Ermenegildo Zegna N.V. Ordinary Shares

Good afternoon. Good morning, everyone. Thank you for joining the Ermine Gildo Xenia Group Q1 2025 Revenue School. Please note that today's material and presentation are available under the XeniaGroup.com website. Joining us today, the Xenia Group Senior Management Team, including Gianluca Tercobu, Group CFO and COO Paolo Duad, Chief of External Relations. Before we begin, we need to point out that the team will make certain forward-looking statements during the call. The group's actual results may be materially different from those expressed or implied by these forward-looking statements. Also, the 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 turn the call over to Paola to begin. Paola. Please go ahead.

Thank you. Thank you, operator. Good morning and good afternoon, everyone. And welcome to our first quarter 2025 revenues call. As anticipated, today's call is led by Gianluca Tagliavue, Group COO and CFO, and by myself, Alicia Poggioli, Investoration Director, is also here with us. Our CEO, Mr. G. Dozegna, will attend the July call. I will start this call with a brief comment on our results and then I will leave it to Gianluca for a few final remarks before opening the Q&A session. So let's move directly to page 8 of the presentation where you find the key highlights of our results. In the first quarter of 2025, the group reported 459 million euros in revenues, compared to 463 million in the first quarter of last year. The revenues were down 1% year on year in both reported and organic terms. As of this quarter, organic performance corresponds to cost and currency, not having any difference in the perimeter of consolidation. And I remind you that as usual during the presentation, I will comment on organic performance. Talking about our three brands, Zegna branded Tom for Fashion reported solid growth driven by direct-to-consumer channels. At Tom Brown, the positive results from the DTC were balanced by the anticipated ongoing reduction in wholesale. By regions, let me highlight that the Americas remains our best-performing region for all the three brands, followed by APAC. Let's move to page 9. I will not go into the details in the buy segment analysis since I believe it's more useful for you if I focus on the buy brand on the next pages. Let me just point out something that I'm sure you know already, but Zegna segment includes revenues from Zegna brand, which drove the performance of the segment's performance in the quarter, as well as revenues from the textile and other divisions. So moving now to page 10, where you find the performance by brand and product line. With 293 million euros of revenues, Xenia brand continued to show very solid performance. In the quarter, the brand was up 3% supported by DTC, in particular in the EMEA regions and the US. Tom Brown reported revenues of 64 million euros, down 9% organic, as I already mentioned, due to ongoing streamlining of the wholesale channel. Tom Ford Fashion recorded revenues of 67 million euros with a 3% organic growth. This growth has been driven by a very solid DTC channel, also supported by the positive impact of Heider Ackermann's first fashion show in March. I remind you that since September last year, Heider is the new creative director at Tom Ford. Moving now to textile, performance of the textile product line was down 9%, and this is largely due to a decrease in global demand from luxury goods brands outside the group. Finally, on the other revenues, marginal comment, but let me underline that the performance, the positive performance, is largely related to different timing in deliveries. So let's now move to page 11 of the presentation where we present the revenues by geographic area. Starting with EMEA. which in the quarter represented 34% of total revenues, and is our largest region. Enya was down 2% entirely as a result of the decline in Thom Browne, Thom Browne mainly in the wholesale channel, Thom Browne wholesale channel, while both Zegna and Thom for Fashion continue to grow by sound double digits in the region. The Americas, our second largest region, contributed to 27% of total revenues in the quarter, recorded a 9% organic growth, with strong double-digit growth at Zegna brand, particularly in the U.S. market. Let me also anticipate that Zegna is continuing to do well with the Americas, both domestically and abroad. Moving now to Greater China region, in the quarter generated, this region generated 123 million of revenues and accounted for 27% of the group revenues. The region reported revenues down 12%, a similar trend to Q4 last year. As I commented also in our previous call, we continue to have a prudent approach on the region. Even if we are starting, I have to say, to see some initial proof that our actions are paying off, especially at Zegna brand. At Zegna, in fact, we are experiencing ongoing positive reaction to new product launches or to new initiatives. As for the recent Zegna switch activations that we just had, I would also underline that the main retail KPIs are moving positive in the region, partially balancing the still ongoing negative trend in traffic that we are all aware of. I remind you that for Zegna, the GCR, most of GCR clients are actually buying locally. That I can say, and I can anticipate that also the cluster has showed a similar trend to that of the region. And finally, on the rest of APAC, which contributed to 12% of Q1 revenues, the rest of APAC reported 8% growth, driven by Japan, which has been very solid across the three brands, but also would underline the Singapore performance, which has been good in the quarter. And so going to page 12, not much to underline here, given that we will go by channel at each brand level. Just a couple of quick remarks. I would like the 5% growth in DTC with positive results across all the brands. And the wholesale minus 19%, which, as we already said, reflects the strategic decision to focus on the VTC channel and the performance of Thom Browne. So let's go now to page 13, talking about Zegna and analyzing Zegna revenues by distribution channel. In the first quarter, of 2025, Zegna DTC revenues grew by 4% and accounted to 86% of the total brands' revenues. Europe, the Middle East, and the Americas, in particular the US, but also LATAM in reality, all continue to report very solid double-digit growth. Revenues from the Greater China Region, also at Zegna, were down low double digits, substantially in line with the average of the group and substantially in line with the trend recorded in Q4 last year. The brand opened two DOFs net during the quarter, including the important Riyadh Solitaire store in Saudi Arabia. Talking about the wholesale at Zegna, Zegna wholesale recorded a negative, a down 2% organic. The performance actually includes the impact from the conversion of the wholesale stores into concession in the Americas that we already mentioned in previous calls. but also, in line with our strategy, a more selective distribution approach on icons, which will continue along the year. And I move now to Tom Brown, page 14, analyzing revenues by distribution channel at Tom Brown. So for Tom Brown, DTC revenues were up 3% organic, driven by the contribution of new store openings. By region, I would highlight the good double-digit growth in Japan and Korea for this channel. In the quarter, Tom Brown opened one dozen at Palm Beach in line with our strategy to focus more and to reinforce brand knowledge in the important North American market. Talking about wholesale, in the first three months, wholesale was down 48% organic, and this was is very much in line with the indications that we have provided during our last call at the end of March. This performance has been impacted by three factors. The first one, and the most important, our decision to reduce volumes in the channel and to focus on the distribution, as we already mentioned. The second one, a different timing in deliveries. Since, as we commented in January, we had some early shipment in Q4, thanks to a better production cycle. So we had products ready produced and ready to be delivered. And third, some wholesale shopping shop conversion, wholesale shopping shop into retail concessions, mainly in North America. And last page, last comment on Tom Ford fashion, moving now to page 15 of the presentation. In the first quarter, Tom Paul Fashion reported a very solid 9% organic growth in DTC. And this composes the results of strong double-digit growth in EMEA and robust performance in the US. These numbers also reflect a boost in traffic and in demand, which has been generated by the success of the first fashion show from Heider Ackermann I've already mentioned, that took place in Paris on March 5th this year. During the quarter, Tom Ford Fashion opened one DOS in Puerto Banos, Spain. Talking about wholesale, wholesale was down 8%, largely reflecting both the impact of some wholesale shopping shop conversion into retail and the natural slowdown in orders ahead of the launch of new designer collections. I can now hand over to Gianluca for the final remarks, but before doing this, please, on page 16, you can see the nice facade and the nice store of Zegna in Monte Carlo. Thank you, and I'll leave it to Gianluca.

Thank you, Paola. Before going to today, let me briefly comment on what our brands have done since we last spoke in late January, and on the overall environment. touching some points that I assume will be part of your Q&A. As Paola mentioned, in early April at Zegna Brand, we presented our summer drop collection, which celebrates the unique characteristic of the Oasi lino fabrics, which are not only the best quality, but also 100% traceable. And the Mocassin shoe, Mocassin in Italian, or actually in the Piedmontese dialect, which is where the groove comes from, means, look, The Mocassin is a new family of former shoe in the Xenia world. This drop launch was accompanied by a marketing campaign featuring Matt Mickelson, the brand's global ambassador, highlighting Xenia's philosophy of a non-complicated style of life. The response from customers has been extremely positive across all regions on the overall drop, including the Mocassin shoes. At Thom Browne, we recently opened the Palm Beach store as Paula anticipated. Since opening, the results have been good and actually above initial expectations. Of course, it is early to make a final assessment, also because the overall environment remains uncertain, but we have been particularly surprised by the response, especially for the women's wear collection. This week, we are also opening Thom Browne store in Los Angeles, Melrose Place. Another important opening to strengthen the brand presence in the U.S. market. At Tom Ford Fashion in April, we continue to leverage the momentum from the March Fall Winter 25 Fashion Show. We are satisfied with the results of the See Now, Buy Now collection that has been presented in a limited number of Tom Ford stores in the weeks following the show. While we are talking about small numbers, the results are encouraging. As you know, the Ackermann Fall-Winter 25 collection will hit the stores starting in September. Let me now make a general comment on the topic that has been on top of everybody's agenda over the past weeks, U.S. tariffs. First, let me clarify that as our group CEO and chairman also stated in his quote, since beginning of April, we have not seen significant changes in the overall demand globally across any of our plans. On the contrary, if anything, we have seen some improvements, particularly at the Zegna brand, alongside the launch of the spring-summer 25 products drop, which I believe is more related to the successful launch of the summer drop I just mentioned. And this is true globally, but especially in the U.S. In terms of the impact from 10% increasing tariffs on products imported to the U.S., I want to reaffirm what I'm sure you already know. We will take the necessary actions to protect our event. Within the current scenario of 10% tariffs increase, for fall-winter 2025, we are considering a mid-single-digit increase in pricing in the U.S. And with this, I will now open the Q&A.