Ermenegildo Zegna N.V. (ZGN) Earnings Call Transcript & Summary

Good morning, buongiorno to all of you who have made the journey here to Trivero and Oasi Zegna. It is a pleasure to welcome you all and also to see so many familiar faces after so long and in this very special place. Also welcome to everyone who is joining via our audio webcast, especially those from the U.S., given how early it is there. We have a full day ahead of us. I hope you will enjoy the day, surrounded by this beautiful scenery and landscape. We're going to hear today from our group CEO and the entire management team on many topics and specifically, on the financial and sustainability ambitions for the long term. Throughout the day, we will be referring to the presentation posted on our website, and the participants in the room should be able to access the event live using their app, and you can follow that along. Everyone can find the relevant materials with the related press release on the investor page of the Zegna Group website. I'm very pleased today I will be joined by the entire management team of the group, of course, the CEO of Zegna and Chairman, Gildo Zegna; COO and CFO, Gianluca Tagliabue; our Director of Marketing, Digital Sustainability, Edoardo Zegna; the CEO of Thom Browne, Rodrigo Bazan; and Angelo Zegna, the Head of Consumer and Retail Excellence. There will be time for Q&A at the end of the presentation. For those connected via webcast, you can both submit your questions through the webcast, or you can send them to my e-mail address. Before we begin, I need to point out that we may make certain forward-looking statements during today's call. Our actual results may be materially different from those expressed or implied by these forward-looking statements. All such statements are subject to a number of risks and uncertainties, including those discussed in our SEC filings. I refer you to the safe harbor statement, which is included on Page 2 of today's presentation. And of course, this call will be governed by that language. Again, thank you for joining us today. And with that, I will turn the stage over to Gildo.

Well, friends, I would say, and colleagues, it's exciting to see the Italian flag in this fantastic day. And I must say, we couldn't have asked the creator a better day, which literally prayed, because it makes a difference in such a fantastic place between rain, fog, sun. And today, I couldn't have asked anything better. Welcome to Oasi Zegna. And this is really the home of our values. And I hope you enjoy the natural stretch in our territory, more with the cars, it was funny enough this morning where we were stopped, the convoy was stopped by [Foreign Language], by a flock of sheep, of cows going in the summer, treat. That tells you how real this territory here is and how much we appreciate the silence and the routes that have made a family an integral part of the territory. We go back 112 years when Ermenegildo Zegna, the founder, our grandfather, established a small wool mill that has become the epitome of excellence of what the made-in-Italy textile can do. And from there, we turned into luxury menswear to create the brand, Zegna; clear, direct and to the point, and addition of an authentic American iconic brand, Thom Browne. And I think that this journey, that seems so long, but on the same time, it's short, took us to Wall Street, and that was the excitement on that balcony. However, the dream of my grandpa started in this place 90 years ago with a truly, authentic sustainability concept. He planted more than 0.5 million trees that you see. I mean, how many of those have grown, it's unbelievable to see rhododendron that are as tall as pines. I remember when I was a kid, they were 1 meter high and they still grow and they still give their best in their maturity stage. That's why this place is infinite. It will never die. And after that, he built a 232 Strada Statale, which in the family we call Panoramica Zegna. Before we gave the name to this territory as Oasi Zegna, we called the area Panoramica Zegna. Panoramica because you literally can see from 2 sides of the Alps. On one side, you have Monte Rosa, which you appreciated. And on the other side, you've got Monviso on the Pianura Padana. So it's really the 2 sides of the beautiful Northern Italy. And I think that with these 2 treats, trees, and the special road, I think that it has created excellence by giving back to the territory, before thinking of creating excellent business results, before he gave the business to next generation. As a matter of fact, I can anticipate to give you a little scoop, since it's nothing to do with Wall Street. We have decided, with Alessandro Sartori, to have the menswear, Zegna Summer '23 Fashion Show at Oasi Zegna. So it's really an honor for us, in a matter of a month, to have the Investor Day followed by the fashion show. And as a matter of fact, the fashion show will close the Milan Fashion Week. And so I think that it's going to be really a prominent fact. Today, he is represented -- we have the third and fourth generation. I just want to remember, yesterday I introduced Paolo, that is a Board member; Anna is with us today as Board member, but more than that, she is the President of Fondazione Zegna and very much involved with the territory. So a good part of what you see here is thanks to her hard work and the improvement that she did to the territory. We have Franco Ferraris, the Head of the Textile division, that will take us through the Textile, and we thank him to have kept Lanificio so fertile and so up. We have more management, Fulvio Benetti, Head of Sustainability; and I hope to have not forgotten anybody else. So third, fourth generation united, and a good management team, we can anticipate our goal, which is the highlight of this day, achieve EUR 2 billion revenue in 5 years organically, that's a very important word. Because we have a Q&A session, which is the part we enjoy the most, I'm sure that they're going to have some questions around that, but I just want to stress the fact that this, we're talking about organically, because we have plenty of things to do with what we have on the plate. And I think it's going to be fun to show you year after year what we can have with this. And I'm talking about the Zegna brand and, of course, the Thom Browne. However, I talked before in the break we had at Margosio this morning. I said listen, we want to grow with scarcity and gradually. We won't push too much because I think that luxury is something very special, very scarce, and we want to get that feeling. So it's good to go fast, but we don't want to overdo it. And I think this is very important. However, the healthy financial growth is important in order to keep investing in the many areas that we need to invest. And I think that there are 6 points that I would wish you to take away from this intense day. The number one is the importance of the Made in Italy manufacturing. This is a must. I think Made in Italy is one of the strongest brands in the earth, and Zegna is part of that. How many companies, how many Italian companies in our field are 112 years old? Not many. The second is the prominence of a controlled supply chain. We are very proud to be an industry, to be an Italian industry, to be an industry of fashion, so you will keep hearing excellence is possible only with a healthy industry in which you believe and in which you invest. And so what we call Filiera. Filiera is a beautiful Italian name that means a yarn that goes across different phases. And I think that the controlled supply chain is an incredible tool to provide the best service and the best excellence to our customers. The third point is DNA. We are what we are. I think we are good people. We are honest people. And we are very proud of our DNA, which is made of values, substance and actions. So we want to stick to that. So whatever you expect from us, it will be in that direction. We are not giving our DNA away for anything. The fourth thing is that we are very strong believer in the highest level of ESG goal. We have a responsible engineer that is responsible of this project. We are going to put a person in charge of diversity, an inclusiveness officer in a few months' time. And we do believe that as I spelled out in my press release, there are a lot of actions that have taken place and will take place in due time. But everything starts from the values of the territory and respecting the people that work for you and the environment you live in. This is of the utmost importance. And also sustainability is creating sustainable product that live forever. I love when my children go after the garments of my grandfather. And they say, "This is so modern. This is so great. This fabric is indestructible." These are the values that make an ESG brand going forever. The fifth is that we are executing our strategy of Zegna and Thom Browne to the highest level. So expect us really for stronger and stronger results. And the last point is that, yes, we do believe in productivity. And among you, often we only talk about retail productivity, which is fine. Let's talk about industry productivity. If you have an industry, working full capacity and at full scale, you have to make that productive. You have to make it fast. You have to be technological. You have to make it livable. So let's not forget that we have 2 productivities, the industry productivity and the retail productivity. And this is something to focus on because unless we do not aim to a super productivity, we will not get the margin the way we want to get, and we will not generate enough resources in order to get to the EUR 2 billion. So these are really must-have points. I think that we have the high potential in front of us, and we'd like to be not remembered, we'd like to be written as a leading, modern and integrated group in the luxury goods industry. Why I emphasize the luxury goods industry? Because I do believe that in the past 3 years, not only because of pandemic, the luxury industry has changed a lot. It's funny to see the teddy bear of Thom. I mean, it was so iconic and so cute. But this is how the industry is changing. And the industry sometimes is too serious. We have to make the industry sometimes more fun. And I think Thom is making, through his art and through his creative skill, the [indiscernible] more fun, truly in America first. Now what we have done in order to get into a luxury position is that we have dramatically changed our perception. I don't speak about DNA. I'm talking about perception of the brand. And as you know, Zegna had a tailoring perception of high quality. And I think that it was a time to move ahead and to move the perception to luxury leisurewear. So this has been a really must have, and we see it is there, even before the new brand is in the store, as you know. The other thing is that we have moved our way, the Zegna way to omnichannel. So I think the 3 most striking words in the actual industry are sustainability, marketing and e-commerce. And if you ask each of us, each different brand will interpret that different, okay? Our approach to sustainability, I told you about Edoardo, I don't want to take away the presentation that Edoardo will talk more about, it has a lot to do with the environment. Our approach to marketing has to be very much aligned to the digital world into a strong storytelling purpose. Our approach to e-commerce is very much aligned to omnichannel, because when you talk about e-commerce, you cannot forget the business you do with e-tailers, the business you do with wholesaler, and more than anything, the business you do with clienteling, without reaching capacity of the sales associates in the stores around the world to outreach the customer. Is that not an online business? For us, it is. So when we talk about the numbers, we'd like to put this in perspective, because this is our forte, and Angelo will tell you more about this outreach that really, pandemic has woken up, rang the bell, dong-dong-dong, wake up Zegna, starting from America, and we did a super job. But I don't want to take away anything from his speech surely. And last but not least, you'll like it, upward pricing strategy. A brand that can increase the price remains strong. It means that it is sought. It means that there is scarcity. It means that you can't produce enough for the demand. We like to get there. Are we there? Not yet. We are getting there. Two price hikes for Zegna brand this year, never happened. We always increase seasonal price increase. No, we increase prices before the season and during the season. Will we increase prices more during the year? Why not? We'll see. So this is the new mentality, the new credo of the brand. The good thing is to know, we are #1 men's luxury brand. I don't care who disputes that. There are no precise numbers, okay? But I can tell you that at top American, [ the Palmas Noche ] is #1. And we want to remain #1, and we can consolidate our position to remain the #1 regardless of the business model. Go e-tailer, go concession, go wholesale, go pop in, go [indiscernible], go Made-to-Measure, we don't care. We are flexible in order to make it happen, and we want to remain in that leadership. Do we have a similar position otherwise? Yes and no. Do we want to get there? Yes. So these are some of the clear dynamics that we want to increase in order to become even stronger. Now let me talk a little bit about Thom Browne. Thom Browne is an incredible reality and Rodrigo will tell you about it. But I think that the potential of doubling clients in the midterm, and if you double clients, you double sale, of course, it could be a reality. And Rodrigo will take you through on some of the journey that he is entertaining, but we have really a good desire to do that. Another important point which you show interest is the geographical mix. We know that we have been prone more to China than anywhere else. But we also are rebalancing our geographical mix quite quickly. And it's extraordinary that we have shown double increase in sales in the United States of America, unbelievable. We are very proud. Incidentally, America is where I started my journey with the merchant, the [indiscernible] and the Pressman, they're animals, those guys, and I learned a lot from those guys. And I'm glad -- I was chatting yesterday. I'm glad that the merchant I'm looking at, Allen, that has been through the journey. I like that those merchants are back. The new generation of those merchants are back, and that's an important thing. So I think that that's a good reality of knowing that U.S. is back strong. And we have -- the phenomenon with the Middle East is unbelievable. Middle East, Hong Kong will be replaced by Dubai. 30 different nationalities shop at Zegna Dubai Mall every day without counting the Chinese, with no Chinese. Can we say that in the old days in New York or Hong Kong? I've never seen a phenomenon like this in my life. And we are talking about men's. We are only men's without women. Go and check somebody that's essentially strong in women and men's, maybe I'm 50. It's unbelievable. It's the new center of the world. Luxury is Dubai. If you're not there, you're not. And next will be Saudi. Saudi is competing with Dubai. Can you imagine if that happened? Double. So I think that what I'm trying to make is that those 2 realities, States and Middle East, if we talked 3 years ago, I would have not mentioned them. We changed. And if you didn't change, you missed the boat and that's the new reality. Now let me quickly, before I finish, talk about the Made in Italy luxury textile platform and about our Made-to-Measure project. Those 2 are literally my highlights. On the Made in Italy luxury textile platform, I will talk in a moment, but it's something very special and I think it was worth a presentation for a focus. And Made-to-Measure is part of that, but it's our Formula 1. I can tell you that my dad, Angelo Zegna, invented Made-to-Measure in the '70s during a trip in Japan, in which he said the real estate in Japan is so minute that Japanese clothing manufacturers have to use the single made-to-order production if they want to show more items in the store. And so what they did, in 30 square meters, they had 1 garment per swatch in different fabrics. And so if the top guy or the small guy went, "Yes, I can do it in a week." He said, "Gosh, why can't I make it in my place?" And so he created the Made-to-Measure of Zegna. And this has been an incredible tool of growth, because if you think, Angelo will tell you, in some stores, we produce -- 30% of the turnover is Made-to-Measure. It's unbelievable. If we didn't offer, we would be less 30% productive. And the stores that are not there yet, there is a long opportunity to get there. So I think that these really are 2 incredible opportunities when we talk about organic growth. Back to some numbers. I gave you only one number, EUR 2 billion revenue in 5 years, pretty ambitious. I'd like to give you another one. Adjusted EBIT margin of at least 15%. We'd like to reach this in a shorter time frame, the EUR 2 billion. I cannot give you exact the year, but let's put it this way, one is more midterm than the other. Let's put it this way. And we have a goal to really expand clients and productivity in the store swiftly. I can tell you, internally, we gave a very big goal to be honest with you, well over 50%, well over 50%. And luckily, Thom Browne is still smaller in footprint compared to Zegna, and so Thom Browne has an opportunity to expand its network. And last but not least, I got some little, not scoop, but surprises that Alessandro and Edoardo will prove in the next few weeks or months collab. We have a couple of collabs that we have been cooking for a while, and they should be unveiled in a matter of weeks. So that surely will help. Also, don't forget that there is no organic growth to the route of EUR 2 billion unless we invest in talent, diversity of talent. We are going to have a diversity and inclusion officer that will help us to become more attractive to diverse talents. Second, marketing. I think we are going to have to do something more, give more resource to Edoardo on the marketing. So a little bit more generous for next year. I think we should go in that direction. And last but not least, confirm the CapEx of 5% a year in the near term, which is pretty good. I think having the resources to spend 5% CapEx on a turnover today, you have to be lucky to have the resources, and two, to have the vision to spend it, and three, to have the guts to spend it, because in days like this, with this geopolitical mess, you say, "Why is it not better to hold?" No, we just go. So I think it's pretty, I would say -- I don't like the word aggressive, I think aggressive means negative -- ambitious realistic. And I think with the management team and with the strategy that we have in due course, I think we can get there. So as usual, I've been too long, but I think it has been a nice conversation with you guys and looking forward to some questions. But before I leave the word to Edoardo, I'd like to anticipate that we thought about a special gift for you. And of course, it has to come from Oasi Zegna, from our territory, and Anna has created this beautiful wooden heart made of recycled wood from spontaneously fallen trees in Oasi. Recycling. Hundreds of years of the hundreds of years, reuse, zero waste, that's what the nature is teaching and it's our belief. And more important, we're going to plant one real tree for each of you in the heart of Sila forest forever. Thank you. [Presentation]

Hi to all. If I haven't met you yet, my name is Edoardo. I run Marketing and Digital for the brand, Zegna, and I run sustainability for the group. Sustainability and community is something that have been part of our family for generations. And in the past, our efforts have been driven both by our family foundation as much as from the company. And therefore, despite being extremely honorable, have been a bit scattered and never with one single goal. Our company, as you are all aware, is a public company. And this provides for us an amazing opportunity to actually consolidate our story, find a single strategy, and shout it in a big way. I want to start from here. And this is an idea. If my great-grandfather had to write a sustainability report in 1930s, he would have listed most likely 3 dreams: give life to a mountain; build a community and give back; and connect to the world. Well, today it is a reality. He planted more than 0.5 million trees; developed our hometown. He built a hospital, there's an orphanage, a swimming pool, he built a community. And he built a 26-kilometer road that you guys have driven surrounding this area. I guess what I'm trying to say here is that we're a family based on substance and actions, not words. I don't want to compare ourselves with other brands, but these are facts. They're not words. So today, we begin a new journey, a new journey that hopefully will bring us for another 100-plus years. How? By simply stating who we are and what sets us apart. There is no buzzword, it's simply who we are. So how do we get there? We launched this about 6 months ago. As Gildo was saying, Fulvio Benetti is the new Director of Sustainability for the group. So we've one single person responsible for it. And we launched a study asking stakeholders, asking some of you what were the most important pressing things that you cared about. We read them, we studied them, and we integrated with our strategy. The 3 things that emerged the most out of this questionnaire and questions in support were 3. The first one is human and labor rights. Luckily, we own most of our supply chain and so we can control it, but we also have extremely long-term relationship with a lot of our partners. And so this is something that clearly is something very important to us and we'll showcase. The second thing that emerged is water management. I'm proud to say that we are standing, and you'll visit this afternoon Lanificio Zegna, and we reduced water consumption in Lanificio Zegna, recirculating up to 30% of it. So again, a testament of the forward thinking and how we think about this. And the third point is sustainable sourcing. I'll talk more about it, but it's very much the heart of the way we think about it. So today, based on this study and what we learned, these are the 3 commitments that we want to put for the years to come. The first commitment is Made in Italy, transparently. This is not about making everything in Italy, it's about making majority of what we do in Italy, but with a true sense of transparency and traceability attached to it. The second commitment is about community. It's about what my great-grandfather left us and my grandfather and my parents and so forth left to us. So weaving -- we like the word weaving because it transcends between what we do and what actually a community is, it's weaving the fabric of tomorrow through to our founder's vision. And lastly, the third commitment is Oasi. How could it not be Oasi and the home of our values and what it stands for. So the first commitment is transparency and Made in Italy. As I said, this is how we do things. My father spoke -- actually, he's going to speak after me around the Made in Italy luxury platform, and about this amazing conglomerate of entities. And we actually own the largest textile manufacturing platform in Italy on a luxury level. And so this is a huge advantage compared to anybody else. We don't rely on other people. We rely on ourselves. And so we are able to be traceable and we are able to decide what we want to do across this entire supply chain. The other thing that is unique to us is the idea that we own a farm in Australia, the wool travels and comes here, where you're going to visit in a second, then it goes to store. But in this journey, there are discarded fibers, threads that we, thanks to Alessandro and his vision, reassemble and create into what we like to call use the existing. So we give a second life to discarded fabrics and so forth. And clearly, when you think about circularity and everything, clearly, there is a next stage that is, I mean, how do we recuperate some of the unsold products or even old products and give them a second life? So again, these are all commitments that we have started, that we want to continue, and we want to start. And this is the journey towards Made in Italy and in a super transparent way. These are some of the action points in your presentation that you have separate to this one. You'll have -- that every of this commitment has an explosion of specific points, but very specific targets attached. So some of them are here presented in this slide. Clearly, the first one I talked about. The second one is partially talked about. Again, responsible sourcing, is something that is huge. And the last one, again, is around governance and sourcing policies as a whole. The second commitment is about weaving the fabric of tomorrow. I like the idea of the fact that since 1910, we fertilize Italian community and craft. We give back to who has given us the most, our country, Italy, and we export to Italy to the world, the best out of Italy as a whole. There are 3 things that I'm particularly proud of that I think can give you the high and low of how as a family and now as a public company we are transcending some of these community actions that my grandfather has given to us down. The first one is Accademia dei Mestieri. So again, how can we keep fertilizing this craft and make sure that there are passionate people in factories that are interested of evolving the manufacturing, to relooking at excellence, and so forth. And so we're working on creating a real school. And what an amazing school, a school that is across an entire Italian, Made in Italy platform that is more than one entity. The second thing is the work that the family has done in the prison in Biella, and it's about a prison where we donated tools and facilities for all the prisoners to be able to recreate clothing and to learn the craft and to be able to then sell these and give this second life for themselves as a whole. And third, and I go on a third level that is the scholarship named after my great-grandfather, Ermenegildo Zegna, that was founded years ago, where the family decided to donate EUR 1 million a year to foster young talent to study abroad, to have an experience abroad and then bring back to Italy their knowledge and so forth. So this is our continuation of our founder's dream, give back to institutions, to suppliers and to the employees. These are some of the highlights. Clearly, the first one is about collaborating with universities, NGOs, and institutions to think broader about what we do and learn from it and make this a place where people can study, can improve. Second, responsible farming. Farming is a major opportunity because you need to move sheep around. You can't let them all in one place. They will destroy a location. I mean, I don't want to talk farming right now. That's proven. So you need to make sure that the sheep move, that the environment is able to recreate itself and so forth. And thirdly, as my father was mentioning, diversity and equity inclusion is a very important thing. Same thing that, by the way, Thom Browne is very ahead of, and we can learn a lot from. The third goal had to be Oasi Zegna. Again, exporting the legacy of Oasi Zegna by spearheading man-made forests in the world. I think this is a glorious dream. This is a man-made forest. Who else in the world has created man-made forests. How can we amplify that? How can we be proud and showcase this around the world as a whole? One very important thing that my father just approved was the idea that in order to push this mindset of Oasi Zegna across the globe, from 2023, the Zegna group will plant 10,000 trees in the forest, where also you have trees, would be forest, in every city where Zegna group opens or allocates its Zegna boutique. So again, it's a testament on how can we keep fostering this. And I'll talk a lot in my marketing presentation on the opportunity that all of this has as a whole. So as I said, you all have had all of these 3 commitments explored in a major way. Transparency and traceability, community and Oasi. And this road is our road. It's a very simple road. But it's who we are and it's what sets us apart. So we look forward to have you in this journey, and I repeat how I started. Actions speak louder than words, and the time has proven. Thank you.

Back to the supply chain. I don't want to bore you all because I think that certain things have been repeated several times, but I repeat, you and the supply chain is one that has to really be part of the strategy, because, I mean, this is the place where it all started and this is the place that gave birth, I mean, to the integrated supply chain. And that's the way we want to do business for the years to come. And there's just another anecdote from the history of my grandpa. The reason why Ermenegildo Zegna, Founder, decided to go this high hand in textile. You know why besides his ambition and his vision? Thanks to the British, because the British were the competitor of the luxury textile industry. And he said, "I want to be the best, and I want to compete with the British. Not only create the best fabric, but also a fabric with a special design." And he was a designer. He knew how to create a pattern. He knew how to design a fabric. He knew how to put the different raw material together in order to get the right hand and the right finish. So it's competition. It's this positive energy that competition creates and that makes you improve day after day. And contrary to the British, he put a brand with the fabric. The British did not have a brand. Okay, there were areas here and there and almost all of them closed, unfortunately. But the fabrics were sold to traders, cloth traders, we used to call it consistently. And so they reached you with the name of the trader, but it was not the actual name of the producer, or very few. Instead, he said, "I want my brand to be known by the tailor who's going to transfer the branding to the final customer." That's how he got it to the marketing models. So not only a genius in terms of philanthropy, in terms of entrepreneurship, but also in terms of marketing. There was no digital marketing, but on railroads, every station, there was Ermenegildo Zegna [ the suit on ], the best in the world, bam. So every time the trains stopped, you read and you say, "Okay, let me just go and try a Zegna suit made with Zegna fabric." So anyhow, that is a funny thing. The other funny thing is to tell you how our supply chain has been incredible. Founded in the Made in Italy is where my dad in the '70s went to Gianni Versace and he said, "Mr. Versace, why don't you have your menswear produced by us?" '70s, unbelievable. He said, "Why not?" And so we made a deal with the Versace family, with whom we went for many years for producing Versace Men's. And lastly, Maurizio Gucci, the last Maurizio Gucci, in 1991, when I signed a manufacturing and distribution agreement with Gucci. And Mr. Tom Ford was there. He was a young designer with Dawn Mello, another very strong fashion director of the American Bergdorf Goodman. So these are some of the highlights of our history. And last but not least, let me mention the 2 Toms. Tom Ford, 2016, Domenico came and Tom came to me and said, "Okay, we want to be back in business with the brand. Can you partner with us in order to do men's." And of course, the Thom Browne story you know. So I think that the history tells you how deep this know-how in an industry as such that is made of textile and is made of clothing, is made of knitwear, is making of Italian know-how, doing things well, craftsmanship is at the mast. We were talking in Margosio during the break and somebody of you asked me a very smart question, "Is there a shortage of talent?" Of course, there is. "How do you cope with that?" Good questions. Since we cannot count on investors as cool as we did at our generation, they're coming back, they're coming 30 years too late, we are going to unveil an academy, Accademia dei Mestieri. Within the Zegna group, it's not only the factory, it's not only the plant. Today, in every plant, we have a little academy. I just want to do something big to think 30 years, not think 10 years. In order to fill in every void in the supply chain, but not only the supply chain, in every function that is important for the future of our brand and strengthening of our brand. I can tell you a little bit more about the textile luxury platform. Now it counts over 650 people. It's made out of a bunch of super specialists that, through the course of the year, with Franco Ferraris, we integrated within the wisdom of Lanificio Zegna. And so it gives an incredible opportunity for us to gain competitive advantage in different raw materials, and also to gain competitive advantage when we go around and meet the top customer, because I go not with a trolley, not with [ a Lisa ], I go with a trunk. And I open the trunk, I show to the leading brand 5 different collections with 5 different specialties. So it gives us the opportunity to be scaled and that's very important. The other part is that our manufacturing clothing part of the supply chain practically produces, 75% is Made in Italy, including Ticino. You know that we have a factory in Ticino, the Italian part of Switzerland where most of the workers are Italian. And so for us, it's kind of Made in Italy. But I think that this 75% is quite important of our total manufacturing. And I would say that the internal production for tailoring is close to 100%. All the tailoring suits and clothing is almost 100% done inside. But if you include all product, about 40% of the total product are internally produced. And our intention is that this percentage goes up. Now the advantage of this model is that it gives you flexibility and speed that are really very, very important in order to cope with the different opportunities that you have around the world and of switching from market to market or from latitude to latitude. I think that having a vertical integration, I think, gives you surely a few advantages. And I think the first one is the advantage of traceability, which we call our project Auténtico, basically what it means that all the wool that we buy as a raw material is traceable through this Auténtico project that goes from wool growers to wool mill. And it's like going from the farm gate to the wool tops of the mill. And this is very important because every step of the journey is traced. They use the existing, you will see in the factory, is practically being able to utilize the waste of the textile and redo, recreate the fabrics that become authentic, and it's really 100% recycled fabrics. And the other, I would say, particular advantage of having a vertical supply chain is that through the Made-to-Measure chain, we are able to offer an incredible service, by which we can deliver the garment in 2 weeks, not around the world, but we have in the top market, we are able to do that 2-weeks delivery. And as we anticipated yesterday in the store, we are transforming the Made-to-Measure supply chain into a more digital form, by which we create kind of a mini avatar in which you can look yourself in putting different style and garment together and make your buy or purchase easier. Another important part of having this fully integrated chain is a project we call Essentials. Why Essentials? Because without that, you miss something as a retailer or as a brand. What is Essentials? Essentials is -- and incidentally, Thom Browne initiated that before us and in Thom Browne, it's called Classical. I'm sure that Rodrigo will tell you about. Practically, it is a collection of a few hundreds of SKUs, which is available all year around, and it will never go out of stock. And these are the pieces that you need most or you wear the most. This is an incredible advantage, because you don't miss sales, you don't look stupid to the customer. Have you ever tried? "You have a 52-bottom blazer?" "No, out of size." "What? Out of size in a Navy blazer?" "Yes." This is what happened most of the time in Italy. So to avoid this [ figure action ], we have invested in Essentials. And I think this is going to boost the productivity quite a lot. And this is going to be offered as for full winter in our own stores and through the wholesale chain. So I do believe that these are some of the pluses that we can highlight in selling you what our supply chain is like. Today, you will see the first part of the supply chain, only the textile part. We don't have time to show you the second half, which is the clothing part, which we wish to show you either in Italy or Switzerland in due date, to show you what the Formula 1 in clothing looks like. But I can tell you that by running under capacity in our Made in Italy platform, we are going to hire close to 100 people this year, of which, 25 Ukrainian. We are very proud of that. We have been promoting this project with the President of Camera della Moda and with other prominent brands that we want to make the life of these -- I don't like to call them refugees, so these brothers and sisters easier and to be able to create a new life. And so we are offering them a job and we already have 5 of them already working with us. So these are some of the highlights I wanted to share with you, and I think that's it for my part. And now I think it's Rodrigo -- no it's Edoardo again. Oh boy, it's a back and forth. It's like a derby here. Thank you. Like a derby between generations. Then you will vote the generation. I think it's fair. A word between generation. I lost it in that. I can tell you that during the investor media, I lost big time. Our generation lost against them. So we have to come back.

So I'm back without the chair. I go back to Oasi Zegna brand. As you hopefully have witnessed and you will again discover today, nobody has done what you have seen. My great-grandfather, as we said, planted 0.5 million trees, built a road, built a community and made what today is Oasi Zegna. But throughout our history, we have proven to have been unable to tell this story in a proper way. And it's probably our own nature. As we said before, we are a family of substance and few words. The Italians will know this, but [indiscernible] are frugal, are hardworking. And if there is one thing that has passed on for generation is the fact that we don't do things for fame, we do them because they're right. So now we are like in this amazing intersection of time and opportunity. Now it's a time to make this blossom, to tell this secret, to shout it, to highlight what this place is. I mean, it's like 12. Probably by now you're like, how have they not told this story before? I mean what's wrong with these guys. And I mean, I bear the question, are we the best kept secret in luxury? So my mission is only one, is how can I make Zegna recognizable and a lot we'll have to do, thanks to the help of Oasi Zegna. But before we go there, I want to remind you -- before we go on how we want to make Zegna recognizable, I want to remind you of the journey we have done so to date. Six months ago, we IPO-ed in New York. We launched this concept of the monobrand. All of our advertisements, a lot of our facades, changed the new logo. There is one, it's Zegna. We repositioned ourself and condensed the 3 labels into one. We repositioned ourself as a more luxurious, higher price point than way higher on the top of the pie. And we did almost something unthinkable like thinking 2 years back, we transitioned from a tailoring brand into a luxury leisure brand. But news flash, no product in store was conceived as a monobrand. What you guys witnessed yesterday in the store is still 3 collections; 3 collections that were conceived at the beginning of 2021. That's crazy, right? So we've done all of this by just changing the label and moving merchandise around and making it. So again, I go back to the stupid question of like, are we the best kept secret in luxury? And are we still scratching the surface of the potential of what we can do. The new collection with the monobrand will land for the first time in June in store. So our brand has gained major momentum. The IPO helped a lot, the monobrand helped a lot, and this chart, I think, explains how hard was it for us? You could argue like you guys are crazy. For the first time in our history, the highest searched thing in the company has been Zegna, 5-letter, Z-E-G-N-A, and it just recently surpassed Ermenegildo Zegna. So it tells you again how -- it's as if we were moving up the hill with like stones in our backpack. And across the board, you see the momentum on products, products such as Triple Stitch, Triple Stitch that actually the entire management is wearing today. So you have a full collection here today. Awareness that is growing across the globe. Across the globe, WeChat, Google, as I mentioned, Weibo, the Douyin campaign was insanely powerful at the end of last year on just the outdoor as a whole. Now how can we get the secret out there, the secret of Oasi, the secret of who we are as a whole? We start with building blocks. And the first building block they want to build is -- and we built and we started this 2 years ago is Triple Stitch. So the recognizability and relevance of the brand has to go through the creation of icons that speak of your inner self. It's like they distill the essence of your brand through a product. If you're able to create these iconic products, you're in heaven, because they speak -- they are like the best advertising campaigns for your brand. And the goal here is as a company to build some of the building blocks. The first building block that we created was Triple Stitch 2 years ago. Now bear in mind, 2 years ago, we were very little in leather. We've never been relevant in shoes ever. We did this well through supply chain, through marketing, through seeding from in-store and so forth. And we created a product that I want to highlight, despite being sneakers, this speaks of our core self. The 3 Xs that you see here are not random for the Xs. The 3 Xs come from our core. On the lapel, where in the old days, you put a flower, you have a buttonhole with 3 Xs that were closed. And this is where this comes from. So every product, again, is traced back to where we come from as a whole and that's very important for us. So Triple Stitch, we're obviously not going to give you the numbers. But I'd like to start from the title on the top left, that is "ROAD TO 100MIL". Yes, every building block that we create and we plan ahead of time needs to be of at least EUR 100 million. Now how far are we on the journey? We're pretty close. You can see the growth year-on-year on revenue and underneath, the marketing spend attached to all of this. But this is a smart marketing spend. And what is the secret sauce here? If you guys visited today, or I'm sure you are on many conferences, whether it's Davos or whatever it is, I can assure you that at least one of the speakers is wearing Triple Stitch. Why? Because we placed it in the right place in the right spot in the right people. And this is word of mouth. It's how you build an icon in authentic way. And the best news of this is when you do things well, the success comes on also a new dimension that is across new customers. The Triple Stitch penetration with new customer is 42% higher than average, not surprisingly. So yes, distill the essence of your brand into a block, plan 2 years in advance and build the House of Zegna into a recognizable house, something we've never really had. Triple Stitch is the first. And I'll tell you more about the next one to come. Clearly, the beauty of creating recognizability within your icons is that the stronger the icon is, the more power you have to do whatever you want with pricing, because if it's requested and it's asked for, I mean, you can do whatever you want. So clearly, the strategy that my father was speaking to you about is here to see on this slide. So this is a strategic slide of Zegna brand today. These are the building blocks. First building block, built 2 years ago, Triple Stitch. Second building block, Oasi Cashmere, it is not Cashmere, it's Oasi Cashmere. Third building block will be Made-to-Measure, and I'll talk to you more in a second. And the goal is every year, we want to add a building block to this house. And the goal here is that every single building block needs to be of at least EUR 100 million, and you can see the chart underneath of where we are on the journey. Oasi Cashmere will launch in stores in September of this year. Two major layers that are important to highlight this, that make this building block successful. One is Essentials. It's what my father was talking about. It's about being able to have the power to replenish all of this instantaneously and having bought some of the natural fibers ahead of time and so forth. And the other is collaboration. For us, collaboration is not about just, "Oh, yes, let's go and get new customers with a new product." No, collaboration for us is instead to use collaboration to maximize our core in an authentic way to get new customer. That is, how can I get Triple Stitch, how can I get Oasi Cashmere, get a collaborator that amplifies even further what these buildings blocks as a whole. So let's go by order. Oasi Cashmere. I've spoken during my sustainability presentation about the power of traceability. I'm very proud to say that Oasi for Zegna brand is becoming a trademark of our commitment to traceability. Today, it's Oasi Cashmere. Tomorrow, it will be Oasi attached to another natural fiber. We have 30 years to go on this strategy. And this strategy is consistent and keeps going to amplify where we're at, the place that, again, for some reason, we have never been able to communicate as a whole. Now the interesting thing about Oasi Cashmere on the traceability side is that for this year, the product that will land in September in store, some of our cashmere will be 100% traceable across the entire value chain. But there is a commitment to making sure that all of Oasi Cashmere will be sooner or later 100% traceable. So it's about placing a QR code inside the clothing, it's about having the user travel to Mongolia, where some of our cashmere is collected, then go back to Italy, to Biagioli, the factory that we bought a couple of years ago, and then back to Italy, to Oasi Zegna, where coincidentally, we shot the campaign. So again, this success doesn't just come from one second to another. It was advanced planning. It was advanced planning of supply chain, on IT, on marketing and so forth. And the acquisition, as I said, of Biagioli, is not, yes, let's buy a cashmere manufacturer as well; no, it's coincidentally because we want to get there. So it's about -- building a block means advanced planning in creating what this block means and what it needs to become. Essentials. My father talked about this. I mean by reducing complexity, you accelerate growth. You're more profitable, you're quicker, you're leaner. Gianluca and the entire supply chain can just see ahead of time and run in direction. And this chart is so basic, but so powerful on how we're moving into a different place. So again, the advantage of being recognized, the advantages of being iconic products or recognizable allows you to just be a linear company as a whole. Collaboration. I talked about this. This year, we'll announce at least 3 collaborations. But I repeat the concept of collaboration. Collaboration is here to maximize our core in an authentic way to new consumers. Okay? So the new building block. And in some capacity, what that does supply? We believe that we do today already offer unique experiences, but we don't speak about them. We could grow this so much more. And we believe that luxury today is service and personalization of interactions. And the goal is to seamlessly, clearly integrate this interaction across all touch points. So when I think of digital as a brand Zegna, I see this way broader than just the sales channel. To me, it's an instrument to engage and to attract new customer and to show them what sets us apart. So we are fully omnichannel. Actually, let me go back, because it's not -- you just looked at the slide. We are fully omnichannel since more than 4 years. All of our stores are directly connected online and off-line. All the sales employees have a tool in their hands where they can scan the barcode, see stock availability. They can move everything, transfer product from one place to another. They can highlight qualitatively and quantitatively the reason why they missed the sales and so forth. Okay? Now what we've been piloting since the beginning of 2021 was a clienteling app. How could we give in the hands of our salesperson the ability to outreach, to do one-to-one. So we are very proud to say that, and this is the data of the past 30 days, is that globally today, 29% of revenue comes from outreach. USA, that has been the first pilot, and the first zone for the app and so forth, is at 37%. 37% of sales into stores is done by outreach. This is personalization of service one-to-one. But this was not good enough. We knew this was going to happen. And we knew that COVID was going to increase this power, and adoption was going to be easier and so forth. So we asked ourselves, let's assume that this app is successful. How can we already plan to give into the hands of salespeople an even more effective tool to do outreaching and so forth? So we decided to launch a Styling Configurator. I'm not going to spoil it for you, and that's the purpose that I just put some images, because I'd love to see you in store, potentially in September, and witness this live in some of our stores that we're piloting live. But the idea is, how can I provide to the salespeople to outreach in a very powerful way, in a very functional way, and give them a better idea of how they could dress, what they could buy, what they could get from Made-to-Measure and so forth? So we're creating exclusively with this technological company, and we will soon, shortly come out with a press release around this, is around the ability to give to salespeople to do marketing bottoms up. We've talked a lot about our power and what sets us apart. We haven't talked enough about the power of our sales staff. I think we hold so much talent and so much know-how, we need to empower them to do this service and to do this personalization service in the most powerful way. And this will be one of the biggest game changers, we think, in the company. It is not just about Made-to-Measure. It's about the entire collection being displayed through this tool and being able to mix and match, to see different options and to play live around all the different projects as a whole. So the third building block of the company is Made-to-Measure. Today, Made-to-Measure is mainly tailoring. Look at our transition on the ready-to-wear side. We have to go in that direction and this tool will provide an amazing opportunity to do this. So one of the biggest success of this app has been Angelo Zegna that has led -- and is about to speak right now -- has led American retail for the past 15 months. So U.S. has taken this pilot and has scaled it globally. Same as Angelo. Angelo was Head of Retail and he's becoming globally the Head of Retail Excellence for the company. I think that one of Angelo's major goals is to -- let's assume that on marketing, we're able to tell this amazing story. How can we distill this story into experiences in store? How can we start creating a Zegna gift? How can we start creating a Zegna store experience? How can we be able to create an experience that is softer than just the entire campaign as a whole? So in conclusion, on the Zegna brand, the road is traced for how I see it. We have highlighted what sets us apart. Icons that become the recognizability for the brand, building blocks for the company. But I go back to my first question. It is like are we the best kept secret in luxury? Time will tell, but it's spring, flowers are blossoming, and we have all it takes to finally shout who we are and the road that will take us there. Thank you very much.

Good afternoon, everybody. Now that Edo has told us what it takes to build a recognizable brand, what I'll do today right now with you guys is to tell you what does recognizable Zegna retail experience look like? And what are we doing to increase the spend of our top high net worth individual clients, with the sole goal of doubling our retail productivity in our stores versus 2021. You'll hear from Gianluca that as per our guidance, we set ourselves a target of increasing 2021 productivity by 50%, but we're committing today to up the target to 100% in the longer term. And to do so, we've created a new function, which I'm heading. This function controls all the levels of retail, from CRM to data insight, to customer engagement, to retail training, to VIP and the like in projects as well as retail operation in order to hit this growth. Over the next 15 minutes, I'll explain to you what we internally call the relationship business model. As a luxury brand, we know that being in luxury is not only about selling clothing, but, in fact, it's even more about building these relationships. And we know that in order to build these relationships, we need to stay in touch with our customers. We need to know what they want, where they travel to, when is their holiday, what is the name of their beloved ones in order to anticipate their needs and trigger their wants and their desires. We believe that the art of clienteling, which is building these authentic relationships, is the ultimate productivity driver. Why? It empowers each one of our 1,200 customer advisers in stores to transform themselves into a store, 1,200 customer advisers, 1,200 stores. Why is clienteling is so important? We found that sales triggered through clienteling are 50% higher than a normal walk-in. Why is that the case? How does it happen? It's really simple. Our customer advisers want to do clienteling, are better prepared for their upcoming appointment. They're also able to plan ahead, which means that we're not subject to the flows of tourists or random walk-ins and we can build those accounts in with a stronger domestic business. Last year, Zegna's domestic business was higher than 80% globally. Edo briefly had talked about how have we been faring so far with clienteling. He talked about our USA pilot, which went live. We talked about our remarkable 37% in the U.S. performance. We talked of how we're now rolling it out -- we have rolled it out globally. And we're setting ourselves an ambitious target in the midterm to hit 50% of our revenues coming from clienteling. It's ambitious, but we'll get there. This is not a COVID story. It's about building authentic relationships with our clients. How have we done it? Of course, technology played a part, and our proprietary app did play a role, but it was all about changing the mindset of the people. We've now changed and we placed clienteling at the center of our interviewing process by asking candidates clienteling task, and based on an assessment whether they're fit or not to join our organization. We changed our compensation structure in order to promote clienteling. And the results are there to see. Now I talked about a change of mindset, right? What is this -- what is the best of changing our mindset that's based on building this relationship? The Net Promoter Score, we believe, is the best way of doing so. And the results are showing of all the hard work. In the U.S., in 2021, our NPS was 92% in our boutiques. We're talking about over 1,000 respondents. Globally, we've increased by 15% this year, 2021, versus previous year. And our CEO believes so much in the importance of relationships that he has set NPS as the goal for the whole organization. So every single executive from Alessandro Sartori to the supply chain head will be held to this measurement. Of course. So NPS, as many of you may know, is a methodology, which was devised by Bain 30 years ago, which measures the satisfaction of a client who's purchased in any of our stores. Again, it's a methodology that's used across industries. Apple -- and we're lucky enough to have Ron Johnson, who's the Head of Retail for Apple, on our Board, and he attributes to NPS. He believes that NPS was the single most important factor in creating the Apple retail experience. And since we are learned from the best, we went straight to Apple adopting this methodology. Now, still a long way to go to get to 50%. And we currently are able to have a single customer view so we know as a company who our customers are across all channels, which is not a given, but we're already there. We're going to be deploying by the summer, a very important tool, which will allow us to predict and prescribe what are the behaviors of our customers based on historical data in order again to anticipate their needs. And last, Edo talked about the importance of the styling configurator, which will allow all of our customer sources to use this tool to increase our sales. And I'll now move and tell you what are we doing to build this relationship with our top clients, so we're bringing this to the next level. Five years ago, Gildo created what we call Circle 300. This program is a group of the 300 most influential clients at Zegna, which are relationships, which the family has built over generations. We spent 5 years perfecting it because nothing can go wrong. We've now decided to expand this group to 3,000 people, and we started with the U.S. These are individuals who spend more than EUR 50,000 per year at Zegna. Why are we focusing so much on high net worth individuals? Well, first of all, we know they're more resilient to inflation and to recession. We don't know what's going to happen, but it's good to know that the backbone of our business is resilient to such, let's say, adversary phenomenon. And as you can see from the Capgemini chart, there are in the world 5 million males who could afford to spend more than EUR 50,000 per year at Zegna. So no matter how many Zegna has today, we're really only scraping the surface. There's so much room to grow. Now what does it take for us to get more of them? You see that in the Forbes 400 list, we already have 30%. And given the mix of gender, it's a good result to be up. But we want to go to -- and we want to get more. And we ask ourselves, how do we get more? And the answer is very simple. We need to be where they are, and we need to be part of their lives. So this insight of being part of our customer life is shaping everything we do at Zegna. I'll focus on 2 areas of the business, in particular, with 2 examples, one on marketing and one of real estate. February 2022, Los Angeles was the single month in private aviation with the highest percent -- with the highest number of inbound flights. What did Zegna do? We took over the private jet terminal of Los Angeles Airport in the month when there was a Super Bowl and we had Frieze art fair. So going forward, we're going to be investing this proportionately in these type of places because that's where high net worth individuals are. And the beauty of it is that every single person walking in front of it is a potential EUR 50,000 customer, unlike other type of marketing activities. We're adopting the same approach as we think of partnerships. Partnerships are needed for us to attract young and potential high net worth individuals. So we're partnering globally and locally with some of the top private members clubs, some of the luxury hotels, again, private aviation, some of the most established family investment firms in order again to attract the next wave of high net worth individuals. We talked about marketing briefly. And I'll show an example that shows how has this insight been into the customer life is even shaping our real estate trust strategy, our retail strategy. And I'll bring to you the example of Boston. We used to have a store, it was nice, was one of a dozen storefronts, was quite impersonal, who was sitting in a mall. We pulled out the store from the mall and we placed that on Newbury Street. It's not just on Newbury Street; it's part of the newly developed, most luxurious hotel there is in the city, and it sits right to the entrance of the hottest restaurant in town, which is run by Mario Carbone, which is the most exciting chef there is in the U.S. We, of course, work with both now, the hotel and the restaurant, but the location was strategic. And what are the results? This is 6 months after opening of one store. So a small sample size, but it's still relevant. Well, first of all, we decided to halve the size of our store. We wonder, well, how is this possible? Why are you guys doing it? Well, we've heard about Made-to-Measure. Made-to-Measure was born as a productivity driver. The grandfather had the idea of bringing to Japan because spaces were too small. So we're using that insight to -- which is still very valid to say that we need smaller stores. In the U.S., on average, 20% of our sales come from Made-to-Measure. In the largest store, it's above 30%. You don't need space, all you need is a meter. Similarly, as you halve the size, you also halve the rent, which is always a good to have. And what we were excited to see is that the revenue did not drop, which is what would be everybody is concerned. The revenue almost doubled, full price revenue in 6 months in Boston with this new location, almost double. I want to highlight the part full price. It will have been one year that in the U.S., there's not a single Zegna product in our channels, online and off-line that sold a discount. As of a year ago, Zegna stopped doing bargains in the U.S., and the results are there to show. And very important, what has happened, not only we've grown, but we've also grown significantly the share of new clients. So this strategy is paying off. And this strategy in this location has tripled the full price productivity with our brands. This is not isolated to Boston. We're applying the same strategy to Vienna. We're applying the same strategy Madrid and to many other cities around the world, wherever the opportunity presents itself. So how does everything -- we talk about how will it shape Zegna's future? This is a conversation that my brother and I had actually over the past few years, and we were imagining how will consumer trend and behavior change. Before the pandemic, luxury brands were used to customers coming to them, main KPI, conversion rate. Once they open the door, hit them hard and to make sure that they convert. The pandemic has accelerated the need of all luxury brands to go to their customer. They don't come along with you, how do you engage? Importance of clienteling. We believe, as we said, this is there to stay. However, in the long term, we believe there's going to be a third lever, which will work in parallel with the second one, which is the one that I just described, which is be in your customer life. How can you turn your brand as an experience? Because as a reminder, it's not only about selling clothing, but it's about giving customers an unexpected experience. Before I, let's say, wrap it up, I just wanted to leave you with this one fact, which I find just very interesting. Economist 2019, size of GDP. The Midwest, for those of you who are not familiar with U.S., is a cold area north of Chicago. If the Midwest was a country, which it's not, but if it was, it would be larger than Germany and Britain. It would be the fourth-largest GDP in the world. Zegna currently has 1 store in Chicago. We're looking to open a second one. But the question for you is, will we always need a store? What does it mean to be part of our client's life? What would the impact of a Zegna at home service on productivity be? And the question, of course, is open and it's a teaser for all of you to bring home. So to -- how does this, everything we talked, Edo and I, this morning tie up? So Edo has spoken about how our rebranding, building that momentum will drive traffic. We talked about clienteling as a great way of increasing conversion, spend and frequency. We did -- and Gildo talked about the strategy of the brand to go up and up and up, which means increasing prices, but also increasing the luxury content of the product we sell. As a matter of fact, Fall/Winter '19 versus Fall/Winter '21, our average unit retail price has increased globally by 27%. So up, up and up is happening. And we think, again, Edo mentioned that the Zegna Styling Configurator as a game changer, it is. That will be the single biggest opportunity for us to increase unit per transaction. Zegna, unlike many of our competitors who only focus on 1 or 2 categories has a full wardrobe. So when Edo talks about styling, that is our sweet spot. We do formal and informal. Nobody else does it. That's why we're the leaders in the menswear space. So this configurator will drastically drive average ticket. And last -- and net selling square meter, we did say that we're going to be reducing it every time we do a new store or we open a new store. So with all of this makes us very confident to be able to fulfill the commitment of doubling our retail productivity in the long term. Thank you very much. And now the word to Rodrigo Bazan, the CEO of Thom Browne.

Good morning, almost afternoon. It's great to be with all of you here. Thank you for the ones that came to the store yesterday. We really appreciate having you there. I'm going to speak on behalf of Thom and the 650 that make Thom Browne every single day. Before we go to the slide, I thought it was important just to give you some background because we are in a capital markets presentation, we will be perceived as an engine of growth. We have growth the last 17 years absolutely. But I want to speak first about the uniqueness of Thom Browne, the brand and our proposition. There's 4 points which are very, very important to understand that. The uniqueness and the proposition that we have in the luxury world, we believe, is based on a client-focused approach. We're extremely client-focused. We have a unique client. We also strive for excellence in the relationship with the client. The company, therefore, I believe, is very interesting because we have a very intimate relationship with our client. The product consistency and what product consistency clarifies, Thom has been creating product with a certain design and quality for 20 years; that is, creates 20 years of very coherent brand expression. Therefore, we are a very resilient brand and company. In COVID, we managed to bounce back very quickly because of that. We managed to build the DTC business because Thom, for 20 years, has been getting a message extremely clear to the outside world. It was a small community, it became a larger community. We expect it to be a much larger community. But we couldn't be doing our jobs, expanding the business unless there will be such a consistent product at Thom Browne. We will not lose a client. If we don't do anything wrong, we should continue to build clients on top of clients. The clients often are ambassadors as well, and we appreciate that. The client loyalty for us is key in our success, is loyalty brand to client, client to brand. We are aiming, as we'll explain later, for a significant expansion of clients, but the most important, we'll continue to engage in even stronger with the client than we have today. It is true that we are under the scrutiny of the financial community. But regardless, I want to assure you that we have a total passionate and focus on growing clients at Thom Browne, and this is, has been and will be. Point number 2 is product. The uniqueness on the Thom Browne proposition is that it's a brand that you don't have that many out there that starts from men's. 7 years ago, we took a commitment to really make into women's. It had started a few years before that and we made it successfully into women's. This is unique. Thom is creating a unique product on both genders, which is quite unique in the situation. Both collections are also aligned. There's no different takes like some other companies. And we see, with these opportunities in other categories, in eyewear, we have a very strong business. In kids, we just launched last year, proof-of-concept. We did extremely well. This all relates to the product consistency in the way that Thom has created product. Point number three, in our strategies, we grow clients faster than stores. We open stores to serve clients. But first, we expand clients. We're going to open in San Francisco in a couple of months, but we have had very significant clients in San Francisco for the last 10 years. Growth, I'm not trying to sell you growth. We're creating a platform, a platform that drives sustainable healthy growth and has a respect for the client and the environment. And this is extremely positive growth for us. The revenue growth is way smaller, I believe, than the brand equity growth that we've been pushing, we are pushing and will be pushing always. There's also the dos and don'ts for us. And this conversation is very good to have always at the Board level and with the shareholder. What do we need? A platform. The platform first is the talent in the company. Today in this conversion is the client value management. And the culture and the company to grow clienteling, keeping a strong clientele with us. The platform is roughly 150 stores as you will see in the presentation in the future. We also need a continuous evolution in the products. Very important asset. Continuous evolution is not a change. This comes from Thom, and this makes a relationship that we will keep with you for a long, long time. What we don't need, and this is often a good conversation with the Board, we don't need expensive stores. We don't need to be main street. The most prime location that we have in a main street, on a street of traffic is Sant' Andrea, you saw yesterday. And this is something that was referred by Zegna. I don't know if we would have gone and opened that store, but it came at great conditions. So with support at that time of the Board, we did it in the darkness of COVID. We just want to be in the right environment, and we want to build a team. As I mentioned yesterday, usually, in 18 months, it takes us to build a really, really good team and clientele. We are present, don't get me wrong, not only in cool off-the-beaten path locations; we're present in the most significant department stores and in great locations. We're present in the best malls in the world. But we are not going to be opening stores just to feed a significant rent to the landlord. We don't want bad growth. We don't want any promotional growth at all at Thom Browne. In fact, in the last -- we learned during COVID, to delay our markdowns, to keep them tighter and to have even deeper percentage of full-price sales. We don't need to push growth. For us, growth is a natural consequence of a great product and a great client relationship. We focus on excellence in product, client relationship and service. This is, I believe, our uniqueness and this is our Thom-ness to the business. With this, I would like to share with you a couple of minutes summary of a film that would air May 1 in American CBS. Thom had an interview with Alina Cho. Alina knows Thom for a long, long time, and she shot this actually during March 2020 before we went into COVID lockdowns. [Presentation]

Thank you. It's unique because Thom, I always say that we're going to be turning 20 years next year. But the first 10 years is where the gigantic amount of hard work came to define the brand. He almost went out of business and he eventually became a very successful business and is respected and represented in museums and built a really good culture in the company which we have. So moving to the next page in the presentation, what's our vision? Sorry. We have a clear vision to double our end clients, most importantly, remaining very connected with the current clients. When I say end clients, it's anybody that's been interacting with the Thom Browne product today. This goes through retail and wholesale clients. Therefore, we will be at least doubling our revenues in the next 5 years. I've joined this company 7 years ago. We have grown 5x in the last 7 years. So I feel very confident about this if we do it right. This is, I believe, a relative target. We're aiming to double our client, and this is a reasonable and also doable target for us in the future. This is all healthy growth for us. And this is a trajectory which is underway. It's not something that we'll start to do tomorrow. I just want to make it clear. 5x in the last 7 years, everything is in place for us to be able to tell this story and to show these results. If anything, we tend to be very understated in the way we give ourselves targets and we work extra hard in strategies. Moving to the next page. We couldn't be achieving this without very clear product strategies. We are aiming to accelerate further the growth in women's to exceed at least 40% of our business. We're also planning to grow categories business across men's and women's. We want to be recognized that usually, you will think about Thom Browne when you're looking at outer wear, sportswear in general, shirting, accessories and footwear. As part of this, just on the perspective, when I joined 7 years ago, women's was just over 10% of the company. So from 10%, we grew significantly. This didn't happen by chance. It was a total commitment by Thom and by all of us at Thom Browne to evolve the product, to define the product, they create the image and get visibility of Thom Browne women's around the world. Today, Thom Browne is recognized as a brand of men's and women's. It wasn't the case. When I joined the company, people said Thom Browne is a great menswear brand, not women's. We are also looking at -- we actually have taken over right now the eyewear business and children wear. We believe we can do a much better share of merchandising strategies and price points. These are businesses which are already very profitable and have a proven business success and have significant growth potential. We are furthering developing the Made-to-Measure, men's and women's, women's launch in the next 6 months; fragrance; beauty; and homeware. All the items that are in the last bullet point are mostly focused on DTC. And these are the items that will allow us to be able to interact with the client in a very engaging way. Our direct-to-consumer business, we believe that we will be building a clientele, a retail network to 150 stores by 2026 and growing clients faster than stores. We want to maintain the right size of stores. We don't want to -- and if anything like we saw in Milan, we outgrew the store to -- where we did men's [indiscernible], we opened the women's store. In London, we did something separately. We are exploring opportunities of conversion to concession that's at least $75 million of currently very successful retail operations that can be converted into concessions in the next couple of years. Client value management is very important. I mentioned this word several times, and it's a very, very important element here. We cannot be expecting to grow clients without a very clear focus and team that will be focused on growing clients. We are also looking at expanding the network. We have a proven business model in North America, where we believe there's a much larger opportunity for Thom Browne. We have a very strong business in China, where we saw it bouncing back very, very fast already in 2020. We have a great business in Korea. We're looking at further expanding there. We're also looking at expanding in markets where we have a bigger opportunity also to grow with Japan, Europe and the U.K. We have made a proof of concept in areas such as Middle East with Dubai. It's an opportunity that happened through the Zegna network of stores. We opened the first store. It wasn't necessarily our market in the world, but we've made a proof of concept within 2 years. And that's a very profitable store today. We also managed to open, during the lockdowns of COVID, in Singapore, very successfully. Also opened in Taiwan, first store, looking to the second store. We're also looking at retail markets that potentially we could be open because we have clients there, such as Australia, New Zealand and Latin America. E-Business. Just to give a point of view, we started from scratch. I often said that 7 years ago we didn't have any system. We didn't have any infrastructure. We didn't have an e-commerce system. So we have the virtue to do everything from scratch. It was e-business omnichannel from day 1. We managed to partner with FARFETCH back in the days across all platforms. The business has grown 10x in the last 7 years, and it is the least promotional business on the FARFETCH platform. So we're looking to furthering developing this. We have an opportunity to grow with the very successful thombrowne.com with a very successful marketplace model, which is currently on FARFETCH on Tmall and soon in other regional marketplaces. We have also started successfully to do social commerce in certain areas of the world. Our vision is to understand that the touch points with the clients they come to thombrowne.com, to know about us and we drive transactions and also position the brand. We'll be mining the gap also between the image and the commercial. Often, you have an image of Thom himself off the show. The idea with thombrowne.com is to be able to mine the gap and show you in images the relate-ability of all the products that we already have. If anything, I feel that we are way more advanced on the product ranges than the product perception and the marketing opportunity. This is the breakdown of how we prioritize what we do in every occasion of our platforms. Marketing, we couldn't be achieving what we're trying to achieve if we don't at least try to aim for more than 10x the visibility we have today. This is significant visibility, and this is going to be done through 3 different areas where we put a major amount of focus. 1/3 of that will, of course, come from shows, VIP and celebrities. In all our work, all the celebrities you've been seeing dressed Thom Browne are totally unpaid; it's totally organic work. And events, 1/3 is we've never invested 1 single page in our advertising the company. So 1/3 will be through global digital communication and marketing. We are investing as we operate in platforms such as Tmall, we do invest marketing behind. And marketing for us is very simple. It's different than the other pillars because it's focusing on clients and products. And 1/3 will happen through client activations and local communications that we'll be doing in different markets. Client value management. This is a very important topic of the conversation. We are committing to roll out the Salesforce platform, full interface in the next quarter. Just to put into perspective, I said we didn't have any system 7 years ago. We fully revamped all our retail systems 2 years ago in the darkness of COVID, and it wasn't planned before. Basically in May 2020, we're all working remotely. We have had the opportunity to work with a data scientist before. And what we did is we started to work on the future of client value management and analysis of data by client and product. So a huge amount of work happened since 2020. We invested in data warehouses, data sets. Right now, we are doing the largest ever commitment that the company had in terms of CapEx and interactions and interfaces with Salesforce. We chose the most expensive tool in the market because of the simple relationship. We have the most exceptional client, the most exceptional product, the most successful talent that is facing the client, we wouldn't be giving them a lower tool to work with them. So this will be fully functioning by September in the company. We'll continue to develop our single client view, our customer program. We will continue to develop our global as well as the regional client program. And our vision is to have 400 sales associates with a device and be able to understand the client activity. Remember, it's not that this is new to Thom Browne. Thom Browne started from the Made-to-Measure affiliate. So Thom used to open the door. David Bowie passed the store in Little West 12th to get in. He often told clients that wasn't for them and maybe what they asked was all he was doing. So -- but he always says, "I did marketing, I dress ladies every single day. I went for coffee, for lunch, and they saw me." And we -- there is at Thom Browne, a religious approach to clienteling. I say that because the Head of Retail Global has been traveling the planet for the last 7 years with me. He stayed 4 times several months in certain markets such as China, to build the clientele. I remember opening the store in Dubai. In the first day or two, [ he does me the sales ] and I think there [indiscernible] actually. And when I ask this gentleman for what he was planning to do, tomorrow would be Made-to-Measure training. And he was genius. Because even when you're struggling at the beginning to build a clientele, you have to be even more focused on what you do really well. Eventually, 2 years after, no Chinese passed by Dubai, as Gildo pointed out, and we have a very successful store. That makes our proof of concept to expand in the future in the Middle East. So our future is to -- just to give you one more fact. Our ratio of onetime clients today is less than 50%. This is year-to-date this year. Our ratio of how much we converted today of business year-to-date from clientele is 47%. So this is naturally our first large flagship was in Tribeca, 100 Hudson. So you don't have natural traffic. So what is it for us, client value management? It's not a simple CRM. The difference of Thom Browne is you have a unique opportunity with the client. We have a lot of team members working on this project that come from outstanding luxury business and luxury brands. They had never seen such a high quality of firsts purchased by a client. We're talking about a client that buys 1.6 to 1.8 units. They had never seen this quality of first-time purchase. We know that we will now be growing the VAC. The VAC is somebody that buys every single category or a show or $80,000 plus. We'll be continuing to keep a very strong relationship with them. We have a relationship with clients that buy $5,000 to $10,000, and we believe we can significantly grow that. How can we grow that? We have all the tools right now to be able to not only locally but also globally, track and understand, but we're committing to fully understand and recognize that we know what they are, what they like. And what's the path of experience and repeat purchases. Understanding the clients for us is everything. The engagement even during lockdown has been outstanding. The sales in a part of the world which sales are down because the stores are closed, through clienteling are up right now. We are capturing data. We became much better at capturing data, not only locally but also through client value management and the big commitment is to know the client globally in support through CVM, not only retail but also wholesale and marketing, because this fits us back in terms of the engagement with product. Purchase behavior is pure analytics. The qualitative knowledge of the client for us gives us a huge opportunity to engage with the client in a personalized way. We want to know what the family looks like for that client, we want to know the gifting practice of that person, we want to know the type of taste and moments where that person wants to be contacted. The love relationship that that person wants to be contacted through different types of e-mails, phone calls, texts, WhatsApp, Weibo and so on. We are working on this to understand the client data, identify behavior to further engage with them to clear drive value for clients and business. Our dream is to understand who I am, what's my gifting moment, what is my travel moments, how to contact me. And we look at them as one is fantastic at what they do. They know exactly whatever you purchase, but they are not engaging with you to ask you what you would like to do. The vision is that not only we have fantastic stores, the stores that know you, but if that person eventually moves to another role in the company or to another brand, the company knows you. You step into a store and you're known by them because you purchased in Seoul, in Tokyo, in Milan or in New York. We want to take the best of both worlds, and that's what we really like doing, not we don't want to be missing on that customer that passed by the store. We are not working on silos. That's a big difference to what can happen. Client value management connects everything from transactions to analytics, to campaigns, to communities and service. And as a closing remark, I hope you see a clear picture of what we're trying to do at Thom Browne. And this is not something we'll start to do tomorrow. This is something that we have been doing, that we are doing and will continue to be doing at Thom Browne. Thank you.

So good afternoon, everybody. For those who don't know me, I'm Gianluca Tagliabue, I'm the group CFO and I take care of also of the supply chain of the finished product not of textile, which is not under my accountability. So we started 1 year ago to have financial communication. We were very private. Around 1 year ago, we started first with the sponsor to communicate our goals, strategy and underlying numbers. Then through the PIPE road show, we opened to some others. And then through the final step of the SEC final, we made it much more public. All this, we called it Piano Futuro. So Piano Futuro was our plan for the future. And my goal today is to first make a checkup of where we stand against Piano Futuro, of what we promised, or probably we promised and over deliver, in a very cautious way. Second is to see our entry speed into 2022. And third, our guidance, how we see the near term and how we see the midterm to give substance to the numbers that Gildo anticipated before as our ambitions for the midterm. So the good news is that our Piano Futuro that was '21, '22, '23 has been proven cautious at the first check that was 2021 numbers. We came out very close to 2019. We over-delivered in terms of profitability. Our e-commerce doubled as a group compared to 2019. Of course, Thom Browne is ahead of the Zegna brand, but also the Zegna brand itself is catching up quickly. And we generated a lot of cash. So this is a flavor, but I will feed you with some numbers more specifically. So in the black, you see the actual numbers of 2021. In the gray, it was our outlook of last year during the IPO process and the due diligence process. So we promised to be north of EUR 1.2 billion and then make a further step in the EUR 1.3 billion , EUR 1.4 billion net in 2022. We came out slightly south of EUR 1.3 billion, so 7% higher than our promise. And specifically on the margin, we have been proven probably to be too cautious. We promised to land at 9%. We had 8% in 2019. The last normal year, we landed with 11.5%. I will come back to the reason, but basically, it's all the execution and the strategy that was laid out before by Gildo, Rodrigo, Angelo and Edo. It's progressing, and we are confident to say that it's progressing as we imagined quicker than we imagined. Now let's step into the beginning of 2022. As you might know, we split the numbers into 2 segments: Zegna segment, which is the Zegna brand, the Textile business; and what we call third-party brands, when we produce for Gucci, Daniel, Tom Ford. And Thom Browne segment, it's on a stand-alone basis, the Thom Browne brand. We finished with the Q1 numbers with a 25% growth, very much balanced between Zegna segment and Thom Browne segment. I will slice it by product, by channel and by geography in the next pages. So this is the geographical view. What is, I think, the most important indication of how our strategy is progressing is this number. Of course, we will come back, I'm sure, with a lot of questions on China. But let's for a second, make an exercise of isolating China out because, of course, there is a distortion and we will come out talking about that. But if we isolate the group numbers, excluding China, we are 48% growth compared to an easier comparison, but 48% is well ahead of most of our peers. This is an indication that the brand repositioning of Zegna, the journey of Thom Browne, the execution of Textile is doing its path in a very quick way, where North American, U.S., for all the reasons that were laid out by Angelo, but also on the wholesale side, that this area that we control less, we are seeing good traction not just in the Q1 numbers, but also on the orders of fall/winter '22, which are an indication of our next 6 months from now on. Europe. Europe is growing nicely in the region of 38% with some markets where we are doing extremely well. Gildo mentioned Dubai. Dubai is the epicenter of a new world of luxury. U.K. is doing well. France, which was probably one of the areas where we were a bit behind, is gaining traction on the Zegna brand. Latin America for how small it is, but it's doubling. Japan, it's growing. China is flat. China is flat. If we make 2 pictures, one at the end of February and one at the end of March, at the end of February, which was isolating the volatility of the current shutdowns, we were double-digit up to a very good 2021. And of course, March at its slowdown, and then I come back to this into the guidance of 2022, sharing what is the assumption that we bake into our 2022 guidance. In terms of product, so we divide our revenues by the Zegna brand, Thom Browne brand, Textile, third-party brands that again, is when we use our supply chain to serve other brands. Zegna-branded product was 22% up with sneakers -- shoes, not sneakers, shoes 42% growth. The Zegna luxury leisurewear, which made a further step up to 51% incidence on the overall numbers. Made-to-Measure, plus 38%. And when we talk about Made-to-Measure now, we don't talk anymore about only tailoring Made-to-Measure; we talk also about casual luxury Made-to-Measure, which is representing an interesting stake of the business. Thom Browne was growing 22%, at higher speed in women. And this growth is not just footprint growth, but it's like-for-like. Textile had a very interesting 64% bounce back. All the different offering of our portfolio, whether it's the Lanificio Zegna, more classical cloth or the Dondi jersey are very much in tune to the new demand, both for tailoring and for the casual luxury. Third-party brands, after slowdown of their demand in the last 18 months, they were coming back with strong requirements of product, plus 56%. If we make the last view, it's by channel. The direct-to-consumer channel is the predominant channel. Last year, it was 66%. Of course, this year, there was a slowdown in the incidence because of the last month of China and because of the good performance of Textile and third-party brands. But we are in the region of 60%, 65% of business coming from DTC. This I will not comment, but you have the -- the network is stable compared to the one that we disclosed at the end of 2021. At this point, let's move looking forward, so our guidance. First, let's share our view of 2022. We communicated in April a view of a low-teens growth and a step up -- further step-up in adjusted EBIT. And we are confirming that guidance, although, of course, we are very well aware of the volatility of China. And I will dissect why we can confirm -- it's not a leap of faith, but why we can confirm which are the underlying assumptions of our top and bottom line indication. So on the revenues, we are assuming that the current disruption in Greater China, where we have today roughly 15 stores closed, is going to continue through the end of summer. So in the guidance, we baked this. If this happens before, we will be ahead of the low teens; if it happens afterwards, we might be slightly short. But this is the underlying assumption, which we want to make clear. So through September, pain. U.S. and EMEA, we are assuming to have a 30% growth through the year with possible some upside, especially in U.S. and Dubai. So we might have a potential risk if the disruption in China goes on, but we have, on the other side, a positive upside on these areas, where we are capturing 30% as our underlying assumption, with U.S. higher than 30%, more in the 40%. Russia and Ukraine, we are assuming no further extension of the crisis. We have already canceled the fall/winter shipments. We delivered the spring '22. We got paid, so we don't have credit risk. But we are assuming that the business there doesn't come back and doesn't worsen further. In terms of Zegna-branded product, we are assuming a 10%. On the wholesale side, it's easy because we have already orders. We are assuming a good double-digit growth of Made-to-Measure. In Q1, we were 38%. So there are some assumptions that probably can prove cautious, that might counterbalance the risk of having more than September disruption in China. Thom Browne, it's between 20% and 25% growth through the year. Textile and third party, we know their orders. And so we can predict a good 20% up with Textile, more than 20% up. E-commerce, we see a growth rate double than the average of the group. All this talks about revenues. One comment that Gildo mentioned before is running at full capacity, the factories, that is my other job, I'm not talking about numbers, makes things easier. Of course, we need to step up the plan that Edo was mentioning of 400% growth, plus 100% year-on-year on cross-stitch. We need to step up the production quite quickly in order to cope with the demand. But this creates a fantastic fixed-cost absorption to the P&L. Because the people are there, whether you produce 10 or 15, it's the same. Of course, there is direct workers, but all the fixed cost know-how is well and nicely absorbed by the volumes, and we are running at full capacity in order to rush and deliver on time the one branded collection of fall/winter. So that's the reason why we believe that our guidance is still valid. Second, why we believe that the EUR 2 billion is not shooting in the sky, why we believe that we can achieve that? One reason, of course, Rodrigo mentioned before, the math is easy. Thom Browne made EUR 264 million of sales in 2021, and we see the potential to double. So that's one building block above and beyond the ones that Edo was mentioning. But how we are -- which are the buttons we need to be sure that we push in order to get to the EUR 2 billion sales? There are several. So we are not betting on 1 element. It's a portfolio of ideas. Of course, store productivity, what Angelo mentioned, we think that we can increase the store productivity of Zegna by 50%. Internally, we run for doubling. But in the midterm, to be again on the safe side of our promises, we -- the numbers, the EUR 2 billion matches with the 50%. In terms of Thom Browne, the stores of Thom Browne are smaller. And so their productivity is higher than Zegna, so probably they can have some room for improvement in some markets, especially on the West side. But I think that the biggest opportunity in terms of store productivity is on the Zegna network, on the 240 stores of Zegna, where we see we can build the 50% growth. You can make easily the math of what it means. The price and mix is one of the drivers why we can achieve the productivity. The productivity comes from all the levers of Angelo, but definitely, it comes from unit conversion, UPT cross-selling. It comes from higher price. It comes from a higher position of our collection because we leave behind Zegna and we turn into a higher and more exclusive offering. So we -- there is also a price/mix increase. We already planned for fall/winter '22 a high single-digit price like-for-like items. For instance, the Triple Stitch were not placed at 750 were placed well below, but we raised the volume and the bar because we didn't see any resistance. We saw that we were legitimate to offer products at a higher price. In terms of price and mix increase, Thom Browne again, is probably already well positioned. In terms of category expansions, we see more opportunities, of course, in killer categories. Killer categories for us are Triple Stitch, Oasi Cashmere, 5-pocket pants and Made-to-Measure. So those icons are the ones where there should be a common year, Made-to-Measure, leather. So we are seeing those as the items where we can bring more business. In terms of Thom Browne, it's women definitely where they can catch up, leather and licensing. Because eyewear, for instance, is the next phase for the business in Thom Browne. Collabs, we will disclose at least 3 collabs by year-end, 2 in the next few weeks because they are connected with either the sales campaign or the fashion show. So that's why we want to maintain confidentiality so far. But -- and the third will be by end of year. In terms of number of stores, the network of Zegna, I'm not saying that it's stable because we are changing stores, especially in some in China. So the cool location might change, some cities. But the overall net number should be -- can grow. We are 245, but could grow in the dozens, not in the 50 incremental stores. Instead Thom Browne has 51 stores at the end of March, we want to clarify directly operated stores. We think that we can almost double the number of directly operated stores. When Rodrigo was mentioning before, 150 was already also considering wholesale monobrand stores. So the doubling of Thom Browne is with less than doubling the number of stores. In terms of geography, there will be an opportunity for us to rebalance. In 2021, of course, China was the predominant number of our business. It will still be, but we see good momentum, good opportunity in North America, Middle East, Southeast Asia, Singapore, Australia as well and throughout the network locals; with the clienteling approach, with the new styling that allows people to buy from Monday through Sunday, so people that can dress the offering of Zegna for weekdays, for weekend in an elegant and comfortable way. Textile is ready to capture the opportunities both from formal wear and especially leisurewear in the next year. All these numbers look into an organic growth. So in the EUR 2 billion, we are not taking any step-up, I mean, from potential acquisitions that we are always looking at, but these are not to the numbers. Instead, the second number that Gildo mentioned was the 15%. As I said, we -- the outlook was in 2021 to get to 9%. In reality, we delivered 11.5%. If we look backwards, the reason why we were ahead are not one-off reasons but are structural reasons that are there to stay. The quality of our sell-through at full price. The initial margin with higher prices. Operational leverage, both in the OpEx side as well as in the fixed industrial cost, both for Textile and finished product supply chain. The fact that we -- Angelo was mentioning before, all the levers of the store productivity above the equation, but there is also the denominator that is the sales in the square meters. We have been constantly optimizing the square meters of our stores. And now that we squeezed the offering from 3 brands into 1 on Zegna, this will become also easier. We can optimize spaces, we can optimize rents, we can optimize investment of capital. So the reducing not needed square meter is also one other lever to optimize store productivity, which is the #1 driver to bring us to 15%. All of this, we include in this, especially for the next 2 years, the step up in marketing and CapEx. Marketing, we are in the region of 5%. If you take out Textile and third-party brands, which are B2B, you are between 5% and 6% in terms of marketing activities on revenues. We will step up by 1, 2 points for a few years, for a couple of years to amplify, on one side, the awareness of Thom Browne, and on the other side, the awareness of the new Zegna direction. In terms of CapEx for this year and next year, we have in mind to have roughly EUR 80 million of CapEx, which we can well afford with the financial position that we have. So we will use part of our financial strength to make the journey easier to the EUR 2 billion and the 15% by, for a couple of years, overspending in marketing and depreciation or, if you wish, CapEx. Everything self-financed with our current positive surplus. So this, in a nutshell, where we stand, why we believe that our recipe is translated in good numbers better than the ones that we anticipated 1 year ago. Thank you. [Presentation]

Thank you very much, everyone, for the patience and the interest in listening to the presentation of our management. I know we're running out of time and well ahead of plans, off schedule. I still would like to give you the opportunity to ask a couple of questions before we head to a lovely lunch and to our factory visit and the visit of Oasi Zegna. So if Rodrigo, Gildo, Gianluca, Angelo and Edoardo want to come up to the stage. One announcement for the people traveling to Malpensa. Please make contact with Lorenza, in white behind, to arrange the next steps in this day so that you can all make sure you are in -- she has already waved.

Lorenza is behind.

So any questions? Do we have the microphone for -- okay, John Guy from Jefferies.

Maybe just to start. Thank you very much indeed for your time today and congratulations. It's been a very insightful and exciting presentation so far. And delighted to be here. My first question is to do with your manufacturing, the verticality of it. How are you adapting your production to deal with demand? Are you going to move more to a lean manufacturing concept, when you think about working capital, stock management, in order to effectively maximize inventory days and cash flow? That's my first question. Second question is on the geographic rebalancing. Is the idea effectively to reach roughly 1/3 across EMEA, U.S. and APAC, ultimately and effectively, deemphasizing Mainland China, Greater China a little bit more? And my third question, sorry, it's 3. On store productivity for the Zegna brand, how many low-hanging stores are there in terms of relocations and store size changes that you can make, just like the Newbury Street example that we saw earlier?

So the first one for Gianluca, I would say; the second for Gildo; and the third, Angelo, Gildo, yes.

So in terms of supply chain. In terms of supply chain, should we adapt? We already -- maybe it was not pointed out clearly, but we already have a specialized unit network. So we have networks -- a network of facilities of plants that are specialized by product. Not far away from here, we have our plant doing network. Far away from here, we have a unit doing sleeve units. In Parma, we have 2 factories, which will become 3, doing leather, outerwear and shoes. So we have all the capacity in sites. So to steer from only formalwear to a more actually leisurewear has already happened. What we are doing is to gain flexibility in the data set that you receive, we are investing. One of the most important investments are in intensifying the capacity of internal in knitwear because we believe that knitwear -- and so we are purchasing new machines for new fineness. We are investing in San Pietro Mosezzo, the business, sleeve units here to create an island, we call it isola di complessità, island of complexity, where we produce -- we give like a fast track for prototypes. We do approach all the complex products, for instance, VIP. And so we take out from the main line of the production where we go for efficiency, we isolate the complexity into 25, 30 people doing all that is complex. So we are adapting in terms of being flexible in this way. But the capacity in terms of knowing all the products, we already have. In terms of investment, we -- of course, the move to Essentials can be a slight investment, but it's not material. We believe that at the end of the year, we should not have an overburden in terms of inventory for the move to the Essentials, especially because we picked fast earnings. So we are investing in items that have high rotation. So we don't fear an overburden in terms of inventory.

The question on...

If I may add one thing on the supply chain speed. It's the most important part going forward. Because of the turbulence or because of the changes of opportunities on the market, unless you are a reliable and speedy supply chain, I don't care whether it's Textile, whether it's shoes, whether it's knitwear, you don't go very far. So I think our aim is to put the investment in order to even do better in the speed, in time to market, probably time to market makes the idea. And I think that being so integrated, an organization from the farm to the textile to the manufacturing, helps better planning. Can you imagine what the planning job was to plan ahead, wholesale, retail of 3 different brands? It was a nightmare, so many cost, prototype, samples, mixing, change. One brand, 50% of the SKU, 30% extension. Wow, let's make it happen. I think we have to be prone every business unit that we are going to manage or buy, traceability and speed. Excellence is a given. It's indisputable. It tends to be, as otherwise you're out. Second question, yes, balanced growth. We are trying our best. I think we are doing more than our best. To be honest with you, I was positively surprised by the stellar performance in some of the geography. So until China is doing not what it should, it surely is a very welcome news. I am one of the positive mind thinking on China. I do believe that China will be back. Don't ask me when, but I think it will be back and it will be back strong again. So we are ready for that. I can tell you that because of my experience in China. I think we have seen at least 3 come back. And I don't think that they can afford not having another strong comeback, and we are ready for that. So I keep a positive mind, but we are prudent. Let's put it this way, as Gianluca said it. However, full speed on any other opportunity that we can go for. And I think that there are more opportunities than what we thought. And there are some businesses that could do slightly better than what we planned as Gianluca and Rodrigo has highlighted. So I am relatively positive on both sides. But an entrepreneur has to be positive, has to think ahead. So that's the way to be. But I think that it's a positiveness with a realism, based on realistic things and realistic expectations.

Angelo on productivity?

Okay, works. On productivity, it's fair to say and I'll start from stand-alone stores, that globally, we have an opportunity to reduce by 25% in certain regions more than others. In the U.S., for instance, that's even higher. Every single new U.S. location will be between 25% and 50% smaller. This is for stand-alone stores. Now they won't all happen at the same time because, as you know, we have long leases. So if you had a 10-year lease, it would take 10% -- every year, 10% of the stores will shrink. So you can run them out. Different story, though, for the non-stand-alone stores. And this is important on the concessions. Switching from wholesale to concession will give us an incredible uplift in productivity.

If I may add, I think if you make a math, if you look at the lease liabilities we have in the financials and the cost in the P&L, you can come out with a ratio of 3 to 4 years average. So not all the stores will require a shrinkage, but on average, probably we have 3 to 4 years of duration of leases. And any time like we did in Ginza, we were looking at -- or Newbury, we were coming...

Or Beverly Hills.

Or Beverly Hills, we will do the same. So in several locations, we will optimize the space to do the equation that Angelo was mentioning. And that is a positive, a powerful driver for our journey.

Susy Tibaldi from UBS.

Thank you so much for the presentation and the amazing day. So first one on thinking about the top line, which is a combination, of course, of price/mix and also your volume growth. So this year, you confirmed your 2022 guidance despite the fact that China, obviously, is seeing a big impact. So it seems that the key drivers so far have been the U.S., the American consumer and the Middle Eastern. So I was just wondering also in terms of price. We are seeing now big price increases throughout the whole industry. Do you think that this pricing -- like where do you see your brand in terms of positioning? Because right now, you have a certain positioning also versus your peers, and there is clearly a scope to improve that further. So is there a level that you have in mind? Or is it like a relationship between the demand and sort of the pricing power that you have? So like how much do you see the pricing increasing from here? Also on the sneakers, you made the example of -- that you're moving to 750, and there is no resistance from the consumer. So do you have a level in mind of how you want to position yourself relative to peers?

Listen, we are not talking about math here. We are talking about being on the market and getting the right feeling and do what we have to do. So far, we have done well because Alessandro Sartori created some high-value product, we developed the Textile division. And so the value of our product going up and that gave us opportunity to entertain better margin. After having said that, let's talk about competition. Cucinelli and Loro Piana are our competitor. Hermès, in somehow for a certain part, is our competitor. So we are in that league. And so we are shooting for that league. We have to be careful. It's not that we're going to, okay, let's go or whatever. But we know what we are doing. I think that just bugs us by keeping the pulse of the market, and I think it was enlightening. [Audio Gap]

ability of the business. So you are pushing into the Made-to-Measure segment, which, for example, if we think about different adjacent sectors like jewelry, and we think about the really high-end jewelry, obviously, comes with a significant price tag, but typically, it's less profitable than the more commercialized lines. So I was wondering when it comes to the profitability of the Made-to-Measure, obviously, it comes with a price premium. How scalable is it in terms of also the relative productivity and profitability? And relative to the group average, would you say the Made-to-Measure is accretive to margin, in line or dilutive?

Gianluca?

No, it's accretive. It's accretive. The math is simple. We price it 20%, 25% higher than the ready-to-wear. You don't have leftovers. The process of producing is not that different. We just have internal process in the factories like the fast track that go faster and go above and beyond the others. So the incremental cost is not as much. And so we can gain and enjoy good profitability. So growing, because we are growing Made-to-Measure, also out of tailoring, also out of formal wear, is an interesting way to increase the profitability. You don't have the leftovers that is the pain in the neck of any ready-to-wear apparel player. So it's all cash.

Okay. I think we need to stop here with the questions. I'm sorry, we are running really late. I think there is an opportunity for everyone to mingle with the management, so you can ask your questions over lunch. Thank you very much. And we also close the webcast here. Thank you.

Thank you.