Ermenegildo Zegna N.V. Ordinary Shares

Good afternoon, good morning, everyone. Thank you for joining the Hermenegildo Zenger Group first quarter 2026 revenues call. Please note that today's material and presentation are available under the zengergroup.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 2 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 revenue, on organic revenue trend, because, you know, they better reflect the underlying business dynamics, excluding foreign exchange impacts. So, in Q1 2026, the group reported 417 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 the three brands, all the three brands. Growth was positive in all regions, led by Americas, with a nice 17% growth, and a positive GCR, Great China Region, at plus 5%. So let's turn to page 8, where I will focus on the performance by brand. Zegna recorded in the quarter €310 million, up 11% in sequential improvement compared to Q4 last year. And this improvement has been driven by a solid DTC performance, which was solid across all regions. Tom Brown, 58 million euro revenues in Q1, reported a 3% decline, which is a combination of a strong DTC performance, which was up double digit, which has been offset by the contraction in the wholesale channel. Tom for fashion, 68 million euro in revenues, plus 5% organic, also in this case, boosted by DTC. Very quick, on the textile, performance was plus 3%, which reflects an ongoing soft demand in the sector. I will not focus on other revenues that you know are an increase in marginal business, so quarter-on-quarter percentages are not meaningful. Directly on page 9, 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 all brands. And this strong DTC performance has been counterbalanced by the decline in wholesale. 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 positive plus 5% increase with a positive contribution from DTC at all brands. Finally, rest of APAC, which 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 first one is the DTC channel performance in the first quarter, plus 14% group level. And 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 BTB, please. All sale performance continues to reflect the decision, our decision to improve the quality of the network and to protect our icons. So 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 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 in 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 the wholesale, the Xenia 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. Tom Brown, 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, BTC performance, but not the only one. In terms of store network, in the quarter, Tom Brown opened two doors. On the wholesale, as you see, the wholesale channel reported a 59% decline, which is a 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. Therefore, first quarter trend should not be taken as a proxy for full year. As already anticipated in our previous call, we expect that Conbrano's sale in 2026 will be down a double digit, but less than what we have seen in the first quarter this year. Time for fashion. Let's move to page 13. Tom Hoare Fashion recorded a plus 9% growth in DTC, which has been driven by a consistent growth, a consistent performance across all regions, in particular in the Americas, that 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 quarter, Tom Ford Fashion opened two DOS, direct operating stores. Wholesale declined 3%, just a normal reflection of our decision to focus on the DTC channel. On page 14 you can find a summary of the GroupStorm network, so not much to add. But before leaving the floor to Gianluca, let me take a moment to highlight our main 2025 sustainability achievements. Full details on 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 the 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. And 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 and unique know-how. In 2025, our internal academy, we call it the Accademia dei Maestri, trains more than 50 maestri, craft people who have distinctive expertise, and we prepare them to pass their knowledge on to future generations. Very important project, which is really important part of our legacy and included in our values. And 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 Paolo already mentioned, in early March, the brand introduced a three-color limited edition sneaker, which resonated strongly among both existing and new clients. And 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 out recruiting new clients. Our goal is to make them, or at least a portion of them, thumb-round repeat clients. We see Jersey and NITWERK. 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 Paula 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 founder suite in the city. Founder suites 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 US, hosting summer 27 fashion show in Los Angeles alongside the Villa Zegna experience. The decision to locate the next fashion show and villa in Los Angeles reflects both the growing relevance of the US market for Zegna brand and the city's role as a global center of cultural influence. Finally, on Tom Ford fashion, we already commented during the last poll on the success of the most recent fashion show, which further confirmed Heider 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 its 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 franchisees 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 most traffic. Considering Middle Eastern cluster, so the residents 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 the strategic area of focus for our group, 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 April. the market and the competition. On Tom Brown, 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. On Tom Ford Fashion, I would say that spring summer collection has been well received and 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. and 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. And 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 Start 1 on your telephone keypad to raise your hand. To withdraw your question, press Start 1 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. And first of all, congrats on the very strong results. I will stick to two questions. The first one, I just wanted to come back on the Chinese consumer comment you made on the Xenia brand. I think, Paula, you mentioned that it was back to positive territory in Q1, which was very impressive. So could you maybe kind of elaborate a little bit more on what you have been doing in the region? And following that positive start of the year in Q1, would you expect this positive momentum to continue throughout the rest of the year. So that's my first one. Secondly, can we just talk a little bit about Tom Brown? 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? And also, if you could very helpfully break down the light for light versus space component, I mean, if we look simply at the number of stores, probably like to like it's in the range of low to mid teens, if that's correct. And 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 and on Tom Brown.

Hi, Chris. So, yeah, you're right. Talking about cluster and market for its Chinese, it's very similar, knowing that most of the demand is local. So Chinese cluster for Xenia, 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 trend, every week the same performance so we see some volatility in the result so we cannot yet say we are entirely into a stable growth momentum that's why we reaffirm 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 calm basis we are seeing within china big momentum in hong kong and we will also take advantage of this momentum with an important opening along the year with arbor city in xenia less of a strong momentum in mainland china still we see the tier one cities holding much better than the second tier cities So 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 in China on the same ground. We were later. I think finally we see some signs of progress. Yes. ASICs. You asked on ASICs. ASICs is not the only driver of the plus 20% growth in DTC. It is an important contributor, but definitely it's a big contributor also to the rest. So it's... 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. So in terms of comp, Zegna and Tom Ford are the bulk majority is comped. The vast majority is comp. On Tom Brown, there is probably an equivalent component of comp and space.

Yeah. Thank you. Second.

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

Hi, this is Natasha Bonet from Morgan Stanley. Thank you for taking my questions, Paola and Gianluca. I have two questions. Just first of all, can you remind us on the contribution from pricing this year? I believe it's mid-single digits. And then maybe if you could break down how volume and mix and pricing have trended in Q1. And then my second question on these Zegna brands 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 Xenia was on?

New clients and.

Yes, new versus existing clients.

The new versus existing. Sorry, I didn't get that. Okay. Price, price, mix, volume, Aliva.

So by brand, and then I will take time on Xenia. Xenia, the big driver is definitely AUR. with a low-mid, as you said, price component. So there is a bigger component on mix, big component on mix, whether it's elevated luxury leisure wear or the component of triple-stage notebooks, but there is definitely a mix component that is elevating the AUR. On Tom Brown and Tom Ford, the UR 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.

So I think we are seeing more new and what we are working a lot is also the retention. For instance, I make an example because we always think of new through the tipple stitch. It's not only that. we launched in Q1 the collection of fragrances. That is also another entry door to the brand, the Memoria, which is, of course, a brand that well resonates, a product story that well resonates in the brand because it talks about the story of the brand. So we are opening new doors to come into the brand, and Memoria, that is the fragrance collection, is a perfect example of that.

And in terms of price mix, also Sumisura and all the personalized collections also through the Villa Zegna and the suite are also an important contributor.

Yeah. Sumisura is definitely growing a lot. We have always mentioned this. So 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. So that is a big driver and unique differentiating factors of the brand. We are working to make the make-to-measure also a bigger driver component of business also on tom ford and tom brown of course starting from a lower base but for instance we we launched new collection of sumisura make to measure on tom ford in the recent months we opened to women tailoring we are we opened leather outerwear on sumisura on tom ford so that business of sumisura which intrinsically carries uh A new hire, a UR, is definitely a driver. Going back to the last point, which is on new versus existing, I talked about Xenia. I think it's important also to remark on Tom Brown ASICs, which has been an important driver to engage with new customers or re-engage with customers that used to buy at Tom Brown, and this has been an important hook. So when we talk about Tom Brown 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 prospects, because we basically sold out the product. So 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 Tom Brown brand.

Thank you. Next question, please.

Your next question comes from the line of Bumi Karnabar with Jefferies. Your line is now open. Please go ahead.

Boomi? 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, Boomi, it was difficult to hear the beginning of that talking, so can you repeat?

Yes, sorry. So just a clarification for the first question. um can you just confirm what the middle eastern cluster did year on year when you're including tourists and locals uh the second one can you just talk about how much to missouri now is as a percent of zania branded sales versus other percent of tom ford and tom brown sales and where you hope that will get and then just

Bumi, unfortunately, it's very difficult to hear you, and I'm sorry, but... Robert, if I rephrase, I think she was asking more clarity about the Middle Easter cluster.

Yeah, the cluster on Middle East, the first one.

And then personalization in each brand, I think.

Luca is much better in understanding.

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

Yes, yes.

Okay, 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 starting, not year-to-date, sorry, from the date of the conflict have been flat. Yeah, year-to-date is positive, clearly. Year-to-date is positive because January and 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. And this abroad is partially going mostly to Europe. This is in actual what we see on the Middle East residents.

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

And on the other two brands is minimal so far, but as we said before, we are working to increase the collection, to increase the capacity of the network to sell su misura. So that is an untapped potential for the two brands.

Great. Thank you very much. Thank you, Bumi. Sorry for not understanding immediately. Next one.

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

Thank you very much. Thank you for taking my questions. I have a couple please. 1st, 1 on the performance in a group level. I was wondering, I know you mentioned the wholesale drug and performance. 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. And second question, and I know this is a current trading update, but I was wondering, not even with a specific indication, but really, how should we be thinking about the operating leverage that I guess the Xenia 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 reinvestment. So 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 my performance, excluding all sales, I would say there's been a very solid double digit for all the three brands. And in terms of Middle East in the quarter, EMEA for the Middle East is basically not much different.

Let's give you this. So if you see that our overall group at 7.4, you exclude Middle East from this year and 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 outlooks. We confirm what we see out there in terms of consensus, which is floating between $185,000 and $190,000. of a million euro for adjusted EBIT let's remember that's the reason why we sat there saying that we have a a margin in percentage which is moving sideways to last year, excluding the hit by Sachs, because we have two factors. We're investing heavily in IT, in one group, in creating the backbone across the brands of same system, same processes. So this is a moment of investment for the group. And second, we have... currency headwind. We have seen in Q1 five points. We don't expect five points for the year. It will be somewhere close to two points. So 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. And therefore, that's the reason why we are cautious in saying that we will enjoy too much of operating leverage. We want to continue growing at our pace, setting the ground for long-term foundation. And of course, IT is one of those. And not stretching too much the price lever, it's another thing. Thank you.

That's great. Thank you.

Thank you, Chiara. Next slide.

Your next question comes from the line of Maria Mehta 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 women's wear and men's wear today? And then on women's wear specifically, I know that Heider 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. And then 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. And what levers do you plan to achieve the results in your guidance? Thank you.

Thank you, Maria. So, I'll leave to John Luca on the split the men's and women for the seventy thirty. So this is a seventy third men's women, but on the leather goods and our plan. Anton, for fashion, I ask Gianluca to comment more. It's part of the journey. As Maria said, we started for ready-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 drivers of the growth. Another one is knitwear, which is becoming more and more important for the brand. Of course, then there are the iconic parts, which is Livionis, Tuxedo, and so on and so forth. We recognize that we are still looking for iconic pieces on the women's 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. And that is, if you look at it from the other side, still in top potential, we see the opportunity to find a good platform there and make an offer that is Tom Ford in the DNA. So 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.

But 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?

We confirmed that the targets that we have stated and we declared stated are valid on, and we said on the lower part of the range. I remember we put a range of revenues and then engineered it. So 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 25, the currencies have taken definitely a swing and therefore it would not be realistic to pay more than the lower part of the guidance. But we are still focused on delivering on that lower part of the range of course then there is we are still with a big question mark of what will be the outcome in the next months of middle east but uh we are we are still seeing that lower range as our goal for 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. So firstly, it's still about a follow-up about the current trading. So I just want to be more precise. So how do we see the 2Q today trend compared with March exit rate? This is the first thing. And also, if you have more clarity on D2C and Xenia core brands, it could be highly appreciated. Also on the GP margin trends for the first half. So how should we think of this? Definitely, we believe you have strong support from your outstanding D2C sales growth, right? So while industry-wise, there are still headwinds from foreign exchange and input cost volatility from geopolitical tensions. So 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. And then my second question is about the new customer, a credit contribution comment that management made just now. So we're very happy to see there are more new customers contributing to the growth. So I just want to confirm one is if it is also the case among the Chinese cluster and also among these new client acquisitions, do you see this new client are more from Xenia Friends, are more into the doers or more are categorized as aspirational customers? So just want to understand the profile of these newly acquired customers. Thank you very much.

Thank you, Chris. Yes, you said three questions. I think there are a little bit more than that. But let's start with the current trend and exit rate. A few comments in particular on the DTC and Zegna. And I asked Gianluca to provide some colors.

Hi, Chris. So to give you some color on how we enter in Q2. So on DTC, we finished Q1 with a plus 14. We said that Excluding Middle East, of course, where the performance is negative compared to last year, DTC overall is trending in line with Q1. So 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 minus 50% that is out in the market in terms of traffic. So we are experiencing a double-digit decline, but much more muted than what we hear out there at a minus 50. There will be a difference, as we said before, the decline of Tom Brown 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. And DTC Tom Brown also. And DTC Tom Brown 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 and we are seeing growth everywhere we continue experiences a growth on friends and 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 doors that i mentioned before also in china before i didn't mention another entry door is also the 232 that is the new platform of shoes that we put on the side of the triple stage so we don't have one arrow only and we have multiple weapons to bring new clients into the brand And so 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 Xenia France.

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 part.

Yeah, we had five points in the first quarter. I think, hopefully, at this point, the headwind will stabilize. We expect on the full year, probably close to two points on the year.

Thank you. Thank you for laughing. Thank you, Chris. Next.

Your next question comes from the line of Adrian Duzaga 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 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 26? How is the confidence across your partners? And what are you seeing with the order books? And then the last question is just a quick follow-up on your comments on margins. So you've reiterated your guidance for margin to be sideways x-axis 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, Adrian. So first on performance by cluster.

Hi, Adrian. So cluster. North Americans continued very solid on a double digit basis. So we keep on seeing good momentum and 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 Xenia and taking aside Xenia for a moment, we are investing also in Tom Ford, it's Bal Arbor, it's San Diego and it's Costa Mesa, Southern California. Cluster for Xenia good, market important, and we continue investing in that market. As I said before, the Chinese cluster turned positive in the quarter. In terms of European, European are solid double down growth and double down growth. Double digit. Double digit. Double down. Double digit growth. European cluster and 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 foreign which probably I've seen some mixed reports elsewhere. We are seeing also good momentum coming from foreign 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 We expect still the business to go down. As I said before, Tom Brown will not be minus 58. We'll be halfway there. What has been the performance of Xenia brand and Tom Ford, it will still be Tom Ford probably single digit negative in the year. And we expect Xenia 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. So 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, but I think that in the consensus, it is baked somehow some disruption from Middle East.

Thank you. Ciao, Adrian. Thank you so much. Okay, next.

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

Good morning. Thank you for taking my question. It's Anthony Chachafi from BNP. On China, the momentum is improving and at Xenia, 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? And 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 Friends growth? my second question is on the store closure in china for xenia 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 store nearby so basically a neutral impact on top line my third question would be on xenia dtc between price mix and volume In the recent year, the growth has 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 volume to kick in at some point. And my last question is on Xenia Wholesale. You decided last year to decrease the quantity of iconic products to your partners. such as the Conté, the Triple Stitch, and the Uber Luxury Collection. Given that you guided Zegna Wholesale down a loadable digit, is there any shift to have in mind from wholesale to a retail store, basically your retail performance being a bit boosted by a shift to your iconic product? Thank you.

Hi, Anthony. So let's start from China. China is not definitely skewed to tailoring market. So 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 on the 232. uh the personalization we have had a very good partially taken in q1 partially will be seen in q2 good campaign of make to measure so i think it's it's not tailoring the driver of the of the stabilization of uh or plus five actually of gcr it's uh it's all the rest In terms of cluster, I think they are The comment I made before about the balance of roles across clusters is the same for GCR. We are seeing good momentum for new clients, as I said before, on the different entry doors that are triple-stitched, 2-3-2 fragrances, and we are seeing good results also on the loyal, big-spending clients. So I think that what is true for the brand as a whole is also all being true. for Xenia in China. In terms of price mix, of course, we said price, low, single digit. AUR, driven by mix, are drivers. On Xenia, probably also the number of tickets is up.

Yeah, absolutely.

Also the number of tickets is up, definitely in some areas with some softness in traffic, but the execution and especially the conversion is driving a growth also in the number of tickets. As it refers to Xenia 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 doors, whether it's existing doors or opening doors. In US, 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 paid 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... to focus and channel business that was in wholesale into our stores. So in any single location, whether it's Costa, whether it will be in Florida next year, whether it will be San Diego. So 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. So 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. And some of the doors were.

Maybe just a follow up on the first one on the Zegna friends or the clusters. Something we didn't mention is that Zegna friends for Zegna are growing double digit also this quarter. So it's true that we have also new and clients, but also our existing clients, both doors and Zegna friends are doing very well. Very, very well. Next.

Thank you.

Thank you. Thank you, Anthony.

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

Hi, Paula and Gianluca. The Zinnia brand has been impressive. Which regions or geographies drove outperformance just at the core Zinnia brand? And then as we think about China, China tourism is Overall, how has China tourism been relative to your expectations? And 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 traffic issues relative to competition? Thank you.

Thank you, Oliver. Okay, on the Xenia brand, what regions 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. So it's definitely not the biggest market, but we always talk about America. And we need to also point out, of course, US, but also Mexico and Latin America are doing extremely well. As I said before, Europe, continental Europe, it's doing particularly well for us, both locals and foreigners. Until end of February, Middle East was booming. So I think, and 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. Therefore, also driven by Chinese tourists. We are not seeing a lot of Chinese back there. on the west side in Europe. So the driver of success in Europe for own locals is 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 bond. So 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, of course, is a success that started years ago, the relations that we have with our customers.

I think it's about resilience of the relationship. 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. And 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 a very long-term relationship with clients, the strategy that we have built. So I think this is the reaction of having also in difficult times, a good resilience and the fact that probably being a client, a brand of destination, these clients also visit us elsewhere. So maybe they don't visit us in Middle East, they visit us elsewhere.

Thank you. Are there no further questions?

There are no further questions at this time.

Okay. Hello, everyone. Alice 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 each one preliminary revenues. The selling period will begin on July 1st. But if you need any other further clarification, please do not hesitate to contact us. Have a nice rest of the day. Ciao.

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

And myself. Ciao.

Ciao.

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