Ermenegildo Zegna N.V. (NYSE:ZGN) reported its preliminary full-year 2025 financial results. The report revealed a resilient performance in a volatile luxury market, characterized by a strategic pivot toward Direct-to-Consumer (DTC) channels and a significant shift in geographic growth engines.
FY 2025 Financial Performance Summary
The Group reported total revenues of €1,916.9 million, a slight reported decline of 1.5% year-on-year, but an organic growth of 1.1%. A standout feature of the year was a late-year acceleration, with Q4 revenues reaching €591.0 million, up 4.6% organically.
Group Financial Overview
The Group achieved a resilient top-line performance despite significant currency headwinds and a deliberate restructuring of its distribution network. Total Revenues: €1,916.9 million, down 1.5% on a reported basis but up 1.1% organic. The year ended strong with Q4 revenues reaching €591.0 million, representing a 4.6% organic increase. Group-wide DTC revenues rose 7.9% organic for the year, now representing approximately 82% of all branded revenues. As part of a strategy to elevate brand exclusivity, wholesale revenues dropped 20.2% organic.
Brand and Channel Breakdown
The Group’s strategy to prioritize its own retail network is clearly reflected in the channel mix. DTC now accounts for roughly 82% of branded revenue.
ZEGNA Brand: The Core Anchor
The flagship brand remained the Group’s strongest performer, with revenues of €1,181.6 million (+4.7% organic). Its Q4 performance was particularly robust, posting 10.3% organic growth in DTC, driven by demand in the U.S. and the Middle East.
Thom Browne: Strategic Streamlining
Thom Browne saw a reported revenue decline of 14.7% to €268.5 million. This was largely attributed to a deliberate contraction of the wholesale channel (-50% in the first nine months). However, DTC showed resilience with 11.2% organic growth in Q4, signaling that the brand’s shift toward exclusivity is gaining traction.
TOM FORD FASHION: New Creative Energy
Revenues reached €317.1 million (+3.1% organic). The brand benefited from the successful reception of the Fall/Winter 2025 collections and the momentum surrounding the first fashion show under Haider Ackermann’s creative direction.
Geographic Performance: The Rise of the Americas
2025 marked a definitive shift in where luxury consumers are spending. While Greater China faced headwinds, the Western markets provided the necessary cushion.
Americas: The primary growth engine, with revenues of €566.1 million (+12.0% organic). The U.S. market continues to show a “soft landing” with high-end consumers remaining active.
EMEA: Demonstrated steady growth, bolstered by a strong performance in the Middle East.
Greater China Region (GCR): Remained a “new normal” of volatility. Management noted a cautious approach here, with revenues down double-digits earlier in the year, though showing slight sequential improvement toward the end of Q4.
Insights from the Earnings Call
During the call, Chairman and CEO Gildo Zegna and CFO/COO Gianluca Tagliabue emphasized “quality of sales” over volume. “Our results reflect a strategic decision to invest in the DTC store network. We remain on track to achieve our 2027 targets despite sector and currency headwinds.”
Key Takeaways for Investors:
Margin Expansion through Mix: The shift to DTC is inherently margin-accretive. By owning the relationship with the customer, the Group improved its gross margin to 67.5% mid-year.
Inventory & Cost Control: Management highlighted disciplined capital expenditure targeted at 6–7% of revenue and a focus on greenfield footwear production.
Leadership Transition
The Group announced a new leadership structure in late 2025, with Gianluca Tagliabue taking a more central role, signaling a focus on operational efficiency and long-term succession planning.
Outlook for 2026
The Group remains cautious regarding the Chinese market, banking on “no immediate rebound” and instead focusing on market share gains in the U.S. and Japan.