Italy's Zegna H1 profit surges as DTC drives 82% of branded sales

The profit rose 53 per cent to €47.9 million (~$56 million), lifting the profit margin to 5.2 per cent from 3.3 per cent. Adjusted EBIT was €68.7 million, with a 7.4 per cent margin (8.4 per cent in H1 2024).

The DTC revenues grew 4.2 per cent (6.1 per cent organic) to €698 million, reaching 82 per cent of branded revenues (76 per cent in H1 2024), and wholesale branded declined 27.1 per cent (26.5 per cent organic) to €154.2 million, Zegna Group said in a press release.

The gross margin improved to 67.5 per cent (+110 basis points), aided by the higher DTC mix, meanwhile the operating profit was €61.3 million (6.6 per cent margin) vs €73.1 million (7.6 per cent). The net financial items and foreign exchange (FX) turned positive €6 million (vs negative €24.8 million), aided by put-option remeasurement and a favourable US dollar/euro move.

Brand and segment wise, Zegna brand revenues were €570.4 million, up 0.8 per cent (2.6 per cent organic). Thom Browne recorded revenue of €129.2 million, down 22.5 per cent (21.7 per cent organic). Tom Ford Fashion saw a revenue of €152.7 million, up 2.8 per cent (3.8 per cent organic), and Textile with €67.1 million revenue was down 6.6 per cent.

Zegna delivered adjusted EBIT of €94.4 million, with margins rising to 14.3 per cent (up 150 basis points), supported by stronger operating leverage and disciplined cost management. Thom Browne generated €4.5 million, with margins falling to 3.5 per cent from 12.1 per cent, pressured by lower revenues and upfront costs tied to new DTC store openings. Tom Ford Fashion reported a loss of €19.4 million, with margins at –12.7 per cent, reflecting heavy investments in retail expansion, talent, IT systems, and organisational infrastructure.

By region, revenues in the Americas rose 6.8 per cent (9.3 per cent organic) to €262.7 million. Europe, Middle East, and Africa (EMEA) generated €328.9 million, a decline of 2.3 per cent (1.9 per cent organic). Greater China fell 16.2 per cent (14.7 per cent organic) to €223.1 million, while the Rest of Asia-Pacific (APAC) edged up 1.4 per cent (3.4 per cent organic) to €111.5 million.

The capital expenditure totalled €54 million, directed mainly towards DTC network growth and the new shoe plant in Parma (Italy). Trade working capital improved to €441.8 million, supported by reduced inventories and receivables following wholesale rationalisation. The net financial indebtedness stood at €92.1 million, remaining broadly stable.

“Our first-half 2025 results reflect the Group’s strategic decision to invest in the DTC store network and capabilities across our three brands, while continuing to support projects that fuel our long-term growth ambitions,” said Ermenegildo Gildo Zegna, Group chairman and CEO. “In this context, we are pleased with the operating results reported by the Zegna segment where stronger operating leverage and disciplined execution led to an improvement of the adjusted EBIT margin by 150 basis points. This strong performance helped balance the impact of the strategic transformation underway at Thom Browne and Tom Ford Fashion.”

“With the strength of our Filiera, the authenticity of our brands, and—above all—the clarity of our vision and the talent of our team, we remain on track to achieve our 2027 targets, despite sector and currency headwinds,” added Zegna.

The management reiterates confidence in achieving 2027 targets, citing the stronger Zegna segment profitability, continued DTC investments, and the group’s integrated Italian supply chain (Filiera). Near-term headwinds include sector softness and currency volatility as Thom Browne and Tom Ford Fashion continue strategic transitions.

ALCHEMPro News Desk (SG)