Ermenegildo Zegna NV Q3 2023 Earnings Call Transcript

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

Question: Susy Tibaldi - UBS Economics - Analyst : The first one on China and the Chinese cluster overall. I remember at H1, you said, on a two-year stack, the Chinese were more or less flattish, can you comment what was the trend in Q3? And given that the growth has been a bit weaker in the Chinese compared to some of the peers, could you elaborate a bit what you think is the issues if it's moving on [a macro event] or if you like maybe the rebranding is not resonating as well as in the West. Perhaps, given your long (inaudible) in China, is the brand not yet perceived as high end as it is in Europe or in the US? And then my other question still linked to this. The fact that Asia is underperforming the rest of the group, does it have a negative implication for margins because I think in the past, you mentioned that China as a region is more profitable? So I don't know if now this has changed given that your sales densities in other markets must have gone up so much over the past years.

Question: Susy Tibaldi - UBS Economics - Analyst : Okay, and are you able to say what was the Chinese cluster doing in Q3?

Question: Susy Tibaldi - UBS Economics - Analyst : Okay. That's very clear. Just one last follow-up --

Question: Matthew Garland - Deutsche Bank AG - Analyst : I just had a quick question around, again, the China cluster. I think from memory in September, you are saying the cluster in total had turned negative. When I look at stage 3Q growth for China, for the Greater China region, it looks more like, I guess, high single digit. I just wanted to clarify, was my understanding that the cluster going into negative growth in 3Q incorrect or was there a benefit to regions outside of China?

Question: Matthew Garland - Deutsche Bank AG - Analyst : Okay, and then in --

Question: Matthew Garland - Deutsche Bank AG - Analyst : And then in terms of, I guess, the outlook for 2024, are you able to give any details at this stage around your view on the growth given some of the macro headwinds that we've seen in 2024? I know you've already spoken about China, but any of your thoughts on the other regions, Europe and the US? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2023 / 12:00PM, ZGN.N - Q3 2023 Ermenegildo Zegna NV Earnings Call

Question: Matthew Garland - Deutsche Bank AG - Analyst : Thank you.

Question: Adrien Duverger - Goldman Sachs - Analyst : I have two, if possible. So the first one is, could you please comment on the resilience from the higher spending cohort? Have you seen any increase in the proportion this year versus last year? And if so, have you seen any difference between geographies, so Europe versus the US and China? And the second question would be if you could give us an idea of the breakdown between pricing and volume in Q3 and how you think about pricing going forward?

Question: Adrien Duverger - Goldman Sachs - Analyst : And if I may, just a quick follow-up on my first question. Would you be able to give us an estimate of the proportion of the higher spending cohort of yourself?

Question: Adrien Duverger - Goldman Sachs - Analyst : Okay. So 5% equals 40% of the business.

Question: Anthony Chaux-Chevry - BNP Paribas - Analyst : It's Anthony Chaux-Chevry from BNP Paribas. I have a few questions, please. So the first one would be on FX. So it was a 4% dragging in Q3 after hedging which is less of a drag versus the sector, so wondering what should we expect for the full year?

Question: Anthony Chaux-Chevry - BNP Paribas - Analyst : Okay. So first question on the FX. So 4% drag in Q3 after hedging which is less of a drag versus the sector. I was wondering what we should expect for the for the full-year '23? On margin for full-year '24 and probably in H1 '24, we should expect some headwind, I was wondering how you're planning to offset this if it's price increases like mid-single digits or if it's rather cost control or cutting some marketing? My second question would be on TOM FORD. So if you can give us some feedback, you received from the September spring '24 collection and if you already have any view on the on the order book. As I'm not sure about the seasonality of TOM FORD, should we expect Q4 similar to Q3, or is Q4 much higher like the rest of the sector in general? And, yeah, my last question would be on Thom Browne. So the wholesale was up 8% organic in Q3 which is a year-to-date, mid-single digit which is quite weak. I was wondering, you've been mentioning womenswear outperforming for quite some time now. It represent 30% of sales. So does the push of womenswear compare to menswear? Is that something you're planning or because maybe womenswear have maybe better margins? That will be my question.