Full Year 2023 Ermenegildo Zegna NV Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Chris Huang - UBS Limited - Analyst : Hello, hi. Thank you for taking my questions. It's Chris Huang from (technical difficulty) and I have three questions, please. My first question is on the Chinese consumers. I know this is a H2 P&L call, but are you able to provide any color on how the China cluster has so far performed in 2024? The reason why I'm asking about this is that we have been seeing -- hearing from some of your peers trends in March have slowed down after a very solid Chinese New Year. So if you can, in any possibility, comment on month-by-month trends, that would be super, super helpful for us. Secondly, on the guidance you provided for Q1 with organic sales growth to be down mid-single digit, just to understand a little bit more that you provided wholesale for Thom Browne to be down high double digits, what kind of level are we expecting here? Just so we can understand better what is the impact from a challenging environment in Greater China and how much is from wholesale. Because if I just did the math, if we're assuming mid-single digit up for Zegna to get to mid-single digit down for the group organically, it means Thom Browne is down around 30% to 35% organically. That's my second question. Lastly, on EBIT margin, I remember back in December 2023, you provided some new mid-term targets by 2028, which if we kind of look at the CAGRs, implies EBIT margin to reach the level of high teens in the mid-term. So if we compare that level to the 12% you printed in 2023, can you just share some thoughts on what should we expect in terms of the cadence of margin expansion in the coming years? Are these targets likely to

Question: Anthony Charchafji - Exane BNP Paribas - Analyst : Yes, Thank you. Good morning. It's our Anthony Charchafji from BNP. Hi. Okay. I have two question, and thanks for the good description before. Just one on current trading and the remaining will be on the margin. So just if you can give us a bit your thoughts on the US market in '24 --

Question: Anthony Charchafji - Exane BNP Paribas - Analyst : Can you hear me better?

Question: Anthony Charchafji - Exane BNP Paribas - Analyst : Much better? Okay. Sorry. So first question would be on the US trend. I guess that 2024, I mean, at a time where the slowdown was already present in 2023 for most of the luxury sector, I mean for you, it seems that you are you're quite resilient in the region and that you seemed more optimistic than your comment on China. So maybe if you can you share your thoughts on the US market currently. My second question would be on the marketing. I understand that Thom Browne that there have been no step-up in marketing in 2023, though I would say that you're starting from a low base. Should we expect that at some point, a marketing step-up also at Thom Browne to drive EBITDA a bit, the new addition womenswear and all that? The last question would be on the gross margin. I mean a very nice improvement in 2023. I understand it was driven by -- specifically by Tom Brown. Can you tell us if there is more upside? And maybe for Zegna, knowing that there is this B2B business that is maybe 30% or 35% margin -- so a bit dilutive. I mean, do you see further growth in 2024 and beyond, or should we expect something higher or flat? Thank you.

Question: Oliver Chen - TD Cowen - Analyst : Hi, Gildo and Gianluca. Hello. Good morning here from New York City. Regarding your comments on aspirational. We're definitely seeing pockets of pressure and continued-over inventory trends with aspirational across some brands. You have very service-orientated brands with distinctive characteristics on quiet luxury as well. But what's happening with aspirational? That's my question. And what do you see happening for it and what's in your control and what's out of your control as we think about that customer coming back later? Thanks a lot.

Question: Louise Singlehurst - Goldman Sachs International - Analyst : Hi, good afternoon, everyone. Thanks for taking my question. I will keep to one, but just to clarify a couple of things on the wholesale channel and as we think about that rationalization, which absolutely makes sense for the long term. But for Thom Browne, is that expected to go into obviously, the multiyear as we look beyond 2024? And similarly with TOM FORD, should we be expecting some rationalization of wholesale over time in there. And then a sneaky, but it's a related question, presumably we should start to see an improvement on the gross margin. Really helpful getting the gross margin color today in the annuals for 2023. But presumably, we should start to see the channel mix effect benefiting that as we move through into the next couple of years too. Thank you.