Ermenegildo Zegna N.V. (ZGN) Earnings

Management highlights

### Strategic Direction - The group maintains a core retail-first business model, prioritizing DTC growth while intentionally streamlining wholesale channels to protect brand integrity and improve customer experience. - The group focuses on serving top-of-pyramid luxury consumers, while growing the client base through consistent brand experiences and community building. - All long-term strategic initiatives launched in prior years are now delivering positive results, with ongoing work required to reach full value. ### Brand Initiatives - **Zegna Brand**: Hosted the successful multi-day La Villeggiatura experiential event in Los Angeles in June 2026, which exceeded expectations for media coverage, brand recognition, and client interest. The event brought the Zegna family's Italian summer villa heritage to life, reinforcing the brand's identity as an authentic Italian lifestyle brand beyond apparel. Zegna continued its longstanding support of art and community-focused initiatives at Art Basel, aligned with the group's founding values of shared sustainable value creation. Make-to-measure (Sumisura), luxury leisure wear, and shoes are the top performing categories, driving overall brand growth. - **Thom Browne**: Held its first-ever runway show during Milan Men's Fashion Week in June 2026, which received positive industry and consumer attention, highlighting the brand's tailoring heritage and creative evolution. The brand is building a stronger retail-first organizational culture through talent investment at all levels, with early progress visible in DTC performance. - **Tom Ford Fashion**: High-profile presence at the 2026 Met Gala and Canfield Festival drove strong earned media and global brand visibility. Combined with more focused collections and improved CRM capabilities, these efforts are driving DTC sales growth. Women's ready-to-wear, particularly day wear, is a key untapped growth opportunity, and the brand has launched women's made-to-measure tailoring to leverage the group's unique supply chain capabilities. The current priority is selective retail network expansion and deepening existing customer relationships, with medium-term focus on comp store growth and new customer acquisition. ### Operational Highlights - Overall DTC comparable sales growth is strong across all brands, with average unit retail (AUR) as the primary growth driver, driven by positive mix shifts toward higher-value offerings rather than pure price increases. - Approximately 90% of Chinese consumer spending occurs locally in Greater China, so offshore spending has minimal impact on regional results. The brand is pursuing a "fewer better doors" strategy in China, pruning underperforming locations while investing in new flagship stores in high-potential locations. - New client acquisition is growing for the Zegna brand, with new clients typically entering for high-ticket items, expanding the brand's core customer base without shifting away from the top-of-pyramid focus. - AI deployment is focused on three high-impact areas: demand planning for core continuative products, enhanced CRM and customer personalization for both digital and in-store experiences, and back-office operational efficiency improvements.

Guidance

- The group reconfirms its commitment to hitting its 2027 long-term targets, with no changes to existing guidance. - Management confirms that full year 2026 consensus revenue and EBIT estimates are reasonable and achievable, despite expected higher comparables in the second half of 2026. - Full year wholesale guidance per brand is maintained: Zegna is expected to deliver a low double-digit decline, Thom Browne a ~30% decline, and Tom Ford Fashion a low mid-single digit decline. A faster rate of wholesale decline is expected for Zegna in the second half as the brand intensifies its iconic product protection strategy. - Zegna Brand has a target to grow made-to-measure (Sumisura) sales from the current level above 10% to 15% of total brand revenue (across all channels) in the next phase of growth. - The majority of Thom Browne's Q2 DTC growth came from new store space contribution; lower space contribution is expected in H2 2026.

Segment performance

In Q2 2026, Ermenegildo Zegna Group recorded total group revenues of 517 million euro, an 11% increase year-over-year with sequential acceleration from the prior quarter. All organic performance figures exclude foreign exchange impacts. By product/brand segment: - Zegna Brand: €324 million in Q2 revenues, accounting for 62.7% of total Q2 group revenue, with 18% organic growth in the DTC channel (which makes up 90% of the brand's H1 revenue). All regions contributed to growth, with Americas performing particularly strongly. Wholesale revenue for the brand declined 3% organic, in line with the retail-first strategy. - Thom Browne: €65 million in Q2 revenues, accounting for 12.6% of total Q2 group revenue, with 3% organic growth overall. DTC grew 16% organic, with growth driven by the Americas, Korea, and Japan, partially offset by a 29% organic decline in wholesale from ongoing channel rationalization. Three net new stores were opened in the quarter. - Tom Ford Fashion: €89 million in Q2 revenues, accounting for 17.2% of total Q2 group revenue, with 7% organic growth overall. DTC grew 13% organic, driven entirely by comparable store sales growth, with the Americas and rest of APAC leading performance. Wholesale declined 3% organic, in line with the retail-first strategy. One boutique was closed during the quarter. - Textile segment: Revenues declined 3% organic, largely due to shifted delivery phasing. Third-party ready-to-wear production is a marginal business with no material impact on overall results. By geography (based on H1 2026 revenue contribution): - EMEA: 33% of H1 group revenue, up 2% organic in Q2, with solid DTC growth offset by intentional wholesale reductions. The Middle East returned to positive growth in Q2. - Americas: 31% of H1 group revenue, up 22% organic in Q2 with sequential acceleration, driven by double-digit DTC growth across all three brands. - Greater China Region (GCR): 24% of H1 group revenue, up 9% organic in Q2 with further sequential acceleration from Q1. - Rest of APAC: 12% of H1 group revenue, up 19% organic in Q2, with contributions from all markets, particularly Korea and Japan. By distribution channel: DTC accounted for 86% of total group branded revenue in Q2 2026 (textile and other B2B revenues are excluded from branded revenue calculations).

Risks & headwinds

- Forward-looking statements are inherently uncertain, and actual results may differ materially from guidance due to a range of risks and uncertainties, which are detailed in the group's SEC filings. - Geopolitical disruption from the war in the Middle East created expected headwinds in the region, though actual performance outperformed expectations and turned positive in Q2, with ongoing uncertainty surrounding future tourist demand. - The second half of 2026 faces more challenging year-over-year comparables, and Q2 benefited from one-off major events (such as Villa Zegna Los Angeles and the ASICS launch for Thom Browne) that will not be repeated at the same scale in the remainder of the year. - Consumer demand in continental Europe showed early softness in July 2026, potentially linked to unusual weather and the timing of the World Cup, though the trend is still early and unconfirmed. - Strategic growth initiatives continue to require upfront investment before delivering sustainable long-term value, which impacts near-term profitability.

Analyst Q&A

• Q: What is the month-over-month performance trend in Q2, what is driving Greater China's acceleration, and is full year 2026 profitability on track to hit prior guidance for stable margins? /

  A: Q2 2026 performance was solid across all three months, with acceleration in May and June that exceeded management expectations. China's acceleration comes from consistent execution on core priorities, particularly improved performance in underpenetrated categories like made-to-measure. 90% of Chinese consumer spending occurs locally, so offshore spending has no material impact on regional results. Management continues to invest strategically in marketing and group-wide synergy initiatives, and confirms that current full year 2026 consensus estimates for revenue and profitability are reasonable and achievable.

• Q: What categories and regions drove Zegna Brand's strong outperformance, is mix still the main growth driver, and is the brand gaining new customers? /

  A: The top performing categories driving growth are made-to-measure, luxury leisure wear, and shoes, with average unit retail (mix of higher-value offerings) as the main contributor to DTC growth. All regions contributed to outperformance, with the Middle East returning to positive growth in Q2, where local consumer demand fully offset shortfalls in tourist demand. The brand continues to focus on its core top-of-pyramid customer base, and community-focused activations are driving a steady increase in new high-ticket customers.

• Q: What is the breakdown of traffic versus ticket growth for Zegna in China and the Americas, what is the new customer opportunity for Tom Ford, and how is marketing spend changing to support new acquisition? /

  A: For Zegna in both regions, AUR/mix is the largest growth driver, with positive growth in both traffic and conversion as well. For Tom Ford, the largest untapped new customer opportunity is women's ready-to-wear day wear; the brand has leveraged the group's unique supply chain to launch women's made-to-measure tailoring, a unique market proposition. Marketing spend cadence remains consistent for Zegna focused on experiential community building, while marketing spend will increase slightly for Tom Ford over the coming quarters to boost brand awareness ahead of a key Paris store opening.

• Q: What are the group's key priorities for AI deployment across the business? /

  A: AI work is focused on three high-value areas aligned with the group's current data readiness. The first is demand planning for core continuative products, which have sufficient historical data for accurate AI forecasting. The second is enhancing CRM to deliver more personalized customer propositions for both digital and in-store client advisors. The third is improving back-office internal productivity through AI-enabled tools and algorithms.