The first one, a negative operating leverage, in particularly at Thom Browne. The second, the cost related to support our long-term growth trajectory, in particularly in building talent team, in building a stronger IT infrastructure and CRM platform. And this is in particularly not only, but in particularly at Tom Ford fashion. The third element is higher initial cost incidents for the newly opened stores. It is normal that at the beginning, stores do not reach the long-term revenue -- run rate revenue. So the incidence of cost related to the openings is normally initially higher. At the same time, we undertook actions to contain costs across all the 3 brands, which has helped maintaining under control this -- the selling, general and administrative costs. Moving to marketing. Marketing expenses reached EUR 63 million, around 7% incidence on revenues, substantially in line with what we reported last year. And this is notwithstanding some important events that took place in the first 6 months of 2025. You perfectly remember Villa Zegna Dubai. But I also remind you that also last year, we had some important events. Okay. So with Page 7, I would not comment more. Let's move -- let's skip to Page 8 of the presentation, where we analyze our adjusted EBIT for the group and by segment. First of all, you know that adjusted EBIT is the main performance metric that we use to analyze our business, both at group, at the segment level. For the reconciliations between adjusted EBITDA and operating profit, you can look -- you can see on the appendix of this presentation. So in the first half of 2025, adjusted EBIT reached EUR 69 million with an EBIT margin of 7.4%, down 100 basis points versus the first 6 months of last year. The reason of this decline is clearly linked to what I already commented when talking about selling, general and administrative higher incidents and also has been negatively -- slightly negatively impacted by the currencies movement. You remember that since April, currencies, euro appreciated, particularly compared to U.S. dollar and renminbi, which are the 2 most important currencies for our group. Let me also comment or add something that we already said during the call in July. We confirm that also in 2025 in the second part, adjusted EBIT will be higher compared to the first part of the year. Of course, we are aware that the sector remains challenging and volatile. However, we know that we have implemented actions to protect our profitability. Let's now look to our results by segment. First of all, talking about the Zegna segment, which, as you know, includes not only Zegna brand, but also the Textile division and the third-party brands. This segment generated an adjusted EBIT of EUR 94 million with a margin of 14.3%, which compared to 12.8% in the first semester of 2024. This important 150 bps increase has been led by higher operating leverage, largely as a result of a more efficient DTC channel and cost control measures. Thom Browne. Adjusted EBIT for the Thom Browne segment was EUR 4 million compared to EUR 20 million in the first 6 months of 2024. This adjusted EBIT contraction was driven by the sharp decrease in revenues in the period, in particularly in the wholesale channel and an increase in the selling cost, in particularly due to the DTC network expansion. Let's now move to Tom Ford Fashion segment, which has recorded a EUR 19 million adjusted EBIT loss, which compares to the EUR 12 million negative last year. This is a result of the plan, the expected investments that we made in store network expansion, in talent team in building a talent team, in building a better, stronger IT infrastructure to create the right size platform to support the business expansion. I'll leave for further comments and questions at the end. Let's now move to Page 9, income statement. Here, I just comment the net profit line or the profit line, which reached in the first 6 months of this year, EUR 48 million -- EUR 47.9 million to be precise, up 53% compared to the EUR 31 million last year. The increase in profit is the result of higher financial income and foreign exchange gains. These 2 items combined moved in the semester from a negative EUR 25 million to a positive plus EUR 6 million. And this reflects largely, I would say, the fair value remeasurement of liability to put option held by noncontrolling interest. The most important liability is actually held in U.S. dollars. So the euro appreciation has also benefited this line. And the second important effect to consider is looking at the tax rate, the income taxes, which was of EUR 20.1 million in the first 6 months of 2025, corresponding to a tax rate of 30% versus last year, 35%, as you see from the table. I can also anticipate that the tax rate in the region of 30% -- 28% to 30% is more aligned to our expectations for year-end. And now let's look at capital expenditure. So let's move to Page 10 of the presentation. CapEx reached EUR 54 million with the incidence of revenues of around 6%. This EUR 54 million has been 2/3 related to investments in the development of the store network across the 3 brands. And the remaining part is mainly related to the investments in production. We are building the important plant for the shoe business in Parma and also some IT investments. For year-end, you remember, we anticipate a CapEx -- incidence on CapEx on revenue of around 6%, 7%, and I can confirm this expectation also because in the second part of the year, investments for the greenfield production site for footwear will actually kick in even more importantly. Trade working capital in the -- at the end of June was equal to EUR 442 million, which compares to EUR 467 million last year. This reduction has been driven by better inventory management, as you can see from the chart and also lower receivable. The last one, clearly also linked to the streamlining of the wholesale business. Finally, on Page 11, free cash flow, I just comment that the free cash absorption has been of EUR 23 million this year. And last year, it was around EUR 7 million. And this higher absorption, as you can see, has been driven by the lower operating cash flow. Not much to comment on Page 12, just saying that the net debt at the end of June of around -- of EUR 92 million was actually fell in line with what we reported at the end of December 2024. I will finish here my brief comments and leave now the floor to Gianluca for the final remarks. Thank you.

Thank you, Paola. Good afternoon, everybody. Let me give you a brief update on the actions that we did in the last few weeks since we last spoke before going to the Q&A session, starting with Zegna. We just launched the Zegna Fall/Winter '25 marketing campaign labeled, it's not a suit, it's a Zegna. For Fall '25, a new chapter is being presented rooted in a century of style. The focus of the campaign is Zegna Torino, the suit that comes directly from our founders closet, and we made it with our unique new fabric, Vellus Aureum, the finest wool in the world. In the campaign, the Torino suit is matched with Vetta shoes that are the winter version of our Triple Stitch to create a unique charismatic and in one word, Zegna Look. The campaign accompanies the launch of Drop 2 of the Fall/Winter collection, which has received in the stores initial positive feedback since we began presales and preorders a couple of weeks ago. Moving on to the Zegna DTC network. We are pleased to announce the opening of our new store in Miami Design District, marking another important step forward in the strategic expansion of our presence in the U.S. market. Additionally, we just opened a new [indiscernible], which are the permanent by appointment stores for our very important client at Plaza 66 in Shanghai, bringing the total to 3 globally following the openings in Shin Kong Place, Beijing and Paragon, Singapore. As you know, as I said, the [indiscernible] is a by appointment-only store, offering exclusive collections that you don't find in the regular stores and a unique shopping experience that reflects the essence of Zegna luxury and personalization offer. Moving to Thom Browne. We just launched the Fall '25 campaign, which in line with the brand communication strategy reflects an evolution of uniformity to include lifestyle-oriented visuals with distinctive DNA that makes Thom Browne authentic and unique remaining unmistakably present. On Thom Browne, let me also remind you that since September 2, that is this week, we are pleased to have Sam Lobban that has officially started his mandate as CEO of the brand. And finally, Tom Ford Fashion. The first Tom Ford campaign signed by Haider Ackermann has been released, and it has been very well received, as confirmed by many comments made by journalists and media experts. Haider's collection touch the stores' floor at the end of August. It is, therefore, early to comment on the trends, but the first very initial reactions in the stores have been really positive. All in all, I can say we have entered September with good energy across all 3 brands, but it's essential to remain cautious and vigilant as initial signs should not be considered yet as a consolidated trend. The sector continues to face [Technical Difficulty] which cause for a cautious and thoughtful approach. As a final comment, I can add that by region, we still continue to see strong momentum in Europe, Middle East and Americas. GCR remains challenging and volatile. It is true that in some recent weeks, the trend in GCR has slightly improved, also thanks to easier comparison base, but still staying on the negative side. So it is yet early to draw a solid conclusion about this latest trend of GCR. I think I can stop here and we can now open to the Q&A session. Paola?

Thank you, Gianluca. Please, operator, can you open to the first question from our audience.

[Operator Instructions] Our first question comes from Anthony Charchafji with BNP Paribas.

It's Anthony from BNP. I have just 2. The first one would be on the current performance in terms of margin. It seems that the gross profit margin is still continuing its upward direction since last H1 '24. Could you maybe give a bit more color on the bridge of this plus 110 bps, maybe given the pricing FX impact on top of channel mix? That would be my first question. And also if we should still see 67% at least gross margin in H2 despite the tariffs? My second question would be on H2 and I would say, expectation. So thank you for giving a bit of color on the current trends. It seems that consensus is expecting close to 4% organic in H2, which is a nice improvement from Q2. You already commented that you were happy with consensus being around EUR 173 million at the EBIT level, which would imply a flat margin. Are you still expecting this development in terms both of top line and margin? That would be my second question.

Thank you, Anthony. And I'll leave clearly all the 2 questions to Gianluca, the first one on gross profit, both analysis on the first half and what we expect for the second part of the year and then on the consensus expectations.

So gross margin -- Anthony, by the way. Gross margin, the evolution is definitely a result of the DTC revenues that are reaching at this point 88% versus 86% last year. And within the DTC, we have been pushing, I think we have discussed many times also the quality of the DTC. It's not something that we report, but we carefully monitor the sell-through and sell-through at full price, which definitely is a step ahead on the Zegna brand versus the other 2 brands. But in the 3 brands with different level of maturities, we are pushing up the sell-through, implicitly creating the opportunity to reduce the number and the incidence of outlets. So those are -- one number is evident, the DTC weight within the DTC is the quality of the DTC that is the underlying factor that is helping us move forward the gross margin where we think we deserve to be. And apart from channel, of course, the journey of personalization is also a driver, the fact that we are able to transfer into the price, the quality and the service unique that we deliver to our customers. So I think that is an indicator -- a synthetic indicator of our ability to stay full price and be recognized for the quality that we deliver. In terms of H2, if you remember, we indicated a low single-digit growth on the revenue side for the year. We confirm that in organic terms. So we clarify that in organic terms when we provided the indication in the USD-euro and renminbi-euro were very different from today. So of course, we need to take this into account. And today, the consensus that we see at EUR 1.923 billion, I go by -- no, but it's the right number, EUR 1.923 billion. We believe that correctly reflects also the change in currency. So if you look at that number on an organic basis, corresponds to low single-digit organic. And on the adjusted EBIT, I think that our -- the consensus that we have in front of us that is EUR 173 million indeed is incorporating the same thing about the currency swing. And we believe that this adjusted EBIT at consensus EUR 173 million is realistic.

Okay. Anthony, I think we answered, but if there is any follow-up, we are here. If not, we can go to the second question or the second analyst from the... Operator for the second one.

Our next question comes from Oliver Chen with TD Cowen.

This is Tom Nass on for Oliver. I wanted to ask about the margin improvement in the Zegna segment. Specifically, if you could speak to some of the opportunities you think may be on the road ahead as to where segment margins could trend over the longer term? And then as a follow-up, I wanted to ask on margins in the Thom Browne segment and the progress you've been seeing there with the wholesale rationalization. I guess, more specifically, how should we think about modeling margins in Thom Browne segment over the long term?

Thank you, [ Oliver ]. Thank you for the 2 questions. They are both on operating margins, on EBITDA. The first one is for Zegna and the opportunities on the long term. And the second one is on Thom Browne. So again, Gianluca is your man.

Yes. In terms -- [ Oliver ], in terms of margin for Zegna, we were able to bring it up at this point higher than the 14%. If you ask us what is the journey of this, let's be mindful that we keep on investing on Zegna, we will have also investment. So we need to decouple short term from long term. If you talk -- if we talk about short term, we don't commit to a specific number, but definitely, something between 13% and 14% is the number that we see as the number for the year. Definitely, the journey of growth for Zegna needs to go, we have always mentioned the 15%. That is the first step we need to get. So we see the potential for the brand to get there, not for the year. For Thom Browne, of course, we have paid the bill of the minus 52% of wholesale in the first half. We have declared that for the year, the decline of wholesale will not be minus 50%. We see the second half reducing the decline in the range of minus 20%. So the impact in the first half has deeply been affected by this step down of revenues, which were very higher -- much higher in the first half -- first quarter of 2024. And of course, having on board, Sam Lobban as the new business leader, bringing and injecting what we want to be a DTC-centric approach starting from merchandising, starting from training in the retail and all the different levers that then bring to life the stores is what we are betting for Thom Browne to bring -- to bring Thom Browne back to a double-digit EBIT that is where it should belong.

Perfect. I don't know if, [ Oliver, ] we answered your questions or any follow-up. Otherwise, we go to the next one. Operator, is there any other questions?

Our next question comes from Chris Huang with UBS.

I have 2. The first one on current trends. I think, Gianluca, you previously touched on some early signs of improvement when it comes to the Chinese consumers. If I remember correctly, Q3 was the quarter last year when you started to see meaningfully easier comps for the Chinese consumers. So can you maybe help us understand a little bit more on the signs you're seeing? Is it traffic coming back? Is the conversions is going up? And can you also confirm if Chinese consumers in the first 2 months of the quarter is -- I know it's still declining, but are we talking about maybe less than double-digit decline in the single-digit area? And secondly, on margins, just as a follow-up to the previous question on Zegna segment. If I heard correctly, you said that for 2025, you're expecting Zegna segment margins to land around 13% to 14%. But that would imply H2 to see quite a bit of contraction year-over-year. And on the basis of probably more H1 weighted marketing investments, how do we square this equation?

Okay. Thank you. Thank you, Chris. Let's start with the second one on margin for Zegna, and I will leave Gianluca to answer. On the China current trend, we can give you some initial more comments or colors. But really, I would like to leave any detailed comment to our Q3 revenue results conference call that, as you know, is in October. This is not a conference call that is meant to comment deeply on current trends. So leaving to Gianluca on margins.

On margins, we know that we have some investments to be done in the second half. We have, for instance, an event in Miami around Art Basel to be done in December. So we have in front of us still 4 months that are uncertain. So we don't want to set expectations that can be disappointing. So the combination of 2, let us invite you to stay within that range. Happy to be -- at the end of the year to say that I was wrong on the upper side. But we know that we have -- we don't want to cut strategic actions. We want to keep on fueling the brand that is with positive tailwinds. So we don't want to squeeze the numbers of the second half of the year in order to deliver an EBIT on the short term. We see big potential on the long run of the Zegna brand. We see results. So we want to keep on having the right events, the right investments, and we are just cutting discretionary costs, not anything else.

And can I just follow up on marketing. Can you just confirm that for the full year group level is still going to be around 6% of sales?

6%?

Yes.

Yes, around 6%, Chris, for the group. Thank you so much, Chris, and leave it to the next one.

Our next question comes from Louise Singlehurst with Goldman Sachs.

Just 2 quick follow-ups for me, please. Firstly, on pricing. Can you just remind us where we are now going to obviously the Fall/Winter, the pricing that's gone through and any plans for the second half? And I suppose you referenced there is really on the commentary for the U.S. because we've been hearing a lot from the peers recently in terms of the luxury positioning, the price increases that have gone through so far this year, there hasn't really been any impact on volumes or any consumer pushback? And then secondly, I know this is a call, it's not about current trading or we're going to get recent trends. But if we think about that low single-digit outlook for the full year and where we are entering September, I suppose where is the biggest -- where is the risk that we still see? Is it more on the China aspect and the pace of recovery? Or is it more the expectations management across the different regions? Just quite interested to hear your feedback, Gianluca, because obviously, the U.S. is probably a lot stronger than we anticipated year-to-date. And hopefully, there are some tentative signs in China, but I know it's early.

Louise, so the pricing. Start from pricing, as we declared, we have been acting always on a low single-digit price increase. That's on a systematic approach to offset cost dynamics and currency dynamics. In Fall '25, when there was the addition of incremental tariffs, we have acted in order to reflect this into our U.S. Fall/Winter '25 prices, which have been live since August of this month. So we have simply taken care of covering the burden of incremental tariffs in U.S. We are not seeing a substantial boomerang from the consumers. As I said before, we keep on seeing good momentum in U.S. So we have not seen a change, an inflection point in our solid trajectory of growth in U.S., first in the Zegna brand, but also more recently with the either collection, we can say the same positive momentum also on the Tom Ford, also Thom Browne, despite being smaller in the U.S. environment, they have just opened some stores, but the business size is smaller. So that is the comment on the Fall/Winter '25 pricing. The second is -- Paola, remind.

The second was the outlook for H2 and where we see the main risk is China or..

China. It's China because we are still in a volatile environment. So we don't want to draw conclusion from a few weeks where we are seeing the trend less negative. So...

[indiscernible] easier base of comparison.

Easier base of comparison. So we want to -- we would be much more comfortable in a situation when we see China solid. As Gildo mentioned last time, we are entering the next year into a cautious mode that we have labeled as China into a new normal, Gildo mentioned that. So we want to think and we want to plan and be ready for 2026, which is steady to this year. So that is we are not banking on a rebound for next year of China. Then if it comes, we will be ready to take advantage and enjoy the growth. But we are planning to stay in this new normal situation through next year.

Thank you, Louise. Okay. Is there any follow-up questions? Any other questions from the audience?

We have no further questions registered. So Paola, I'll hand back to you.

Thank you. Thank you to everybody. As always, a very interesting and nice questions to us. We always enjoy spending some time with you. And because we enjoy, we will soon see on October 23. So let's see and catch up on Q3 revenues in 1.5 months. Thank you, everybody. Have a nice weekend.

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