FY23 transcript ZGN
earnings summary
Financial Highlights and Guidance:
- Group revenue in 2023 reached €1.9 billion, up 28% reported and 19% organic. Adjusted EBIT was €220 million (11.6% margin), up 100bps. Net profit more than doubled.
- In Q1 2024, revenue is expected to grow around 10% constant FX but be down mid-single digits organically, impacted by Thom Browne wholesale declining high double digits due to timing and selective distribution.
- Management believes 2024 full year revenue consensus is achievable. Mid-term guidance is unchanged.
- Gross margin expanded 210bps in 2023 to 64.3%, driven by channel mix, price/mix and scale. Further gross margin expansion is expected in 2024.
- Tax rate was favorable at 20% in 2023 but is expected to normalize to around 30% going forward.
- Free cash flow was €72 million in 2023. CapEx is expected to increase to over 5% of revenues in 2024-2025 due to store investments and a new factory.
transcript notes
Here is a summary of the key points from the Ermenegildo Zegna 2023 full year earnings call, focusing on guidance, past performance, and details on products and segments:
Segment Performance:
- Zegna segment revenue was €1.3 billion with 14.6% adj. EBIT margin, driven by 25% organic growth in DTC.
- Thom Browne revenue reached €380 million with 15.5% adj. EBIT margin. DTC was +20% organic and wholesale +15%. Q1 2024 wholesale is impacted by timing and distribution cleanup.
- TOM FORD revenue was €235 million for 8 months. 2024 will focus on investments and building the organization. 12-14 new stores planned.
Products and Strategic Initiatives:
- Zegna is gaining traction with its “One Brand” strategy, especially high-end products like luxury leisurewear, accessories and shoes. SECONDSKIN leather collection launched successfully.
- Personalization through made-to-measure is a key growth driver across brands.
- Strong reception to Thom Browne women’s collections. Focused on connecting with top clients through shows, made-to-order, and events.
- Growing TOM FORD through retail expansion, especially in China, while selectively pruning wholesale.
- Investing in marketing to drive brand awareness, stores, supply chain, and a new factory to bolster vertical integration.
Overall, despite near-term volatility, management remains confident in the strategic direction and growth potential of its three brands. Continued investment in retail, products and marketing aim to drive long-term profitable growth.