ZGN

Good afternoon. Good morning, everyone. Thank you for joining the Ermenegildo Zegna Group third 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 statement, cautionary statements included on page two of today's presentation. I will now hand over to Paola Durante, Chief of External Relations and Sustainability.

Thank you. Thank you, operator, and good morning, good afternoon, everyone. Thank you for being with us. As usual, our call is led by Gianluca Tagliabue, Group CEO. I will start commenting our third quarter revenue performance. Gianluca will then share his closing remarks and take you through some of the quarter's key moments. The new Zegna campaigns dedicated to Su Misura and the Falcon jacket, and the Spring/Summer 2027 fashion shows of Tom Ford and Thom Browne. But first, let's go to our revenue results, key highlights on page 10 of the presentation. As always, when commenting on revenues, I will refer to the organic performance, which excludes foreign exchange impact and therefore better reflects the underlying business dynamics.

In the third quarter of 2026, the group reached EUR 434 million in revenues, up +8%, showing continued strength in the DTC channel, which grows 11%, with all regions contributing positively to this performance. Going now to page 11, and I will comment Q3 performance by brand, starting with Zegna. Zegna brand continued to lead the group growth, recording EUR 284 million revenues, a +13%. A performance which has been driven by a very solid DTC channel across all regions. Thom Browne reported EUR 45 million of revenues, down 7%, reflecting a more challenging consumer environment in Greater China and the ongoing professionalization of the wholesale channel. TOM FORD FASHION, EUR 70 million in Q3, up 5%, with both DTC and wholesale positively contributing to this performance.

And finally, on textile, revenues were up 5%, while other revenues, which as you know, mainly related to ready-to-wear garments produced for third-party brands, was -14%, that off a very small base. Let's move now to page 12, the revenues by geographic areas. I will start commenting EMEA, which in the first nine months of the year represented 35% of group revenues. EMEA revenues were up 6% in the third quarter, supported by double-digit growth at Zegna, partially offset by the negative wholesale performance at Thom Browne and TOM FORD FASHION. The Middle East showed a strong sequential improvement in the quarter, with a double-digit performance in Q3. The Americas. Americas represented 31% of group revenues in the first nine months. In the third quarter, this region recorded a 14% growth, led by double-digit growth at Zegna DTC, partially offset by decline in the brand's wholesale channel.

Also, TOM FORD FASHION solidly contributed to the region's growth. Moving now to Greater China region, which accounted for 22% of total revenues in the first nine months of this year. In the third quarter, GCR revenues increased by 6%. Zegna DTC continued to deliver solid growth in the region, despite the increasingly challenging environment. Partially offset this performance by a negative performance at Thom Browne and TOM FORD FASHION. Finally, the rest of APAC, 20% of group nine-month revenues, reported a +5% growth in the third quarter. Zegna and TOM FORD FASHION delivered a positive performance, while Thom Browne revenues remained broadly in line with the prior year. I will skip to comment on page 13. Let me just highlight that in the first nine months of 2026, DTC for the group accounted for 85% of branded revenues, 3 percentage points higher than the prior year.

From 82%, we moved to 85%. Now let's go to page 14 of the presentation, and let's deep dive on Zegna brand performance. In the third quarter of this year, Zegna DTC revenues grew 16% with, as I said, a very good performance across all regions. The Americas, once again, outperformed the average of the revenues improved sequentially and delivered double-digit growth, while GCR also remained on a steady growth with the Chinese cluster accelerating in the quarter to a double-digit performance. In terms of retail network, Zegna closed four net doors during the quarter. In the wholesale, revenues were down 8%, reflecting our continued strategic focus on a retail-first business model and on delivering a more exclusive customer experience. We confirm that we expect the Zegna brand wholesale channel to be down in the low teens by the year-end.

Now, page 15, Thom Browne revenues by distribution channel. In the third quarter, Thom Browne DTC revenues declined 7%. This performance has been impacted by a more challenging environment in some key markets, in particular in Greater China region. The slowdown in the quarter also reflected the first full deliveries that were not optimally balanced, in particular in terms of fabric weights, as well as some deliveries shifts. In terms of retail network, the brand opened one door next during the quarter, including the new store at the Shanghai Plaza 66. The wholesale channel for Thom Browne reported 11% organic decline, reflecting the ongoing streamlining of the channel. For the full year, we expect a trend broadly in line with the first nine months. Let's move now to page 16, TOM FORD FASHION revenue analysis.

For TOM FORD FASHION, DTC revenues grew by 4% in the third quarter, supported by positive contribution from Americas, EMEA, and the rest of APAC. DTC performance was also in the quarter, has been also impacted by different cadence of deliveries compared to the last year, a timing effect which will be neutralized in Q4. In terms of retail network, TOM FORD FASHION, those network remain unchanged during the quarter on a net basis. Wholesale revenues were up 9%, reflecting the positive reception of the fall-winter collections among our wholesale partners. For the full year, we confirm we expect to have a low single-digit growth for this channel. Page 17, not much to add. As usual, you can find here our group store network. With this, I'll hand over to Gianluca for his remarks. Thank you.

Thank you, Paola. Good afternoon, good morning, everyone. Let me also welcome you to the call. Paola said we are pleased with our third quarter revenue performance, driven in particular by the ongoing solid momentum of the Zegna brand, which showed a very good DTC performance across all regions. These results reflect the successful execution of a strategy that we have been pursuing consistently. The momentum we first built in the Americas and in the Middle East is now increasingly extending to Continental Europe and to GCR, broadening the foundations of our growth. This is evident not only in the brand's performance across regions and customer nationalities, but also across product categories and client segments. Zegna brand is growing with existing and new clients across all categories, led by Su Misura, luxury leisurewear, and the continued strength of our footwear offering. Zegna brand is unique.

Its uniqueness is rooted in three pillars: legacy, family, craftsmanship. By staying true to its identity and uncompromising positioning while connecting with distinctive communities, the brand is increasingly attracting both loyal as well as new customers across markets. And within new clients, we see a promising pattern of new clients returning for a second purchase. Our recent fall-winter Su Misura campaign from father to son, was not only a commercial success, but even more importantly, a compelling expression of the brand vision and strategic direction. Another important milestone was the September fashion issue of the Financial Times, How to Spend It, featuring the first joint interview with our Zegna brand's Co-CEOs, Edoardo and Angelo Zegna, alongside our Executive Chairman, Gildo.

Set at the original Villa Zegna in Trivero, the story fully captured the essence of the Zegna legacy, a unique heritage, a strong sense of continuity, and a shared vision for the future. Moving now to TOM FORD FASHION, I want to start with the recent spring-summer 2027 fashion show held in Paris at the end of September. That was Haider Ackermann's fourth collection for the house. I believe that Haider and the entire TOM FORD FASHION team are defining the evolution of TOM FORD FASHION identity in today's landscape. TOM FORD FASHION is continuing to evolve towards a more intimate interpretation of the elegance seduction. Leatherware, tuxedo, evening wear remain enduring codes of the house, while new expressions are taking shape, notably a stronger tailoring proposition, including tailoring for women.

We are now focused on translating the TOM FORD FASHION creative momentum into increasingly tangible results, strengthening its positioning in the U.S. while broadening audience global. Product is clearly an important part of this journey. We are continuing to refine the collections across both menswear and womenswear, and we are encouraged by the performance of womenswear, which outperformance albeit from a smaller base. At the same time, we see further opportunity to sharpen the proposition across seasons. We are also continuing to strengthen our retail footprint. TOM FORD FASHION has just opened a beautiful new store in Costa Mesa, California, with two more openings in the U.S. coming shortly. One in San Diego, the second, Bal Harbour, Miami. Let me now turn to Thom Browne. Q3 was a challenging quarter for the brand.

As planned, we did not have the contribution from the ASICS collaboration, while the sharp deterioration in consumer demand across Asia, starting with China, created an additional headwind. In DTC, July and August were the most challenging months. September and October so far have shown some improvements, but we remain cautious given the continued volatility in the markets. At the same time, we are seeing encouraging signs around the brand. The highly acclaimed New York Spring 2027 fashion show held in September, together with the launch of the Thom Browne Bose Headphones collaboration, helped slightly improving momentum in the recent weeks. Our priorities are clear for Thom Browne, a highly selective approach to new store openings, a stronger in-store product proposition in terms of category mix and range.

A more flexible use of branding systems, alongside a communication strategy aimed at engaging a broader audience while remaining firmly rooted in the brand's distinctive codes and identity, all with one key goal, improving retail productivity. Sam is completing his team by year-end, which will bring fresh energy to the brand. The recently opened Thom Browne store at Plaza 66 in Shanghai is a good example of how we are continuing to elevate the brand's retail expression. A brief word on our textile platform, which continues to perform well despite the challenging environment. Lanificio Zegna, Dondi, Bonotto, and Ubertino keep gaining market share driven by quality, creativity, and ongoing innovation.

To conclude, let me say that the fourth quarter, although remaining highly volatile, in particular in China, started on a slightly better note for Thom Browne DTC and TOM FORD FASHION DTC, while Zegna DTC continues to deliver a very solid performance. As our Executive Chairman, Gildo, said in the press release, "Looking ahead, we remain cautiously confident, knowing that the uncertainty in the global environment remains pretty high." Within this context, what matters most is the solidity of the vision and the ability to engage with consumers. The appetite for luxury is and remains strong. Ultimately, the opportunity is there. It is up to each brand to earn its share.

Let's now open the Q&A session. Thank you, operator.

We will now begin the question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question.

Operator.

We will now begin the question-and-answer session. We ask that you pick your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. We are now ready to take the first question. The first question comes from the line of Adrien Duverger with Goldman Sachs. Your line is now open. Please go ahead.

Good afternoon, Gianluca and Paola. Thank you very much for taking my questions. I have three, if possible. The first one would be on current trading. Could you please comment on the performance throughout Q3, and if you see any material difference month-on-month, as well as if you could comment on the first few weeks of October? My second question would be on China and APAC. I see a deceleration in China as well as in APAC in Q3 compared to the last couple of quarters. What are you seeing in the region, particularly in terms of DTC trends? Are you seeing any difference in performance between mainland China and offshore spending?

Sorry. I think you are talking, but we cannot hear from here, so I don't know what is happening to the system. Let us a few moment to fix it. Very sorry for that.

Thank you very much. Thank you, Adrien. Please stand by everyone while the speakers get connected again. Thank you. As a reminder, the speakers are getting reconnected. We appreciate everyone's patience. Thank you. The speakers have reconnected. I will now open the line again for Adrien Duverger from Goldman Sachs to ask his question. Adrien, please go ahead.

Good afternoon, Gianluca and Paola. Can you hear me?

Yes.

Very well. Thank you.

It was not a trick to avoid the Q&A, huh?

No, no problem. Thank you very much for taking my questions. I have three, if possible. The first one would be on current trading. Could you please comment on the performance throughout the quarter? I just want to understand if there is any material difference month-on-month. Also, if you can comment on the first few weeks of October. My second question would be on China and APAC. I think there has been a slight deceleration in Q3 compared to the last couple of quarters. I wanted to know if you could comment on what you are seeing in the region, especially in terms of DTC trends. Is there anything different between mainland China and offshore spending? Have you seen any changes in consumer environment, especially after what some of your peers have reported recently? My third question would be on the Zegna brand.

In DTC particularly, could you help us understand where the performance is coming from? What has been the contribution of space, price, mix, as well as volume? Thank you very much.

Thank you, Adrien. Three questions, but I think they are a little bit more than three, but let's move to the first one, current trading and quarter and the first two weeks in October. I leave to Gianluca.

Across Q3, I would not point out to any significant difference across the quarter. In the months, if I may make a small difference, probably August was slightly more softer than the other two months, but I would not say that there has been a major difference across the months. In terms of October, as I said during my speech before, October so far is doing a touch better at group level, even though as you called out also some indication from the environment gives some sign of volatility. Of course, any comment for the trend is related to the DTC. To give some color on the October month to date by brand, Zegna is continuing to perform solidly across the regions, all regions.

Thom Browne, we are seeing some signs of improvement, also supported by a slightly better performance in Asia. I would say improved merchandise in the store. I have been in many stores in the last couple of weeks also with Sam in Asia, spending many time on the road with him in Asia. We have been seeing an improvement in the merchandising execution in the stores. TOM FORD FASHION is benefiting from the buzz around the fashion show, together with the actions that we are taking to further engage existing clients and attract new ones. Also, as I said in the last calls, putting some marketing dollars on the table, making a more intense marketing activities both on the one-to-few events as well as in the one-to-many. That is some broadcast amplification of the brand.

In October, happy to see a good start, but we cannot drive the strength of the quarter out of these few weeks. We know that we have still 10 weeks to go, nine, 10 weeks to go. We are very, as Gildo was saying, we are cautiously confident and optimistic knowing that what is out there it is partially not in our control, partially not. In terms of China performed solidly in Zegna in the entire quarter and is continuing the same direction in October. While for Thom Browne and Tom Ford, although for Tom Ford, Greater China is very small. We saw a deterioration of the demand in the region over summer, especially from aspirational clients. As I said, the exit rate in October is getting a touch better, yet is not a solid trend that we can project for the year to go.

In terms of color, I call out that Hong Kong is performing well, very well, and within mainland China, we see some regions performing much better than others. I would call out the east side, where Shanghai and Hangzhou, and on the west is Chengdu, which is performing better of the other. On the Zegna brand, the growth is not coming from space. It is basically an entire comp. As Paola reported also, we closed net four doors, so there is— the addition is not the driver of growth. It is really the productivity, and the productivity comes from both number of tickets as well as AUR. Where AUR, there is a very limited like-for-like component, and there is a very interesting mix component, which is the elevation of the offering. I think those are—

I think we answered to the three questions. Next?

It's very comprehensive. Thank you very much, both.

Thank you.

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

Hi. Good afternoon, Bhumi Kanabar. I have three questions today, please. Firstly, what was the performance of the various clusters for Zegna brand? You already commented that the Chinese cluster was up double digits for Zegna brand, but I was wondering if you could also give the same figure for Thom Browne. Secondly, could you please quantify to what extent you see TOM FORD FASHION being neutralized in Q4 for the DTC channel, given the timing of shipments? Finally, is there any chance you can comment on the sales densities you're seeing at the moment in Zegna brand stores? Thank you.

Can I get to your first question again? Sorry, you asked about the Zegna brand?

Yes. It was the performance of the various clusters for Zegna brands. Because you already commented on the Chinese cluster for Zegna brand, but what about the other clusters?

Okay. The Chinese cluster. Yeah. Sorry.

And if you have the cluster comment for Thom Browne as well, given the weakness in the aspirational consumer there.

Okay.

Okay.

I take this, and then you help us in referencing the others. Comment on nationality clusters for Q3 Zegna brand. As we mentioned, and Paola mentioned, GCR clients have presented a sequential improvement going into a double-digit growth in Q3. This is, as we said at the beginning, I think that the execution that moved from west to east, we are starting to see some traction. I think it goes back to executing properly in the strength of the brand, whether it is some areas of the footwear, whether it is Su Misura, whether it is Belisario. So it is a holistic success on GCR. It is not just Triple Stitch. We are seeing the brand taking shape in the proper way, and we are happy to see Q3 with a double-digit GCR cluster performance.

U.S. solid double digits continued in Q3, even a touch better, but still a very solid double digit. LATAM, strong double digit. Where Middle East found a double digit, a couple of markets where a couple of clusters, where we are seeing some slight slowdown, but still solidly in the positive territory are European cluster and Korean cluster. Southeast, which is the last that I was forgetting, Southeast Asia, solid double-digit positive. So everything positive. If we have to point out a couple of cluster nationalities that have presented a slowdown still in the good positive territory is European cluster and Korean cluster. In Thom Browne, we don't report on a nationality, and we don't comment, but definitely the Chinese, especially the low tier of Chinese consumers, are the ones that have been dragging down the performance in Q3.

I would call out that as a major inflection point for Q3 compared to the first half.

The second question, Bhumi, was on wholesale, but can you help us if there was some specific questions?

Yeah. Sorry. It's the DTC, you mentioned that the timing of shipments affected TOM FORD FASHION.

Okay.

That was neutralized Q4. Could you quantify?

Okay.

No, I think that simply the winter had some longer deliveries, especially if you compare to last year. It's not a major shift. I don't think it's a major thing to call out as a driver of inflection between the quarters.

The last one on sales density. I think I got the question, but was it referring to Zegna brand?

Yes. Thank you. Zegna brand.

Zegna brand, of course, the productivity is going up because the growth that we are projecting is basically entire comp. It is same stores. We are pruning a bit the network and the numbers, the stores that we are closing are the low performing ones. Of course, there is a growth in productivity. That is the promising part. Also, when we talk about TOM FORD FASHION, the growth is comp in Q3. The addition of Thom Browne at this point is very limited. We had a lift in the first half by space in Thom Browne. At this point in Q3 is marginal. The space addition on TOM FORD FASHION is entirely comp. Going forward, looking forward, we will have, in the next quarters, some space addition on TOM FORD FASHION, as Gildo mentioned also in the interviews. We just opened Costa Mesa.

We are going to open Bal Harbour and San Diego. We will have the major flagship opening in Q1 of next year in Paris. We will enjoy some space addition looking forward, not looking backwards, it has been Q3, on a comp basis.

Thank you. Operator, the next one. Thank you, Bhumi.

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

Yes, good morning. It's Anthony at BNP Paribas. Thank you for taking my question. The first one is on wholesale. You maintained the full-year guidance for Thom Browne at 35 and at TOM FORD FASHION at plus low single digits, but I might have missed the guidance for the Zegna brand wholesale on a full-year basis. My second question is on China, and if you can give us a comment at group level if Tier 1 cities are holding up better than lower tier, given the stabilization of real estate price. I think that last year at the same period, you commented that Tier 2 cities outperformed Tier 1, so I'm just curious on this one. My third question is more into 2027, so it's the first quarter in a row of double-digit growth for Zegna DTC.

Looking into 2027, should we assume a new algorithm of growth for this channel with maybe a low single-digit volume to a single-digit pricing and mid-single digit mix to sustain double digits in the midterm? My last one is on Thom Browne. Given the top line and your guidance of breakeven at the EBIT level, are you significantly managing the base currently?

No.

Okay. Thank you, Anthony. The first one I just answered because I commented during the speech that we expect the Zegna wholesale channel to be down in the low teens range by year-end. So this is the guidance that we confirm is exactly the same we commented in the past. I leave Gianluca to comment on China and on Zegna and Thom Browne.

On China, hi Anthony. In China, some cities of Tier 1 are in our specific network. We have seen some cities of Tier 1, as I mentioned before, performing better. Hong Kong in Greater China. Hong Kong, Shanghai, Hangzhou, and Chengdu. Those are the cities that have been performing better. Some of the Tier 2 cities are lagging behind. That same pattern is partially, probably external. Partially it is driven by us because, of course, we are investing in top stores more than elsewhere. So we are putting the best people, the best merchandising, the best activations. So it is a self-fulfilling prophecy to some extent, and partially it is probably the traffic. In Hong Kong, we are seeing some resurgence of traffic. In the cities that I mentioned before, we are seeing solid traffic, and probably we are gaining market share with our focused investments in some key doors.

In terms of 2027, for the time being, I would stick to what we have said so far. We are working on the targets that we have set, which is the low range part of the range. So the EUR 2.2 billion revenues and EUR 250 million of adjusted EBIT. Then while entering the year, we will be more specific in guiding you how to split that.

In terms of your fourth question, sorry, Anthony, you were asking on Thom Browne and our indications on an EBIT closer to break even by year-end, or did you ask us something that we did not get?

Yeah. I am just curious how, if you are significantly managing the cost base currently to achieve this or not.

I think we are managing the EBIT at group level. We are managing the EBIT at group level towards the current consensus, with a different mix compared to probably what we have seen last time. Specifically at Thom Browne, we are working to improve the EBIT performance compared to the loss of H1 to close the year with a slightly smaller loss, which is different from what we had in mind some weeks ago. The overall number we are working to stay in the consensus on Thom Browne. On the back of Q3, we are seeing at this point a full-year loss smaller than the loss in H1.

Thank you.

Thank you, Anthony. The next one.

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

Thank you. This is Jonna on for Oliver. Thank you for taking our question. First question is just on Korea and Japan, if you can elaborate on what you're seeing in terms of the local demand versus tourism will be helpful. As you think about the upcoming holiday season versus last year, what are key differences or same points on inventory and marketing and product assortment? How are you just thinking about the holiday season? Thank you so much.

Thank you, Jonna. Your first question was on Korea and Japan, and the second one on marketing is referring to the group and marketing events or—

Yeah, group or brand that you can elaborate just as you think about the holiday season.

Okay. Thank you. On Korea and Japan, I leave to Gianluca. Of course, it's important to underline that for the group, they're very small markets for us overall.

On Japan, I talk about cluster. We are seeing some softness in Q3, not different than H1, cluster of Japanese. Korea, as I said before, we are seeing some slowdown after a very strong first half and super strong double digits. We are seeing still a positive performance of Koreans consumer in the positive territory. This is what we have said. In terms of heading into the winter season, I think at this point the deliveries are well set. We are seeing a good performance also reflected in the month-to-date numbers of the winter of TOM FORD FASHION, which is picking up well. We are seeing some inflection on the latest deliveries of Thom Browne. We are intensifying the communication side of TOM FORD FASHION.

Yes. With those events.

An important part for it that we are investing in order to gain benefit from the buzz and the momentum of the brand. On Zegna side, we are seeing across all the months, all the drop one, drop two, drop three, drop four of the fall/winter, we are seeing good reception by the collection. There has been, I think, an important new delivery, that is, Paola mentioned before, the Falcon jacket, which is a new iconic piece of the offering. It is an iconic piece in the outerwear section, in the elevated part of the outerwear section, which is grounded in sophisticated materials together with the history of the brand, because it goes back to the story of our founder and the mountains where the family comes from.

The Falcon jacket was delivered in drop three, and has been well received both in the ready-to-wear as well on the make-to-order. We are delivering in drop four, which is now basically new colors. We are going to build on the success also of these new iconic pieces that are also supported by the communication campaign.

And also, again, for Zegna, there is an ongoing activity in terms of suite around the world, which is—

Is another, yeah.

—that they are very important, particularly also for the fourth quarter. Okay, let's go to the next one.

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

Hi, Gianluca and Paola. Thank you for taking my question. Just one, and apologies if I missed it, but could you maybe give us some clarifications on the breakdown on volume price mix for Zegna and how that's evolved throughout the year and maybe your expectations for next year? Then I believe you said that you have strong growth across product categories, but anything else to call out on Su Misura, for example, maybe performing much stronger than the rest? Thank you.

Thank you, Natasha. On the breakdown volume price mix for Zegna, what we said that is

It's a balanced contribution of volume tickets and AUR. Behind the AUR, it's bigger, the component of mix than the component of like-for-like price increase.

Yeah. For next year, I don't think it's going to We don't expect a big difference. There will be a balanced contribution from both volume, i.e. traffic and tickets and conversion, more conversion than traffic, and mix.

I think in nuance it's important to be understood. The volumes come from, on one side, new clients coming into the brand because, of course, we communicate to the top of the pyramid, but there is a snowball effect on the lower tier. So we see more and more people coming into the brand. And what I said in my speech also, an important indication is the percentage of new clients are returning and buying for a second time. So the tickets growth comes from either people coming brand new or people that came in the last 12 months and are coming back. And the percentage of retention of new clients is increasing. So that's why looking forward, we don't see a major change of pattern.

Your second question, Natasha, was on the Su Misura growth and any color on the Su Misura performance for Zegna, but also for the other brands as well.

Zegna Su Misura is definitely, together with luxury leisure, one of the driver of growth. The example I made on the Falcon is a point in time, but we are more and more adding Su Misura on iconic items, and those iconic items on Misura with different materials or different colors are definitely one of the driver of growth. At the same time, this is, to a smaller extent, a driver of growth for TOM FORD FASHION. We added in this year some categories like tailoring on women, like leather outerwear, which is men and women. Of course, also on that side, leveraging on the internal capacity of the factories of the group, this is becoming more and more an important lever for growth. On Thom Browne, it's still a smaller business, but definitely there's an impact opportunity that we are chasing.

Thank you.

Thank you.

Thank you, Natasha. Next.

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

Hello, good morning. Thank you for taking my questions. I just have a couple of follow-ups, please. One on wholesale for Thom Browne, especially thinking about next year as we are starting to see maybe some reduction of the pace of decline. How should we be thinking about wholesale for Thom Browne next year? Are we still expecting declines? In what kind of order of magnitude? The second question, just a clarification on your comment that you are managing EBIT at group level towards consensus. Does this mean that the margin uplift you are getting from the sales density improvement at Zegna is better maybe than what we had discussed before, so better operating leverage or there is also some work done on the central costs to drive better profitability at group level? Thank you.

Thank you, Chiara. I'll leave to Gianluca on the wholesale for Thom Browne and on the EBIT group level.

Wholesale for Thom Browne, we have been reducing from 2024 through 2026 in a pattern that we all know. I recall we were at EUR 129 million in 2024. We went last year to EUR 77 million. This year we are guiding into a decline that is not different than the nine-month decline. At this point, the level and the magnitude of Thom Browne wholesale business is becoming in the 20% range, slightly over there. We need to manage that business at this point in that range. That is more or less what we are looking ahead. We need to see this resized Thom Browne wholesale business in the 20% range of the brand. For next year, we might have still some plus or minus, but at this point, the biggest change of magnitude has happened.

Looking forward, we need to have that 20% size in mind.

EBIT, the group level, sorry, and Chiara was asking if we can assume Zegna slightly better from initially expected Zegna brand. Your comment on that.

Well, if you decline something that is compared to the prior estimate, that is the EBIT on Thom Browne, of course, there will be something of that, yes.

Yeah.

Sorry, just to clarify my question. I was wondering whether there's also some work done centrally on central functions to drive better efficiencies and drive margins centrally besides a brand level. That was the question.

Sorry, Chiara, can you reformulate because we could hardly understand?

Sorry. I meant, great to hear that Zegna brand is seeing better operating leverage. I was also wondering whether you're also doing work centrally on costs to drive better profitability, just thinking about the group structure at really a group level rather than a brand level.

I think it's more productivity than cost management. As we said, we are investing both on brands and we are investing also on group initiatives in order to create a group backbone. Today on cost, we are not squeezing cost. To the other side, we are investing, and that was also one of the statement why we moved sideways on the margin. We are not cutting costs in order to stay in the guidance.

For 2026.

2026.

Okay, perfect. Thank you.

Thank you, Chiara. Next, if there are follow-up questions.

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

Good afternoon, both, and thank you for taking my questions. I have a follow-up and then two questions. First is just a clarification on TOM FORD FASHION. Could you please give us more details around all these different product deliveries for the DTC and the wholesale channel? Then whether we should expect a catch-up in terms of DTC performance in fourth quarter as a result of all this phasing. Then my first question is on TOM FORD FASHION. Obviously we always talk about womenswear in TOM FORD FASHION because that's the most exciting category right now with Haider Ackermann. But you mentioned that their menswear is sort of slightly underperforming from a higher base. Could we please talk more about its positioning maybe, versus Zegna and Thom Browne, and whether Haider Ackermann has a similar sort of impact on the menswear category as he did for the womenswear?

Then finally, you very helpfully mentioned wholesale for Thom Browne in 2027 and your expectations there. Could you tell us how we should think about wholesale for the other two brands, for Zegna and TOM FORD FASHION? Thank you very much. In 2027.

Thank you, Maria. So on TOM FORD FASHION, on the deliveries. First of all, in wholesale, there were no changes in, no difference in deliveries. The growth that you see in the third quarter in the wholesale business is entirely driven by the demand coming from our wholesale partners and the very good reception of our fall-winter collections. In terms of DTC, what Gianluca said and explained before is that there was some plan. Also deliveries are different this year from last year, and we have more going to the end of September and October. So this is what Gianluca said, that not much is normally in a small quarter like Q3, this can create some differences.

In terms of menswear and womenswear, I would reformulate it. It's not that menswear is underperforming. It's performing well. It's womenswear that is starting from a low base that is ramping up quickly. So of course then the incidence is. I don't want to pass the message that menswear is not working on TOM FORD FASHION. It's working well. Of course, it's the incumbent biggest business and womenswear, which we recognize being an untapped opportunity for the brand, is giving signs of growth. That's how I would formulate it in this way.

Maria was also asking in terms of positioning and things, the men's that Haider Ackermann, even more from Tom Ford, is I think is even more different from the Zegna men in terms of positioning high luxury, but different, let's say, clients. Of course, very different from the Thom Browne one. I leave also Gianluca to comment more.

There is definitely a higher price positioning on Tom Ford, slightly higher price positioning than the Zegna tailoring. There is definitely a bigger component of evening wear and occasions.

Ceremony

Ceremony. So these are probably the biggest difference in terms of occasional use and price point.

And in terms of wholesale for Zegna, TOM FORD FASHION, the next year, TOM FORD FASHION?

I think let's freeze it for the next. So at least we guide on 2027 in a very specific way in the next round.

Let's move the question, this question to January. Thank you.

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

Hi. Good afternoon, Gianluca and Paola. Congratulations on the great results amid a complicating environment. I have a few follow-ups. Firstly, we are very happy to see your Chinese cluster accelerating double-digit growth for the Zegna core brand this quarter, probably one of the strongest Chinese cluster performance of quarter among the luxury peers. We understand that you have got some better, larger locations, like Plaza 66 in Shanghai and also the newly renovated, the Beijing China World store and also Hong Kong Harbour City. These are all very beautiful boutiques. At the same time, you are also closing some small, low efficiency stores.

We just wonder how much sales density improvement do you see for the newly renovated or newly opened, very big from its own versus existing ones. We want to see how much improvements you are generating from this. This is the first question. My second question is also regarding the Chinese cluster outperformance. For this robust growth, how much is coming from the new consumer recruitment, and how much is coming from existing customers? Do you see the concentration level on top spenders increasing in China? My last question is regarding, for the Zegna core brand. Just wondering, how does the number of Zegna Friends grow year to date? Do you have any color on that? Thank you.

Thank you, Chris. As always, very interesting question. The first one is on the, how much of the, if I got it, the Chinese cluster growth is also driven by new store openings. Actually, Chris, you mentioned Plaza 66, but this is a Thom Browne.

We are going

We're going to open.

Overall, the trajectory, deposit trajectory that we are observing in Greater China, which ultimately translates definitely, as you pointed out, Chris, into an improved productivity per square meter, because definitely we are closing doors net, and we are opening better. As you pointed out, we've opened the one, Plaza 66 is a temporary. We will open a final store mid next year, I would say Q3 of next year. We are doing investment in people, investment in training. We are improving the network. As you observed, China World was an improvement. We remodeled. Harbour City was an important statement. We have been, under Angelo and Edo guidance, increasing the marketing spending. Some campaigns like the William Chan campaign, was very effective in terms of creating buzz around the brand.

Altogether, this ultimately ends in an important improvement on the productivity as well as an increase of both demand from aspirational and potential Zegna Friends. We are bringing into the brand fresh, new blood. And also what we are observing and carefully measuring is the growth, not only of the Zegna Friend, but of the potential Zegna Friends, the ones that we are breeding to come and stay with us for a longer journey. I think that all the leading indicators we continue monitoring GCR are giving us comfort that we are on the right track.

I think with this, we answered also the second question. The third one was on Zegna Friends overall, how they're performing.

Zegna Friends overall continue to grow on a nice double digit in line with our strategy, as I said before, also creating a snowball effect on the other clusters. I think across the regions, we are seeing a good, solid growth in the number of Zegna Friends, and this is going back to my comment before, we are nurturing the potential Zegna Friend in order not to finish with just a few current friends, but continue feeding the pipeline of to-be friends.

And potential are still there, very important, as we can see. I hope we answered your question, Chris.

Yes. Thank you. Thank you, Gianluca and Paola. Congrats again.

Thank you. Let's move to the next one.

Your next question comes from the line of Robert Krankowski with UBS. Your line is now open. Please go ahead.

Hello. I've got only two questions. Just maybe just starting on the Zegna brand. Taking all the comments into account to the questions and just generally, if we piece it together, even though you are cautiously confident, you are still very optimistic probably about the Zegna brand. Given the performance in the first nine months, is there any reason why we shouldn't think that DTC can sustain similar momentum into Q4 outside of a bit tougher comp? Then maybe the second question, I know someone tried already to ask about 2027, but if we look at the initial comments on Chinese cluster, we started the year with flattish assumption, and it turned out much better. When you look into 2027, what is your kind of initial assumption, behind reaching the low end of the guidance?

Are you assuming that the Chinese consumer is going to be still very challenging, and maybe you should be thinking that the cluster assumption is relatively cautious? Or maybe it improved, and it just now assumes that other brands will be a bit weaker, and that's why it's still lower end of the top line guidance. Thank you.

Thank you, Robert. Okay. Two questions, of course, for Gianluca. The Zegna brand Q4 momentum, what?

No, I think it is fair to assume, as we said, that we started the quarter in the same trend that we have seen in the last months. We are confident that this trend will continue. Of course, there are, as we pointed out, all the elements of volatility that are outside of our control. But the execution that we have been doing year to date in Q3, we are confident that will continue to come out also in Q4.

In terms of assumption in our, let's say, guidance of reaching the low end of our target range, what are our assumptions in terms of Chinese cluster?

I think it is very granular, this. I think that overall we are seeing if you look at the goal of next year, low range, and the consensus, there is quite a substantial step up. Everything, we are assuming that all the different components, whether the luxury line brands or whether it is the Zegna brand in its different forms of geography, will contribute in this important step up that we are setting ourselves as the target for next year. I think everything we expect to continue executing well in America, definitely, we expect to have a further journey of improvement in Greater China. All the different components need to give their contribution to fill the bridge between the current 2026 consensus and the EUR 250 million of EBIT.

We expect all of them, and we have been in the cycle of budget, and we are asking all the different groups of business units and brands of the group to give their contribution, therefore, also China.

Thank you. I think that is the last one, but I will ask the operator.

Your final question comes from the line of Daria Nasledysheva with Bank of America. Your line is now open. Please go ahead.

Hi. Thank you for taking my questions. This is Daria from Bank of America. I had a couple of follow-ups that I wanted to ask. Could you please comment on the reasons for such an acceleration in your European revenues? Is that due to the Middle East, or is there something else that we need to be aware of? Also, could you please comment on your outlook on Europe into Q4, considering, obviously, social unrest in France and Italy, anything we should be aware of? Then another one would be on Thom Browne. You mentioned the Bose launch since the start of October. Are there any other launches that we need to be aware of for the remainder of the year? For example, what about the next ASICS collaboration launch? When is that happening? A very quick one.

Last year, how does October compare to the rest of the quarter when it comes to the comparison base? Is it homogenous, or do comps get tougher as we progress through the rest of Q4? Thank you very much.

Thank you, Daria. The first question is, the reason for wholesale, did you ask?

No, Europe.

Europe acceleration. Sorry. No, because I understand Europe, but Europe acceleration.

There is definitely a good performance of Middle East.

Yeah.

And that, especially Middle East for Zegna DTC, improved sequentially to a solid double-digit growth. That is the biggest driver of the acceleration.

Absolutely. A little bit of. The second question is, Daria?

Mm-hmm. Basically, the continuation of the Europe question was on how should we incorporate, if anything, the social unrest that exists in France and Italy for the remainder of Q4.

Okay.

Then, Thom Browne launches for—

Thom Browne. On the second one, clearly we are monitoring the situation. So far, we didn't have any impact. Of course, the days with the protests, there were a couple of hours the stores being closed a little bit earlier, but overall, I would say we have not seen any impact so far. We monitor the situation. We will see the evolution. In terms of Thom Browne and the Bose collection and what—

ASICS, we will have a further product injection in Q4. It's a similar model to the one that we had in Q1, but since we had a very good sell-through, we left some clients behind. We will reinject also for the holiday season, more product. There will be further collaboration on ASICS next year, both in terms of same model, other colors, as well as new models. We will be more specific, starting in January. But those are the two biggest product collaboration. Of course, there is also an intrinsic development of product. We are investing more and more on some product categories, whether it's knitwear, whether it's outerwear, whether it's a jersey. We are investing, and I think Sam is driving a redesign of the collection architecture, working on ways, working on price levels.

I think that is the part that should be, aside from the collaboration, the area of the work stream where Sam and Tom, together with all the merchandising team, are working to create a more balanced product architecture.

Okay. This is a—

Yeah, sorry. Last question. This is Alice speaking, but before closing the call, let me just highlight that today we have also published the 2027 financial calendar, as you can also see on page 18 of the presentation. Our next release and conference call will take place on February 1st for the full year 2026 revenue release. Thank you for attending today's call, and of course, if you need any further clarification, do not hesitate to contact us. Have a nice busy day. Thank you. Bye.

Thank you to everybody from us all, and to the next one. Thank you.

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

Good afternoon. Good morning, everyone. Thank you for joining the Ermenegildo Zegna Group first half 2026 preliminary revenues earnings 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 those 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 statement cautionary statement included at page two of today's presentation. I will now hand over to Paola Durante, Chief of External Relations and Sustainability.

Thank you. Thank you operator, good morning, good afternoon, everyone, and welcome to today's call. As usual, Gianluca Tagliabue, Group CEO will chair the call, while I will begin with a brief comment on our second quarter revenue results before handing over to Gianluca for some final comments on key events of the quarter that you can see also highlighted in the opening page of the presentations and for some closing remarks. I remind you that, as always when commenting on revenue trends. I will and we will focus on organic performance, which exclude foreign exchange impacts and therefore better reflects the underlying business dynamics. Let's skip the first pages and move directly to page 12 of the presentation. In the second quarter of the year 2026, our group revenues reached EUR 517 million up 11%, marking a sequential acceleration compared to the previous quarter.

ZEGNA brand continued to outperform, recording EUR 324 million revenues with a 70% growth, also in sequential acceleration driven by a strong DTC channel performance across all regions. Thom Browne reported EUR 65 million in second quarter revenues, up 3% organic with a positive double-digit growth in the DTC channel, partially offset by the ongoing rationalization of the wholesale. On TOM FORD FASHION, the business reported EUR 89 million in second quarter revenues, plus 7% organic with the solid performance of the DTC supported by the very good reception of the spring/summer collections. Finally, on second quarter tech side performance that was down 3% is largely due to different phasing of deliveries. I will not comment much on other revenues, which as you know related to ready-to-wear garments produced for third-party brands because this is now a marginal business, changes are really not meaningful.

Let's move now to page 13 of the presentation where we look at the revenues by geographic areas. Starting with EMEA. EMEA, which in the first half of this year represented 33% of the group revenues in the second quarter was up 2% organic with DTC, direct to consumer, up solidly across all the three brands, counterbalanced by the reduction in the wholesale, which reflects the group strategic decision to prioritize a retail-first business model. Also, the Middle East will turn positive in the second quarter. The Americas, which represented 31% of group revenues in the first half recorded a very good 22% growth, making another quarter of sequential accelerations supported by double-digit growth across the three brands in the DTC channel. Greater China region, which in the first half of this year accounted for 24% of total revenues.

In the second quarter, it was up 9% organic with a further accelerations compared to what we reported in Q1 this year. Finally, the rest of APAC, which contributed to 12% of group's H1 revenues, in the second quarter reported a 19% organic growth with all markets contributing, especially Korea and Japan. I will skip really commenting page 14 of the presentation since we will look in details at the trend by channel for each brand. Let me just highlight one number. In the second quarter of this year, DTC accounted for 86% of group's branded revenue. You know that branded revenues exclude the textile and other revenues which are by definition and by nature B2B businesses. Let's go to page 15 and let's concentrate on ZEGNA brand revenue by distribution channel.

In the second quarter ZEGNA DTC which reached 90% of the brand's H1 revenue, sequentially accelerated compared to the previous quarter and posted 18% organic growth. A growth entirely comp-driven, with all the regions contributing to this performance. The Americas continue to be very strong. Revenues in Greater China region improved sequentially and the rest of APAC continued to strengthen. Europe also perform very good, and the Middle East, as I said, improved sequentially during the quarter and return to a positive growth despite the disruptions caused by the war. The brand's network remained unchanged. In the wholesale channel, revenue was down at 3% organic as we continue to focus on the direct-to-consumer model based on exclusive customer experience. We confirm here the indication of a low double-digit decline by year-end. Moving to page 16 and commenting Thom Browne.

In the second quarter, Thom Browne reported a solid DTC momentum +16%, driven by the Americas, Korea, and Japan. Thom Browne DTC performance was also helped by space contribution. In terms of retail network in the quarter, the brand opened three net doors. Including Chicago and Vancouver. The wholesale channel reported a -29% organic performance, reflecting both the decision to streamline the channel and the conversion of the distribution in Hong Kong. We confirm that by year-end, this channel wholesale, which I underline is increasingly less relevant for the brand, in the first half it was only 17% of the brand revenues, will be negative in the -30% area. Let's now move to page 17, and let's talk about TOM FORD FASHION. DTC revenues for TOM FORD FASHION grew 13% organic in the second quarter, which was led primarily by the Americas.

Rest of APAC in the quarter outperform. This performance was exclusively driven by the comp store sales growth, which is a further proof of the client appreciation of the spring-summer collections. In terms of store network, TOM FORD FASHION closed one boutique during the quarter. Looking at the wholesale, the wholesale was down 3%, reflecting also in this case, the group's retail-first strategy. The performance in the quarter benefited from some anticipated deliveries of the fall collections, which have been driven by better good production timing. By year-end, the channel should be down low mid-single digit, and this is a confirmation of what we already said in past calls. Moving now to page 18. As usual, here you can find the summary of the group store network. With this, I completed my hopefully short presentation, and I will hand over to Gianluca for his important remarks.

Thank you, Paola. Good morning, good afternoon, everybody. Let me share a few final remarks on some important brand initiatives and on our business. First, as Paola also mentioned, I would like to celebrate once again the extraordinary event that ZEGNA brand hosted in L.A. this June, which we called the La Villeggiatura. In Los Angeles, we told another chapter of the ZEGNA story. This time, the story was rooted in the Italian tradition of villeggiare, which means to spend the summer in a villa. We brought to life the ZEGNA family summer villa inspired by a time in the '70s when the entire family would spend the summer together in a house, always open to relatives and friends. This is what we did in Los Angeles at Chateau Marmont Hotel.

We welcomed friends of the brand to discover exclusive collections. We invited them to experience the runway presentation on the Malibu pier while living the ZEGNA legacy. Those were memorable five days, delivering results in terms of coverage, recognition, and client interest that exceeded our expectations. I want to express again my sincere congratulations to the entire ZEGNA brand team, starting with Edoardo and Angelo Zegna and Alessandro Sartori, for the focus, creativity, and quality brought to this project, and for the outstanding execution that made these results possible, all underpinned by Gildo's vision, guidance, and unwavering encouragement to keep the bar always high. Villa Zegna, Los Angeles was not the only major initiative the brand pursued in the quarter.

At Art Basel in June, the ZEGNA brand continued to champion art as a force for responsible progress through its support of artists who engage directly with communities, society, and the environment. This initiative reflects a belief that has long been part of the ZEGNA brand's, and overall of our group's, identity, that business, culture, people, and nature can create lasting value when they evolve together, just as our founder envisioned more than a century ago with the creation of Oasi Zegna. As you can see, everything ZEGNA does is part of a coherent vision. Every ingredient is already there, written in the ZEGNA family book. We simply have to open it and bring to life its values, culture, and way of living. That's how we express what makes ZEGNA unique, an authentic Italian lifestyle that goes far beyond products.

Let's now return to Italy, where we proudly welcomed Thom Browne for his first-ever show during June Men's Fashion Week in Milan. This debut was a powerful expression of the brand's tailoring heritage and commitment to craftsmanship. At the same time, it demonstrated Thom's ability to continue to evolve his iconic creative codes, introducing a broader color palette and exploring a sophisticated range of fabrics, textures, and techniques. We were very pleased with the show, which attracted significant positive attention from industry, media, and clients. At the same time, Sam Lobban, the CEO of Thom Browne, is making progress on the brand's objective to drive a stronger retail-first culture across the organization. This includes investing in talent at every level, ensuring that the brand's creativity and merchandising stories are effectively brought to life in the stores.

There is still important work ahead, we believe that the team is moving in the right direction. Moving now to TOM FORD FASHION, the recent 2026 Met Gala and Cannes Film Festival in May marked two defining moments for the brand. Through a curated celebrity presence at both events, the creative and marketing teams contributed to enhanced global visibility, while driving significant earned media coverage. Combined with increasingly focused collections and with improved CRM capabilities, these efforts are supporting the development of the retail business as shown by recent sales performance in the directly operated stores. Lelio Gavazza, the CEO of TOM FORD FASHION, and his team continue to work actively across all these levers, marketing, merchandising, CRM, selected new openings to drive future growth of the business.

Indeed, we believe that TOM FORD FASHION ongoing success will come from a combination of comparable store growth, new space contribution, development of existing clients and acquisition of new ones. Today, our priority is to selectively expand the retail network while deepening our relationship with existing customers. Over the medium term, the focus is also to drive comp store growth also through new customer acquisition. Before taking your questions, let me conclude highlighting that the strong performance we saw over the last quarter is the result of actions we began implementing years ago, and which are bearing their fruits now. We know we have much more to do, as important projects remain underway. These projects will continue to require resources before delivering sustainable value, they are strategic and relevant for our future.

As we enter the second half of the year, let me offer a few general observations on what we are seeing across our business. While we are only a few weeks into Q3, and therefore we have yet limited visibility, what we are seeing today is that the underlying DTC trend of the business remains very solid. That said, it is important to recognize that Q2 benefited from some specific initiatives that are not expected to be repeated in the same way in the remainder of the year. For instance, we Zegna Los Angeles and the ASICS launch for Thom Browne. The momentum we continue to see reflects the work undertaken over the past several years to strengthen the ZEGNA brand.

While at Thom Browne and TOM FORD FASHION, it reflects the early progress of the initiatives we have put in place, fully aware that we are still in the early stages of the journey and many things remain to be done. As a final remark, our commitment to investors remain unchanged. We remain focused on delivering our 2027 targets. The second part of the year might be a bit more challenging in term of comparison. However, we are confident that 2026 full-year consensus is reasonable. With that, we will now open the Q&A session.

Thank you, Gianluca. Please, operator if you can open the Q&A session.

Thank you, Paola. We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset while asking a question to allow for optimal sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Our first question is from the line of Adrien Duverger at Goldman Sachs. Your line is open. Please go ahead.

Hey, good afternoon, Gianluca and Paola. Thank you very much for taking my questions. I have three if possible. The first one is on the performance throughout the quarter. Could you please comment if there is any material difference month-on-month? Also, if you can comment on the last few weeks and if you have seen any change in the consumer environment. My second question would be on China. I see there's quite a strong acceleration for two quarters in a row now. Could you please comment a bit more on what you are seeing in the region, particularly in terms of the DTC trends, are you seeing any difference in performance between mainland China and offshore spending? My last question is on profitability.

With the strong set of numbers today, is there anything we should be aware of in terms of phasing out costs for 2026? Do you also reiterate your comments that full-year 2026 margin should be broadly stable, versus 2025? Maybe lastly, does that give you a bit more confidence regarding your 2027 EBIT guidance? Thank you very much.

Thank you, Adrien. Many questions. I leave Gianluca to start with the performance in the quarter.

Hi, Adrien. The quarter had a solid performance across all three months, probably with a bit of acceleration in May and June. I would qualify also in these two months above our own expectations. In terms of China, to give you also some color, for instance in ZEGNA, I think there are some elements of the offering in June, like the linen is being positively received. I think that this to give you some color on a month by month. China sequentially improved, as you noted. I think it's all about the consistency of our execution. We said that we were focusing on the key factors in China, namely some areas of underperformance, Su Misura, Triple Stitch, and I think we are starting to see some traction there. We continue to see positive signs, and the good brand momentum of the ZEGNA brand.

Looking forward in China, I call out we will have a couple of important openings. Probably the most important one is in Hong Kong, Harbour City. We just opened an interesting and important second store in Shenzhen, MixC Shenzhen Bay. While we focus, and I think we said last time, we will have some pruning on the footprint. We keep on investing in China in fewer, better doors. This is the message I'm giving on China.

I think the question was also, if I understood well, on the cluster, I say there is not really difference between the results in China and the cluster. Also the cluster has been accelerating in the quarter.

Yeah, remember always that our Chinese consumers spend almost well, I'd say 90% locally. To us, cluster and geography for Chinese

That's it

very overlapped.

Profitability.

Profitability, as we said before, so we keep on investing on what is strategic. That's why we believe that the consensus is reliable and feasible, both for the full year as well, I think commenting also on the first half, because there is some cost incidence on first half. That's why I believe that the consensus that is out there on the marketplace is reasonable for both H1, as well full year 2026.

Next question. Thank you.

Just to give a color about the cost, I think that there are two direction of cost where we are investing. Of course, supporting our brands, the three of them, from marketing standpoint and so on, and investing in group initiatives to start creating a group layer that will then trigger some synergies and better group management going forward.

If there is no follow-up from Adrien, I would go to the second set of questions. operator.

Our next question is from the line of Natasha Banoori at Morgan Stanley. Your line is open. Please go ahead.

Hi. Thank you for taking my questions and congratulations on the good set of results. The first question, obviously the ZEGNA brand performance is quite impressive. Which categories and regions drove the outperformance? My second question would be, can you break down Q2 via volume price mix? Is mix still the biggest driver in Q2? Are you seeing an increasing number of new clients to your brands? Thank you.

In terms of mix for the ZEGNA brand, I would call out Su Misura. So make to measure is definitely outperforming. It's not just formal, it's across the board. The luxury leisure wear side is performing extremely well and the shoes. Those are the three drivers of growth for the ZEGNA brand. In terms of KPIs or mix, AUR is the driver, is the main contributor to the DTC growth. It's not just a pure price increase, it's a mix thing. The driving force are the Second Skin part of the collection. Bedazzar, of course make to measure as I said before. On Tom Ford, it's the success of leather outerwear, which by the way going back to make to measure is now also available on a make to measure format.

I think all the most elevated part of our offerings are the ones that are being more credible in the eyes of the consumer. In terms of new or existing loyal clients, I think there has been one new element that is becoming more and more solid throughout the year. Of course, our strategy has always been the top of the pyramid as we have called out several times, and it's continued being so. The events, the CRM, and so on and so forth. This is generating a side effect, also bringing in new clients. I'm not saying new clients from the bottom of the pyramid, but new clients. Most of the time, these clients come in also for high-ticket items.

We are seeing also an increase of client base, namely on the ZEGNA brand, which you called out was the driving force of the growth, which is a new part of the equation for us, is in welcoming new clients into the brands.

I think there was a question on ZEGNA also, what was the region driving the growth, I would say Natasha, all the regions have been really important to the ZEGNA performance.

Probably looking what is happening in the marketplace, probably I call out the fact that Middle East as being positive in Q2 for us. Which talks about the resilience of the brand and the resilience of our customer base namely the local ones which have more than offset the shortfall of tourist demand in that market.

Thank you.

Thank you.

Thank you, Natasha. To the next one.

Your next question is from Oliver Chen of TD Cowen. Please go ahead.

China and the Americas, really nice momentum there. What is happening on traffic relative to ticket? It sounded like you had nice contributions from both in different ways. Second question, when you mentioned new customers and Tom Ford, what is underlying that opportunity now versus prior? Third, as we think about new customers more broadly. How is that interplaying with how you are thinking about marketing spend and marketing spend composition? Thank you.

Thank you, Oliver. The first one was traffic versus ticket. Are you referring to the three brands or ZEGNA only? I did not get if it was specific on ZEGNA.

Zegna would be-

Yeah

Zegna would be helpful. China's and America's. Thank you.

Thank you. China and America.

Yeah, slightly positive. I think that the main driver as I said before is AUR. Hi, Oliver, by the way. The main driver has been AUR positive traffic.

Conversion.

Conversion. The biggest driver has been AUR, and traffic-driven also in China by the revamp. Some good momentum that we start seeing around the brand.

New customer for Tom Ford.

The part of the collection that is growing the most is women.

Yeah.

That's an area of focus for the overall team, starting from design and merchandising. The women's side ready-to-wear is the one that is probably giving a bit more momentum and of course, the untapped opportunity is on the daywear side of women because the evening and ceremony-related is strong historically, but the daywear side of the collection is the area that we see more opportunity. Again, going back to what I said before, the make-to-measure, which is sitting on the basis of our unique supply chain capabilities, we started in TOM FORD FASHION to offer make-to-measure on tailoring for women, which is a unique proposition in the marketplace taking advantage of our short lead times and sleeve units capacity. I would say that women is definitely an area of-

Maybe just-

worth for TOM FORD FASHION and somehow enlarging the client base.

Yeah. Just wanted to underline or to specify, when Gianluca first in the previous question, was referring to new customer. He was talking mostly about ZEGNA, that was a comment that was really on ZEGNA, on new customers, that there is this snowball effect even if we are concentrating on talking to our community, that what we are seeing is actually that this brings also new customers to the brand.

This last part, I was talking about Tom Ford.

Yeah. No, in fact, just to clarify with Oliver. In terms of talking about new customers, Oliver was asking about the marketing spending, what are our thoughts there?

Well, marketing spending on ZEGNA continues with the same cadence that we have done in the last six, 12 months. Which is amplifying the message, especially through the right communities, events, creating unique experiences. On Tom Ford, you will see probably in the next three, four months, adding into the opening of the store in Paris in January, we will amplify a bit more the message, increase a bit the volume of our marketing spending to both increase awareness and consideration for the product. That, I think, is the only change of direction in terms of intensifying a bit the marketing spending on Tom Ford, because we believe that it's the moment to do so.

Okay. On your comments, Gianluca, on Los Angeles, which was a great event, what's happening with what we should model with that benefit in terms of a more normalized Americas growth rate? The Americas numbers have been outstanding, but curious about what might be a run rate in terms of longer term of that region.

Of course, a Villa is meaningful, but it doesn't move the needle of ZEGNA or the group in North America. To give you a sense, Villa generates revenues that are the size of a mid-size store in a year more or less, give or take. The Villa although being very successful, generates revenues that are recorded over the months since they largely depend from products that are not ready to buy, but need to be produced on order. If your question was the Q1 or Q2 inflated by the Villa? I would say to a very limited extent.

We will benefit the revenues of Villa partially in Q2. Of course, because there was a part that was ready to buy, there will be also in the, I would say Q3, there will be the manifestation of revenues of some products to be delivered.

Okay. Last question on AI. We're doing a deeper work here as you know. What are some of your call-outs for how you're using artificial intelligence across the organizations or key priorities and/or any benefits you've been seeing on that front? Thank you.

We have defined our battlefield on AI, looking at already we are on the underlying data and how easy for us is to capture low-hanging fruit. We have defined three main areas of intervention on AI. One is on operational planning, which means used AI to make the right demand planning, especially on continuative items, because it's the part that requires more statistic, because if it's seasonal product you have not enough data behind. One is operational planning, demand planning. The second is supporting AI in the interaction with the clients. The engine of CRM, making the right proposition to a customer, either directly on the web or through our customer advisor. These are streams that are underway. The third is on the internal productivity. All the call it, back-end functions.

We are chasing opportunities to improve efficiency, by adopting either software that are AI with an AI engine or developing algorithms to support better productivity. These are the three areas where we decided to put our bet.

Thank you, Oliver.

Best regards.

Thank you to you. Next one.

Your next question is from the line of [Anthony Charchafji] at BNP Paribas. Your line is open. Please go ahead.

Yes, good morning. Thank you very much for taking my question. I have just two. The first one is a clarification on the Middle East performance. You said that Q2 turned positive. For some reason, I had in mind that the region was already positive in Q1, yeah, just a clarification on this point. Sorry about this question. The second one would be on Villa Zegna in Los Angeles and to know a bit the cost in term of as you're doing more of those events, and they are getting more and more costly as I understand. Just to know if the ZEGNA brand particularly was prioritized in H1 and you reduced investment on the other two brands.

My last question, Gianluca, maybe it's on the top line, when we see that we have higher AURs and better mix, with more uber-luxury sales, made to measure, more sales with personalization. I understand that those are quite helpful in term of margin. Like, basically it's maybe 20%-30% more ASP and in term of costs, not much addition. Curious to know , why we should still see a consensus number in H1, which would imply basically your margin down 30 or 40 basis points. Thank you so much.

Thank you, Anthony.

Anthony, on the Middle East, let's qualify. You're right in Q1 it was positive, probably turned positive is not the proper language. Of course, in the first quarter, we had just one month of disruption which was March, and instead we expected to have a longer disruption in Q2, which actually didn't materialize. Probably this is the better framing of the situation.

Just to clarify what we said also in Q1, the quarter was positive because January, February clearly was growing at very nice double digit that the region was growing. Then we said, at that time you remember in April, we said since the war started that we were down double digit. What we are seeing today is that the second quarter, which has all the months impacted by the war is actually positive, slightly positive.

It turned positive compared to March.

Yeah.

In terms of the ZEGNA cost, this is information we don't disclose. Of course, as you pointed out. We are intensifying. These are costs that belong to the marketing line, that's why we said we are investing, that's why we are saying, let's stay cautious on the consensus despite, as you point out. We have a better mix. We have two elements that are bringing us to be prudent on the consensus. One, as we said before, especially in the first half, we have FX headwind, which hopefully should be less material going forward in the second half. We have these investments. These investments on ZEGNA are the experiences, and Villa is the pinnacle of the experiences.

Tom Ford, as we said before, we are going to pump up the volume in a way, because we want to make sure that the fashion part of the business is more visible on the marketplace. When you call then about make to measure, there is a surcharge. It's true, but also the cost of those products is higher. Make you an example, just to make you sure, the cutting of the fabric is much higher because it's cut one by one. There are accessories or finishings of the garments that are richer. The equation is not higher price of make to measure, higher margin. Also the mix, of course the mix is helping the growth, but typically the mix comes with more sophisticated fabrics or more elevated leather, like it is the case of the Second Skin.

It doesn't immediately translate in increased gross margin percentage.

Thank you.

Thank you.

Anthony, thank you to you. Let's move to the other question.

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

Hi, Gianluca. Hi, Paola. Thanks for taking the questions. Firstly, congrats on the great numbers. Actually, I have three questions. The first one is about APAC. I have a quick follow-up. For the broader APAC, GCR has been performing really well and also sequentially improving. I remember at earlier of this year, your Chinese cluster guidance is about flattish this year. Do you think actually, it is likely to do better than what the market expected at the beginning of this year, right? Would you going to raise the guidance of the Chinese cluster? And also among the other APAC market, can we have a sense how much Korea contributes to the mix of Zegna Group and ZEGNA brand? And how much of this growth from the other APAC segmentation is driven by local and how much from tourists? This is about the APAC.

The second question is about wholesale. We see the wholesale channel decline in the second quarter is actually much narrower than market expectation, especially for ZEGNA and TOM FORD FASHION. Just wondering if there's any updates for the full-year guidance of your wholesale channels for each brand, and how should we look into the second half? My last question is about the concentration rate of your top customer spending. We can see very positive acceleration of your growth, and historically you have mentioned like roughly top 5% of your consumer contributes around 40% of your ZEGNA revenue. Is this contribution ratio going higher this year, thanks to the strong D2C performance as you have been seeing across regions? Thank you.

Thank you, Chris. Thank you so much. On APAC, GCR, and Korea, I leave Gianluca to comment on the performance by region and clusters.

Let's start. Hi, Chris. Let's start from rest of APAC, which represents slightly north of 10% for us. We are aware that we are probably underrepresented in those markets yet, we are working to improve there. What we are seeing definitely is a good momentum. Korea, which remains strong off a small basis, but remains strong. In Korea, the demand, we are happy to observe that it is very much driven by locals.

Yeah.

In Japan, we are improving, there is a combination of improvement on locals and tourists, which are roughly 30% of the business. In Korea, it's much less. In terms of GCR, we observe a sequential improvement. We want to be cautious because, of course, we are seeing some volatility. We are aware that we will have some openings, we will have some closing going forward. I think that while we are happy about comp results, we need also to be cautious that going forward, we will have, as I mentioned before, some important openings, we have also some concentration of the footprint in the logic of fewer better doors.

In terms of wholesale, I think Paola, in her speech remarked the guidance, which is on ZEGNA brand, it's a low double-digit decline by year-end, which is more that when you can observe in the first half, because we are intensifying our icon protection strategy. It's a question of protection, it will become more intense. In Thom Browne, we have seen in Q2 29% decline, that is more or less what we expect for the full year in the region of minus 30% at this point. This part is becoming less and less impactful because it's 17% of the business at this point is on sale. Tom Ford, we expect a low mid-single digit, which is not far away from what we have seen so far.

There will be a continuation with a stronger decline in the next months on the ZEGNA side because we want to make a further step on the protection of the icon products.

There was a final question on the concentration rate, the 5% generating 40% of our business, which first of all is not something that we provide, let's say, update quarterly or half-years. More than that, Chris, it's very important, our strategy for ZEGNA brand is to talk to our community, to talk to our top of the pyramid customers. This, as Gianluca was saying before, is today generating a snowball effect, and we see many other new customers. This is what we look, what we consider, and these are the KPI that we look at. I would concentrate on these KPIs more than on the one that you mentioned.

Understand. Thank you very much.

Thank you to you, Chris, as always. Moving to the next one.

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

Good afternoon, Paola and Gianluca, thank you for taking my questions. I have three. First, I know you opened quite a few stores for ZEGNA in the U.S. recently. Would you be able to tell us how much space contributed to growth in the region or overall? Could you maybe walk us through the dynamics of new stores a bit more? How many new clients do you have coming in versus existing clients? How long does it take for the stores to reach brand average? Anything basically that you could tell us. Second, in the existing stores that you have, what would be the selling actions that you implemented at ZEGNA that have had the highest impact in terms of sell-through and maybe retail space productivity as well? Even though I know it's only a revenue call. Finally, it's a quick one.

Su Misura, obviously you're doing more activations with ZEGNA, you're saying that Su Misura is driving some of the growth. Is there a target to go above the 10% of sales, which you have now for Su Misura, for ZEGNA or the group, or you're just waiting to see which performs better? Thank you very much.

Thank you to you, Meita. Just one quick one. Can you repeat briefly the second one? I personally don't think I got it completely or just don't want to answer something not right.

Yeah, sure. For existing stores, are there particular selling actions that you implemented at ZEGNA? Let's say, more collection drops or maybe specific products that have had the highest impact on sell-through of these items or retail space productivity over the past half year.

Okay. Thank you. Yes, very clear. Okay, on the first one, on the space and how many new existing clients in the U.S. for ZEGNA Meita, I would like to a little bit, let's say, not to answer, but I don't think all these details is something that is important to share today. What is really important, and then I leave also Gianluca to comment is the success of a strategy that has been implemented over the past years, very coherently, very focused. This is working, of course, with the also merchandising strategy, CRM strategy, the team locally that has been very successful and is working very well. All this is today bringing to these results, and in a market that continue to remain solid, but I would say maybe we are outperforming.

This is what is important to understand, and then I leave it to Gianluca if he wants to comment a little bit more on the U.S.

No, in general, as you said before, DTC growth for ZEGNA overall is comp. All the growth is comp. This applies also to U.S. It's not meaningful, the space contribution. In terms of product, I think as Paolo was mentioning, more than a single product, it's the overall consistency and go-to-market execution that is really working well. Any month or there is a drop, of course, any drop has its own story. Once it's a story about linen, once will be a story about Second Skin notebook. There is the underlying support of make to measure, which I come to comment later. I think it's more than a single product story. As we said before, the ZEGNA success is going beyond products.

Of course, we have products that are well appreciated and we are obsessed to have well-done products, outstanding materials with a fantastic identifiable silhouette designed by Alessandro. All this is the overarching story, is the consistent execution, go to market, intimacy with clients, I think.

Yeah.

Of course, there is the make to measure success, the linen success, the Triple Stitch success. We will have further products coming up in fall, iconic products. The Lego building house, as Edo likes to mention, that we are building products that are recognizable and it's the execution that is making the difference. In terms of make to measure, I think we are, at this point, trading higher than 10%, and I think that our next phase will be overall in the brand, which means retail and off-sale, everything all together, the next target is to get to 15%.

Yeah. The question on existing stores and what has been the highest impact in terms of sell-through is if it is our drop strategy, which actually is continue to work very well and to drive. I think there is also a strategy of concentrating of fewer bigger stores because what is true and what we see more and more is that even if a store is bigger and so has more product, the sell-through is actually higher. It's much easier, let's say, to have higher sell-through in a larger store than in a smaller store. This is a strategy that we have started and we are adopting now successfully in particular for ZEGNA brand, but also for-

Also for the others.

for the others. Okay. I don't know if we answered to all your questions. Okay, operator, are there any other questions?

Don't hear anything.

Operator? Sorry.

Your next question is from the line of Daria Nasledysheva at Bank of America. Your line is open. Please go ahead.

Hi, this is Daria from Bank of America. Thank you for taking my questions. Can I please ask three? Within DTC revenue at Thom Browne, what was the split of comp and space, please, considering two new stores and Hong Kong conversion?

Yes.

The next one is regarding recent trends in July. Are you seeing stable trends or any acceleration slowdown on the year-over-year basis? Aware you were talking about solid underlying, but also aware of the comp difference for the second half, just to help us a little bit with modeling and how to think about it. When it comes to profitability and you being comfortable with consensus, can I please ask and clarify if you're referring to the absolute value of EBIT or to the margin? Thank you.

Thank you, Daria. Yes, I'll leave it to Gianluca for Thom Browne, the incidence of space versus comp the contribution of space in the DTC.

Oh, yeah. Hi, Daria. The space part for Thom Browne in the first half has been the majority of the driver for the 16% organic for Q2. Still with a meaningfully positive comp basis. In H2, if we look ahead, the space will be less of a driver for Thom Browne DTC. I suggest that needs to be taken into consideration going forward because we will have less of a lift in space from Thom Browne. In terms of EBIT, when we talk about feasible consensus, we talk about absolute numbers.

Yeah Did we answer all your questions, Daria?

Actually, on the July point, because you were talking about solid underlying, which probably implies the two-year stack. Just how should we think about acceleration or slowing compared to what you have shown in the first half, particularly for ZEGNA brand? I know you answered for Thom Browne, but if we can have on ZEGNA, that would be helpful.

Thank you. Yes, sorry, I had it written and I forgot to mention to Gianluca, my fault.

Early to make a final judgment. As I said before, we are happy about the DTC trend that we see still solid. What we are seeing as the only difference, if we can put a comment is that we see some softer European trend in these three weeks. Then it's a question of the weather, it's a question of the World Cup. We'll see. That is the only color that I would call out. For the rest, we are observing in the first days, Americas still very solid. We are seeing Middle East very well recovering with resilience. We see Asia in line with the GCR, with some positive signs, and the rest of APAC still strong. I would say that overall are the same features with some softness in continental Europe.

Perfect. Thank you so much.

Thank you to you, Daria. I don't know if there is any follow-up.

There are no further questions at this time. We have reached the end of the Q&A session. I will now turn the call to Alice Poggioli, Group Investments Relation Director, for closing remarks.

Okay. Hi, everyone. Thank you for attending today's call. I would just like to remind you that our next release will be on September 3rd for H1 results. The silent period will begin on August 1st, do not hesitate to contact us for any further clarification. Have a nice summer. [Foreign language].

Have a nice summer to everybody.

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

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.