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

Hello, everyone, and thank you for standing by. The Ermenegildo ZEGNA Group FY 2025 Preliminary Revenues Call. Please note that today's material and presentation are available under the zegnagroup.com website. Joining us today, the ZEGNA Group leadership team, including Gildo ZEGNA, the Group Executive Chairman; and Gianluca Tagliabue, Group CEO. Before we begin, we need to point out that the team will make certain forward-looking statements during the call. The group actual results may be materially different from those expressed or implied by these forward-looking statements. Also, these statements are subject to a number of risks and uncertainties, including those described in our SEC filings. Please refer to the forward-looking statements cautionary statement included at Page 2 of today's presentation. I will now hand over to Gildo ZEGNA.

Good morning, and good afternoon, everyone. Thank you for joining today's call. Our first call as Executive Chairman; Ambrogio Tagliabue as Group CEO. Very exciting indeed. As you know, in November last year, we announced a new leadership structure, a positive step forward for me and for our group, having appointed Gianluca Tagliabue as Group CEO; and Edoardo and Angelo ZEGNA, my two sons, members of the fourth generation of the family, as co-CEO of the ZEGNA brand. This decision marks an important milestone to further strengthen our group and smoothly prepare the next generation of leaders, who will carry forward our legacy, just as we have done for over a century and will continue to do so. By 2025, also is an important year for our business performance, particularly for the ZEGNA brand. The group total revenue were EUR 1.9 billion with ZEGNA brand reaching EUR 1.2 billion. These results were driven by the strategic DTC channel. In Q4, both the group DTC and ZEGNA DTCs delivered a sound 10% organic growth. With ZEGNA, in particular, these results have been led by Americas and EMEA with also China slightly improving, although remaining volatile. The ZEGNA brand strategy over the past years has been clear and coherent. In 2025, we delivered consistent and strategically aligned milestones from the fashion show in Villa ZEGNA in Dubai, to the Airbus partnership, from the launch of the Vellus Aureum collection to Villa ZEGNA in Miami. And last, but certainly not least, the recent beautiful Fall/Winter '26 fashion show in Milano, a Family Closet, where the brand opened the doors of the Family Closet. Taking pieces from the family wardrobe including mine as well as those of my grandfather, because a closet is much more the space, in which we keep our garments protected. For us, it is a shine where the beauty of cherished icons is celebrated. In the Family Closet, Alessandro Sartori presented Timeless Collection. This is designed to remain alive for generation to come because only memories can define identity and give the unique meaning they earn over lifetime, something only ZEGNA heritage and mastery can create. This show was acclaimed by press, buyers and clients as one of the best this menswear fashion week. The fashion show was complemented by Villa ZEGNA Milano, our private club. An invitation-only temporary store reaffirming once again in Milan, the strength of this format, which allows ZEGNA guests to experience our family heritage, centering on textile excellence and leadership in craftsmanship and Sumizura. Bravo to all people, starting with Sartori, Edoardo, Angelo, and who conceived this concept and continue to deliver strong and consistently improving results. I just want to emphasize that unless we had our Filiera from textile down to the clothing chain, we could have -- never have achieved these results. So a bravo also to all factory people and the know-how of our tailors and artisans in the factory. Let me now comment on TOM Fashion, which in '25 was a year in which we further shape the evolution of the brand's fashion business. The first collection designed by Hyder, which is the winter '25 collection, received very good results, as noted during last earnings call. In the past weeks, we have been introducing the spring '26 collection, the second by Hyder, that is, as we speak, also receiving a real positive response in the store, but above and beyond this, the team led by Lelio Gavazza, is working to cement TOM FORD, as a true brand of influence in the high-end fashion industry. We know that our journey is not yet complete, but the team is built. The plan is set, and we now have to execute together. Our priority for '26 will be to reinforce the brand momentum and restaurants and to expand its high-end customer base. Moving to Thom Browne. In '25, we continued on our path to reduce the brand exposure to the wholesale channel. As you know, we appointed Sam Lobban, the CEO, to transform the company into a retail-first organization. I am pleased to see the initial, although still timid results of this strategy. Q4 DTC delivered good growth, even if still driven by new opening. We all know these results are not yet where we want them to be, but they confirm that we are starting to take the right step. Our focus for 2026 will be to deliver sound DTC comparable store sales growth to sharpen our collections and marketing strategy. This will allow us to evolve our customer base and continue elevating the quality of our wholesale partner. And lastly, I want to comment on our Filiera. It continues to be our state-of-the-art laboratory, where we test, refine and develop fabrics that represent the absolute pinnacle of the luxury world and where our craftsmanship know-how continues to set us apart. We remain the custodian of this heritage while strengthening it further, because we know it is what makes us different from any other player in the industry. The Trofeo wool fabrics, our iconic fabrics born in 1965, are interpreted today and presented at the ZEGNA Fashion Show is a further evidence of it. Looking to the year ahead, I believe we all agree that we must face a new normal. And by new normal, I mean, a word more uncertain and less predictable. In this context, agility, coherence, vision, speed, together with talents will make the difference. We know the road may not always be linear, but we must face it with determination, prudence, and with the same courage that has always distinguished my family and our group. The courage to be pioneers while remaining true to who we are. As the main shareholder of the Ermenegildo ZEGNA Group, our family and I personally are fully committed to growing it and to making it even more solid for the generation to come. This is the undisputed goal for Gianluca, Edoardo, Angelo, Lelio-san, and myself and for entire leadership team. Thank you.

Good morning and good afternoon to all of you. Before commenting on the full year '25 revenues, let me begin by expressing my gratitude to the Board, our shareholders, and above all, to Gildo for the trust shown in my regard. It is an honor as well as a clear responsibility to step into my new role, and I will carry it out with the utmost respect for our unique century-long heritage. In my new capacity, I will work closely with the CEOs of our brands, Sam, Lelio, Angelo, Edo to ensure that we can fully leverage the group's strength enhance, integration and accelerate our ambitions. At the same time, I will continue to oversee our manufacturing platform of finished products and corporate functions. Gildo has been a mentor to me and I know he will continue to stand by my side and by all of ours to continue guide us and safeguard our unique legacy. So thank you, Gildo. Let me now move to Page 8 of the presentation. As always, I will comment on the organic performance, which excludes foreign exchange impacts, and therefore, better reflects the underlying business dynamic. In 2025, we reached EUR 1.917 billion in revenues, plus 1% versus last year and EUR 591 million in Q4, up 4.6% organic. In the last quarter of the year, ZEGNA brand reported EUR 362 million, plus 7%, driven by the DTC channel that has been landed at plus 10% for the brand. Thom Browne reached EUR 91 million at plus 1.4% organic and TOM FORD fashion reached EUR 98 million, up 1.5 points. Let me now move to the following pages for a deep dive. Turning to Page 9, we comment on the performance by brand in the quarter. ZEGNA brand recorded EUR 362 million in revenues, plus 7% growth, driven by the solid sequential acceleration in the DTC channel, specifically in Europe, Middle East and Americas. Thom Browne reported EUR 91 million in Q4, plus 1%, also in this case, driven by a good performance in DTC, driven by new openings. TOM FORD fashion landed at EUR 98 million revenues, plus 1% organic with the DTC channel growing faster. Finally, we observed textile growing at plus 1%. Moving now to Page 10. We see revenues split by geography. Europe, Middle East and Africa represented 36% of total revenues in full year '25 and was up plus 7% in Q4, with a solid performance in the DTC channel, in particular, at ZEGNA brand, which offsets a negative impact of the wholesale channel rationalization. The Americas, which accounted for 30% for the full year revenues recorded plus 16% increase in Q4, despite the challenging comparison of the last quarter of last year. This performance was underpinned by the strong DTC momentum at ZEGNA brand, which continues to deliver outstanding results, thanks to the robust brand momentum and the team fully capable of executing our strategy. Indeed, ZEGNA brand continued to grow sound double digits in U.S. as well as with the U.S. consumer cluster. Moving on to Greater China region. In full year '25, the region accounted for 23% of total revenues, so it's half of the incidence compared to the time of listing of our group in 2021. In Q4, GCR reported a revenue decrease of minus 10%, a sequential softer performance compared to Q3, which is only due to Thom Browne and TOM FORD and to the wholesale channel across this. In this case, wholesale channel across the three brands, whose quarterly performance was influenced by different delivery timing. ZEGNA DTC specifically improved in the quarter, while still being negative. We expect China to remain volatile throughout the year, and as you know, we planned accordingly to the budget of 2026. Last, rest of Asia Pacific in Q4 reported plus 5% growth, driven by sequential improvement at both ZEGNA and TOM FORD fashion, specifically in Japan and Korea. Moving to Page 11. Let me go quickly through it since we will comment on the trend by channel for each brand. I will only highlight that the DTC channel at group level reported plus 10% growth in Q4 in sequential acceleration compared to plus 9% in Q3, and in full year 2025, DTC accounts for 82% of group's branded revenues, which, as you know, excludes textile and other revenues, which are B2B businesses. Let's move now to Page 12, where we deep dive on ZEGNA brand revenues by distribution channel. In Q4, ZEGNA DTC revenues grew 10%, accounted for 88% of full year 2025 brand revenues. As we mentioned, we saw an acceleration of performance in the last quarter, notwithstanding the solid base of comparison across regions in Q4 of last year. As we mentioned, the Americas and Europe, Middle East and Africa continued to report solid double-digit growth. Great China region revenues remained negative, but with an improved trend compared to Q3, revenues from the Chinese cluster improved sequentially in the quarter to a mid-single-digit negative. At the end of December, the number of ZEGNA DOS was unchanged compared to the end of September. Moving to wholesale, where the brand's revenues were down minus 17% in Q4 and accounting now for 12% of overall revenues for the year. The performance reflects the deliberate actions put in place by the brand to rationalize the distribution of iconic ZEGNA products and to increase direct control on the distribution channels. Moving to Page 13. Thom Browne revenue split by distribution channel. DTC revenues for Thom Browne were plus 11% in Q4 in sequential acceleration driven by Americas and Japan, supported by some relevant store openings, such as New York Madison, Los Angeles Melrose, Palm Beach and Ginza, Tokyo. In the quarter, Thom Browne had one net DOS closure in Asia. As broadly discussed during the year, the brand is continuing its activity to defocus from the wholesale channel, reducing volumes injected, thus the wholesale channel reported a minus 14% in the quarter and minus 40% in the full year. As already anticipated, we will continue to see negative performance in the wholesale channel, also in 2026, thus, at a significantly lower degree than the 40% seen this year. Let's now move to the last but not least, TOM FORD fashion revenue split by channel, Page 14. In Q4, TOM FORD fashion reported DTC growth of plus 5%. This performance reflects a sequential deceleration versus Q3, as already indicated in our prior call, since the higher base of comparison and the decision to place significant emphasis on Hyder first collection in Q3, which has been supported by strong commercial and marketing activation. Let me also anticipate that the brand has started the year positively, benefiting from the very good reception of the spring collection. At the end of December, the number of TOM FORD fashion DOS was unchanged compared to the one of September. The wholesale channel reported minus 4% in revenues in Q4, in line with our strategy to strengthen direct control on distribution. On Page 15 -- Page 16, you'll find a summary of the group's store network, which is now composed of 282 directly operated store for ZEGNA, 123 DOS for Thom Browne and 66 for TOM FORD. Before opening to the Q&A, let me conclude with a brief comment on Saks Global. Saks Global filed for Chapter 11 bankruptcy protection on January 13. Saks is an important partner for many luxury brands, including our group. We are closely monitoring the situation that Saks works to stabilize its operations and to negotiate terms, also with respect to past due receivables with all vendors, including ourselves. At this stage, these discussions remain ongoing, their outcome is still uncertain. Our group has the financial and business strength to absorb this extraordinary event, considering the limited incidence of Saks Global on the ZEGNA Group revenues. Paola, now I'll defer to you to do Q&A session.

Thank you, Gianluca. Thank you, Gildo. And please, operator, can you open the Q&A session?

[Operator Instructions] Our first question comes from Chris Huang with UBS.

It's Chris from UBS. First of all, congratulations on the very strong results at the ZEGNA brand DTC. So I'll actually start with my first question on ZEGNA brand DTC. I was doing some calculations and looking at the comments you just gave on Chinese consumers, it does seem like the brand, excluding Chinese, accelerated to, in Q4, around high teens percentage growth year-over-year. Can you maybe confirm if that is the right understanding? And also connected to that, what is the mood you are seeing year-to-date in 2026? Of course, if we put aside China due to the different timing of Chinese New Year, but I just wanted to understand a little bit more. Any color you can give on the start of the year for other markets? Second question on FX. I think we've been hearing some of the other peers reporting so far in Q4. So with the current rates in mind, can you help us a little bit on what kind of FX impact you are expecting for 2026 on an EBIT margin level, how much of a headwind we should expect?

Okay. So, Chris, thank you for the questions. I think they are both for Gianluca, even if maybe on the first one, I'm sure that also Gildo wanted to add some color on the start of year. The first one is on the calculation x ZEGNA DTC x Chinese, if it is on the high teens as calculated and then on the ForEx.

You're good in math, Chris. Yes, I think it's the right calculation. In terms of ForEx, we have seen 2.6% headwind on currency this year. It's the delta between reported growth and organic growth. We are seeing something similar for the year. So that is our budget, if we expect currencies this way. Of course, part of that can be mitigated by hedging. Of course, we have hedged specifically very much so spring '26. We are already well covered on fall '26, but of course, this will fade out. So there will be definitely an impact also from currency. That's why I think if you remember, I talked about margin in '26 moving sidelines because inevitably, if this is 2, 3 points, we'll have partially an implication on the numbers, still partially covered by hedging, but not entirely.

And any color on the start of the year, excluding China, that Chris is saying, we know that the Chinese New Year is having an impact.

Okay. So Chinese New Year, I don't need to remember, but last year was 29th of January, this year is on the 17th of February. So comparing January to January, we are against the peak season of last year. So if you isolate -- if we isolate the effect of the calendar of Chinese New Year, we don't see a trend significantly different in DTC, of course, from the one of Q4 2025.

Any color by market?

No. We see resilience in America. America keeps being our #1 market in terms of percentage growth, followed by the Gulf area. And I think European is doing pretty well. So we just are past January and, I think, January is following the trend of Q4. So, so far, so good.

Our next question comes from Anthony Charchafji with BNP Paribas.

It's Anthony from BNP Paribas. First question would be on ZEGNA Retail and the productivity that is now quite close to 20,000 per square meter. I think you're targeting close to high single-digit improvement per year. Can you just remind us the key drivers here? And also remind us the rollout of your new perfume in -- for the ZEGNA brand and what impact could it give for full year '26? My second question would be on the profitability indication, probably, for this year, if I may, the consensus is at around EUR 173 million. And if you see some upside or not given the strong DTC? And my third question, and I'm a bit sorry to ask about Saks, but really curious to know your exposure at group level. You have a few shop-in-shops for especially ZEGNA and TOM FORD, I think. And on top of revenues, maybe an indication on the inventory exposure and if there is anything to flag in terms of potential provision or how we should model this?

So, Anthony, yes. So the first question is on ZEGNA productivity and the key drivers for this year and also going forward. So for sure, it's for Gianluca as much as the perfume rollout, which has just started in any case, so very early. Sorry, the second question, did you ask consensus '26 or '25?

'25.

EBITDA '25, okay? And Saks exposure, I think they're all really for Gianluca.

So the ZEGNA DTC, you said it's on the 20,000 per square meter. So we are -- of course, that is one driver of growth for -- not just for 2026, but for the 3 years. So -- and the drivers so far will continue to be mix and price, price mix together. Of course, we have been elevating the offer successfully, and it's keep on growing. So for instance, now we have launched a new version that is the NAM version of Triple Stitch, which goes in the same direction. We are intensifying the density of the collection of Vellus Aureum, more will come through the year. So mix will continue being the driver of our growth, together with events, which means the activations that we are doing above and beyond the stores. The Villa ZEGNA is a perfect example, but there are some that are less visible, which are suites or trunk show. So that world of elevated offering, elevated moments is the main driver of our increase of productivity. ZEGNA brand from a client perspective, you see this reflected in the growth, which is very positively double digit on ZEGNA brand, still in 2025 and will be continue doing so next year, while we not only foster the already existing ZEGNA brand, but as we have exposed in some of the recent meetings, we are targeting what we call the doors that are the clients that are slightly lower the threshold of ZEGNA brand, that we want to then elevate and bring them into the threshold of the ZEGNA brand, which I recall is some clients that are spending EUR 50,000 per year with us. In terms of consensus, the one that you mentioned, I think for 2025, EBIT is reasonable. Of course, pending the effect of a bad debt accrual that is linked to Saks Chapter 11 evolution. So if you isolate that, yes, it is reasonable. We need to take into consideration, which is something we cannot do today because we are monitoring the evolution, and we will continue doing so right until March, when we publish the numbers, what is the situation and the needed bad debt accrual that we have to book, which is, of course, something that is extraordinary and it's affecting the exposure. You mentioned inventory. I think it's not an issue of inventory. It's a question how much we need to accrue in terms of bad debt. Inventory is not an issue, because it's more on the credit side. I think, I also answered on the Saks. We cannot comment more than this because it's all in flux, and we are having clear conversations with them. And I think more than this, we cannot comment.

I don't know if the question, Anthony, was also on the Saks overall revenues exposure or if -- but in any case, I think it has been said, but it's in the low mid-single-digit.

The impact of -- so the overall magnitude of Saks Global in the different dimensions Saks NIM and NBGs, represents a low single-digit incidence on our group's revenues. So that's why we face the situation with -- looking forward with optimism that we can offset the impact of this situation.

Our next question comes from Chiara Battistini with JPMorgan.

It's Chiara Battistini from JPMorgan. I have a couple of questions, please. The first one on the U.S. that strongly accelerated in Q4. I was wondering if you could deep dive a bit more on the colors -- on the drivers of this acceleration, especially between new customer acquisition versus the returning customers that you're trading up? And then also whether you could share some detail on basket size and conversion and ASP and how those are evolving, especially in the U.S.? And then the second question on the wholesale numbers at group level for Q4 -- both Q4 and 2026. On Q4, I was just wondering if there was any impact from Saks. So maybe if you held back any shipments that might have the negative impact on the wholesale development in Q4? And then any early guidance on how to think about wholesale for the three brands into 2026, please?

Okay. I think they are both for Gianluca, but then if Gildo wants to comment more on the U.S. market, I'm sure that he can give us some nice colors and on the wholesale is Gianluca, for sure.

It's a mix of things. I think that ZEGNA has continued to be extremely successful, both with loyal clients and with new clients coming in, whether through the Triple Stitch or through a knitwear. So it's, of course, Villa ZEGNA has been an important driver. So ZEGNA is a very round acceleration across the board. TOM FORD -- Thom Browne, there is definitely, as I said before, some openings, which has generated new clients whether it's New York Madison, or it's Melrose Place. In TOM FORD has been a very good acceptance of the new collection that has been put together, starting in August and September because that was the peak moment of pushing the collection of either, but also through Q4. And as we commented, at the beginning of this year in January, we have seen good momentum in spring. So I think that three brands are seeing good traction in U.S. In wholesale, your question, we are -- definitely wholesale will not be a driver of growth in 2026. We expect the decrease to be lower than this year for the three brands. Of course, it will also depend from the Saks evolution. So at the moment, before any major change on the Saks' landscape, the wholesale channel is expected mid- high single digit negative for the year with a higher decline on Thom Browne, which could be in the low single -- low double-digit mid-teens range. So that is the scenario that we have in front of us. Of course, isolating any situation on Saks that for the time being is still liquid in terms of evolution.

And just to confirm also for ZEGNA brand, I'm sorry.

Sorry, for the ZEGNA brand.

The wholesale channel will remain negative in 2026.

Yes. It will be -- as I said, if I said mid- high single digit at group and Thom Browne is low double digit means that ZEGNA will be negative and low.

Our next question comes from Bhumi Kanabar with Jefferies.

Bhumi from Jefferies. Congratulations on the results today. Just two questions from me, if I may. Are you able to quantify what Dubai Zoloto and Villa Zegna Milan contributed to organic growth in Q4? And then secondly, you commented on your happiness with EBIT consensus for the full year, but on the revenue base reported today, consensus has about 13.9% margin for ZEGNA segment. Do you think this can get above 14% or close to 15% given the operating leverage from Q3 and Q4?

Okay. On Villa ZEGNA, well, that has not impacted Q4, if this was your question, but I leave Mr. Gildo to comment a little bit more on Villa ZEGNA, which I think is a very important concept that we will continue to leverage on. On the EBIT, in particular, the question was on ZEGNA brand EBIT for full year 2025. If I understood well, I'll leave then Gianluca to comment.

I want to stick to the comment on consensus at group level for the time being because there is also -- but when we -- I think Anthony was asking, if we confirm the consensus of EUR 173 million at group level, yes, before Saks accruals. Yes, of course. Of course, the numbers of ZEGNA DTC have been specifically positive. So we might see some impact on that positive impact. Yes, that is to be expected.

Okay. Villa ZEGNA, it's a long journey. We started a few seasons ago with this project, which I think that this highlights the personalization and the high-end product of ours. And I think the clue there is that we try to localize only Villa ZEGNA. Villa ZEGNA is not all alike, but we tried to make them one different than the other. And I think this is an exciting journey because also a customer that has bought before can find newness and differences on the Villa ZEGNA to come. That's number one. Number two, I think that more and more customers are embracing this project because it's about experience. It's not about selling because most of the product, you can find the Villa ZEGNA, you cannot find them in the store. And so I think the level of service, the level of surprises, the level of experiences, the level of product innovation created by Alessandro Sartori are quite unique. Our intent is to continue this journey. We have a couple of the destinations set that are still secret for this year, but surely, they will complement new store opening, and maybe also market where we don't have stores, because it gives us the possibility to reach our customer without knowing of their stores. So Milan was extremely successful, more than what we expected as has been Dubai. And there's a matter of fact for you that want to visit still Villa ZEGNA Milan, and will still be there for several months to come. And so enjoy your journey, because I think that this is something very, very special.

Our next question comes from Oliver Chen with TD Cowen.

Gildo and Gianluca, congrats on the leadership transition. Regarding what you're seeing in Greater China as well as the cluster, are you expecting things to get less negative there? I know it's a very dynamic and volatile environment. And what are you seeing in terms of traffic and/or what you're monitoring with that consumer, and how it interplays with your results. Second, regionally, Americas continues to really execute, but the comparisons get tougher. Do you anticipate double-digit increases at ZEGNA brand to continue? And which products within the ZEGNA brand have been performing better versus less good as well would be interesting to know?

So a couple of questions, very interesting as always. The first one on GCR. Are we seeing the environment less competitive? And what are we seeing there? And then the second one, which I'm sure, Gildo would take it is, how we are executing in America even if -- and what we expect there, even if the environment and the base of comparison for us is becoming increasing challenging. So I might leave the first one for Gianluca and the second one to Gildo, if okay for you.

So in order to see the momentum in China, it's been there recently, early January. So probably, we can see some slight improvement in Hong Kong, if we want to see the overall picture rather than in Mainland. Mainland itself, we are still taking a prudent approach because the environment is volatile. Then we can take -- draw more definitive conclusion after the end of Chinese New Year, end of February. So for the time being, I would not raise the flag that we see a change in momentum, probably with the exception of Hong Kong.

And for our momentum in the U.S. and our market?

I said it before, I think our momentum in the U.S. will surely continue for ZEGNA, because we are becoming better and better, thanks to the new product offering that is well received by our customer. And number two, we are opening new stores. There is surely a good trend, not only for ZEGNA, also for TOM FORD. And I think that for Thom Browne, we opened a good number of stores also in the mid recently. So we hope that the results will come in '26. So overall, still bullish on America on the three brands. We know that there is this situation that, as Gianluca said, will be monitored very closely, but we remain positive on the outcome of the situation. We are continuing investing in both marketing and in new store development, which we have done a few years ago. And I think the results are coming, thanks to that foresight and I believe in a market that seems to be resilient to also geopolitical situations, for us at least.

On wholesale, I had a question on wholesale. Where do you expect it's 12% of resins in here, but when you look longer out, what do you think the mix of wholesale as a percentage of revenue should be perhaps at ZEGNA as well as Thom Browne. And on the Thom Browne strategy, awareness and marketing is obviously a big opportunity as well as continuing to commercialize the Thom Browne business. Just would love to know where you are in that journey and key catalysts ahead there as well on the Thom Browne brand.

Okay. The journey...

Sorry, you're asking only about Thom Browne or about the three brands?

Three brands. Wholesale at ZEGNA and then the mix of wholesale ZEGNA and then Thom Browne, just strategy awareness build and change, if this change is happening.

Sure. On ZEGNA, we are getting close to 90%. I mean, retail versus wholesale. And I think this journey has started quite a while ago when we decided to convert the wholesale into concession. I think that was an important step we have taken. And plus, as the productivity of the store climbed, surely, that was a very favorable situation. On Thom Browne, it's a transition. And surely, the future will be more on direction retail. We have decided to cut the wholesale in the past 2 years. And I think that it has -- we still have some -- a little work to do, but I think, most of the work has been done. And I think that retail can have a good progress because we have enough stores of Thom Browne around the world. It's just a matter of to improve the productivity and to become a stronger retailer. And on TOM FORD, I think America is very strong. We are going to strengthen our distribution in Europe, we can anticipate the new store that will open in Paris on Rue Saint-Honoré by the end of the year. And we are opening also store on the same road. So this is a good cope, plus adding a few stores in America and Asia remains a big territory to be done that will be coped in due time. But overall, our future is more and more retail and less wholesale for the entire group.

The next question comes from Adrien Duverger with Goldman Sachs.

Adrien Duverger from Goldman Sachs. First, congratulations on the great show in -- for ZEGNA and Milan earlier in January. And then I have three questions, if possible. The first one would be on the performance of the Chinese cluster in the fourth quarter and on the underlying demand trends for the group and by brand, and also what you would expect for the rest of 2026? My second question would be on pricing. How do you think about the pricing environment and the overall opportunity to continue to drive higher pricing from the product mix? My last question would be on the higher spending cohort. I think we've seen that they have been quite resilient so far. Has there been an increase in the proportion this year versus last year in your revenue numbers? And if so, do you see any difference between the different geographies?

Thank you, Adrien. Okay. So in the -- for the cluster -- for the Chinese cluster, sorry, we might not have said, but when we comment cluster, we comment ZEGNA brand. So the comment on the cluster was referring to ZEGNA brand. In terms of pricing, how we see the price environment and spending cohort? So the higher spending cohort, which has remained more resilient this year, I leave to Gianluca and to Gildo to comment on this. On the pricing, Gianluca, and then we move forward on the cohort.

Pricing, as we see 2026, we are facing spring and fall with mid-single-digit price increases in order to offset the currency evolution. So that is the pricing we are taking is in that regard. It's not repricing for the sake of repricing, but to offset the currency fluctuation. And on the spending, spending cohort, the evolution, I defer to Gildo.

Yes, the success on our spending. I think that we have, in particular, in ZEGNA and so forth, I think, we have set up a goal to go after the big spender. And I think that all the product development is in that direction, including the personalization project, which we are second to none. And I think every time we apply those assets, we see that the customer spends. And so I think that the increase has come more from the high spender than from the less spender. And so I think that our goal is to continue go in that direction, both for ZEGNA and TOM FORD, and we are preparing ourselves to do the same with Thom Browne. Know that the personalization project is fueled by the ZEGNA Filiera by the ZEGNA supply chain. So this is an advantage. So there is no reason why if it -- it's well done for ZEGNA, it cannot be done the same for TOM FORD and Thom Browne. And I think this is something that we are developing and strengthening this year for the years to come.

Yes. And on spending cluster, I can add on the ZEGNA side that we see extremely good momentum on the clients above the 25,000 pending. Those are the ones that we nurture in order to get to ZEGNA brands, and of course, also the ones above 20,000 -- 50,000 are the ones labeled at ZEGNA brand. So those cluster, 25,000 to 50,000 and 50,000 and above are the ones that are driving the growth on the ZEGNA brand specifically. On China, probably, one thing that we already mentioned and will become more present in 2026 is the pruning of our retail footprint that is going on, both on the ZEGNA brand as well as on Thom Browne. So the numbers of ZEGNA of GCR already in Q4, but even more in 2026, we will give preference to rationalization of stores to concentrate business in fewer better stores.

The next question comes from Maria Meita with Bernstein.

I have two. First, could you please break down the growth at ZEGNA between price mix and volumes? And how do you see this evolving into the next year? And then second, what actions are you planning to undertake TOM FORD to sort of keep the momentum, the strong momentum from last year going into 2026?

Okay. Thank you, Maria. I'll leave to Gianluca to comment on ZEGNA brand price mix and volume and to the TOM FORD momentum.

It's the driver is price mix more than volume and will continue being -- this is the pattern. It's consistent with the trajectory and the strategy and the positioning of the brand. We want to focus on elevated items, elevated moments, elevated clients. So price and mix. Price, as I said before, in order to defend the margins, rather than just repositioning like-for-like to increase the margin, but to defend the margin and the mix, because we are creating more and more collection that carry sophisticated materials, more elevated details in the making. So it's -- mix is the driver together with price.

In terms of TOM FORD momentum, how we keep this momentum into 2026?

TOM FORD will have both comp as well as space. So TOM FORD is today distributed in 60, 70 doors, and it's a brand that will deserve 100 stores in the midterm. So we will also use that lever. And for instance, in U.S., consistently with success that we have seen, we are going to open a few stores in the year. Bal Harbour will be one, for instance, that we opened apart from Paris that Gildo mentioned before. So there will be space, and of course, all the activities that we have been putting together, investing in these years in retail team, merchandising, IT, CRM are all levers that we are deploying in order to replicate the same go-to-market model of ZEGNA. So the cadence of product, the activations of clients with CRM tools. All these are the levers that we expect to generate increased revenues on a like-for-like basis.

Operator, I don't know if there are follow-up questions.

Our next question comes from Daria Nasledysheva with Bank of America.

I have three. The first one, to follow up on one of the previous questions on China. And also given your outstanding performance ex GCR as of today, is there anything outside of macro that keeps ZEGNA brand from closing this gap in performance in China versus rest of the world? For 2026 and also for the medium term because I think that's pretty important. Number two, could you please share your thinking around development of your store base for 2026 across your three brands? Any indications that we could be using for our models and maybe anything to comment also on the CapEx cycle. And the third one, can I please follow up on your thinking on EBIT margin development into next year? How should we be thinking about this, as you said, flattish because of FX between gross margin versus OpEx leverage/deleverage?

Okay. Daria, thank you for all the three nice questions. First one on China. The question is, is there anything on 2026 that it's a outside macro that can cause us for the, let's say, limiting our performance in China, and I'll leave to Gianluca to comment on this. And then the second and the third are more numeric questions on store development and EBIT margin development on '26.

I think that we monitor ourselves compared to competitors, of course, and I think we are seeing more or less in the same location, similar trends. So we don't judge to be a specific brand-related topic. So it's more related to macro, it's more related to the appetite of spending that we are. And of course, to the fact that, there, we are not using space as a lever. It's vice versa, we are shrinking the network. So I think, it's -- probably, that is the combination of macro with something that is specific to us. I would just say the network that is not in our favor, it's more on the opposite.

In terms of development of stores by brand for 2026, you commented already that basically for ZEGNA, you should assume no space or very little space contribution or not?

I want to -- we already mentioned on TOM FORD. We have definitely three stores that are in U.S. that are coming. One is Bal Harbour, as I mentioned before, San Diego in Costa Mesa. There is Paris.

Very end of the year, so.

Yes, mostly, it will be on the second half on these ones. And there will be women. On Thom Browne there is no impact on that space. Probably, there will be some stability more than anything else. On ZEGNA, we have some openings. The most important ones that come to my mind are still a couple in U.S., San Diego, Scottsdale. There is one in China, which I call out, which is counterintuitive because we are reducing, but there is one that we are going to open in Shenzhen Bay, which is an important city from a technological standpoint. We are opening a couple of stores in Middle East in Riyadh and Abu Dhabi. These are the main relevant openings that we see going forward.

And in terms of margin, Daria asked, you comment on margin 2026 to be flattish. And how you comment on this?

No, we confirm the movement on the sideline with possible some improvement on the margin, of course. But there is an impact on the top line coming from the devaluation of the FX. So I would not enter into the detail, whether it's gross margin or OpEx. We have said that it will be more lateral than a steep increase.

I will speak to this.

The next question comes from Natasha Bonnet with Morgan Stanley.

Congratulations on the good set of results at particularly the ZEGNA brand. I've got a few questions. The first, just going back to your comments on the group EBIT margin -- sorry, the group EBIT margin, moving sideways in 2026, what level of growth have you baked in for margins to move sideways? I see consensus has 5.4% organic next year. And do you expect TOM FORD EBIT to turn positive in 2026? And then the guidance, I guess, on EBIT, 12% to 2028, that's where consensus is. Does that still make sense? Second question would be, could you please tell us your exposure to the Triple Stitch franchise in 2025? And my last question would just be, you mentioned store rationalization at the ZEGNA brand and Thom Browne in Greater China. Could you tell us how many stores you're planning on closing this year or next?

Okay. Thank you, Natasha. And sorry, the first -- well, we really lost a little bit in translation with all the numbers that you mentioned, but the reality is what I would like to call out is, Natasha, this is a call on revenues. So we might leave all the questions on margins when actually we report margins in March, if you don't mind. So the second question you had on Triple Stitch, but I didn't get the real -- the actual question, sorry.

So it was your exposure in terms of revenue now on Triple Stitch.

Exposure, okay, yes. It's a line of the 15%, 1-5, that you remember, we said so shoes overall, including also other shoes is around 20% of our revenues and Triple Stitch is more or less, as we said in the 15%, 1-5 percent. No changes from the past. And the third question was or is?

The store rationalization in Greater China.

The number of closure in China. Yes, yes, right. So I'll leave this to Gianluca.

It's not specific to 2026, but in the midterm, probably, we might have 10 stores that we are not renewing at the expiry. So that is ballpark. The -- on ZEGNA, we might have some others also on Thom Browne. TOM FORD is fairly distributed. So I don't see a major impact from TOM FORD, but definitely on ZEGNA might be 10 stores. Not in 2026.

Yes. Over the medium term? I'm not sure if there are other questions on the line.

At this time, we have no further questions on the phone lines. And so Paola, I will hand back to you.

Thank you. Thank you to everybody for the many questions. Actually, we like them all. And of course, we remain at your disposal, Alice and myself, to any follow-up questions that you have, we are here any time, and we reconvene on March 20 for the full year results. Thank you so much, and see you or speak to you very soon.

Thank you, everyone, for joining us today. This concludes our call, and you may now disconnect your lines.