Ermenegildo Zegna N.V. (ZGN) | Investment Case

1. Company Snapshot

1.a. Company Description

Ermenegildo Zegna N.V., together with its subsidiaries, designs, manufactures, markets, and distributes luxury menswear, footwear, leather goods, and other accessories under the Zegna and the Thom Browne brands.It provides luxury leisurewear for men; formal suits, tuxedos, shirts, blazers, formal overcoats, and accessories; leather accessories comprising shoes, bags, belts, and small leather accessories; and fragrances.The company also offers luxury womenswear and childrenswear under the Thom Browne brand, as well as provides eyewear, cufflinks and jewelry, watches, underwear, and beachwear manufactured by third parties under licenses.

It serves customers through its retail stores and online channels in Europe, the Middle East, Africa, North America, Latin America, the Asia Pacific, and internationally.The company was founded in 1910 and is based in Trivero, Italy.Ermenegildo Zegna N.V. is a subsidiary of Monterubello Societa' Semplice.

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1.b. Last Insights on ZGN

Ermenegildo Zegna N.V.'s recent performance was driven by strong H1 2025 results, with revenues reaching €928 million and a profit of €47.9 million, up from €31.3 million in H1 2024. The company's strategic investment in its DTC store network and brand resilience, particularly in its core brand, have contributed to its growth. A recent partnership with Temasek, which will hold a 10% stake in the company, has strengthened Zegna's balance sheet. Additionally, the appointment of Sam Lobban as CEO of Thom Browne is expected to aid the brand's turnaround.

1.c. Company Highlights

Last Price	10.61
Change Percentage	-2.66%
Open	10.82
Previous Close	10.9
Market Cap ( Millions)	2682
Volume	808014
Year High	11
Year Low	6.05
M A 50	10.02
M A 200	8.7

FCF Yield	7.40%
Dividend Yield	1.33%
ROE	10.56%
Debt / Equity	116.90%
Net Debt / EBIDTA	345.18%
Price To Book	2.61
Price Earnings Ratio	24.26
Price To FCF	13.52
Price To sales	1.2
EV / EBITDA	12.53

2. Ermenegildo Zegna's H1 2025 Earnings: A Mixed Bag

Ermenegildo Zegna Group reported first-half 2025 revenues of EUR928 million, a 2% organic decrease. Despite the decline in revenue, gross profit reached EUR626 million, with a margin of 67.5%, a 110 basis point improvement driven by a higher DTC channel mix. The company's adjusted EBIT was EUR69 million, with a margin of 7.4%, a 100 basis point decrease compared to the first half of 2024. EPS came in at EUR0.2, beating estimates of EUR0.1178.

Publication Date: Sep -05

                                    📋 Highlights
                                    Revenue Decline::
                                                H1 2025 revenues fell 2% organically to EUR 928 million.
Gross Margin Improvement::
                                                Gross profit margin rose 110 bps to 67.5%, driven by DTC channel growth.
EBIT Margin Pressure::
                                                Group adjusted EBIT margin dropped 100 bps to 7.4% due to SG&A expenses and currency impacts.
Zegna Outperforms::
                                                Zegna segment EBIT margin climbed 150 bps to 14.3% via DTC leverage and cost control.
Tom Ford Loss Widens::
                                                Fashion segment posted EUR 19 million adjusted EBIT loss, up from EUR 12 million in H1 2024 due to expansion investments.

                                

Segment Performance

The Zegna segment performed well, with adjusted EBIT reaching EUR94 million, and a margin of 14.3%, up 150 basis points year-over-year, driven by operating leverage from the DTC channel and cost control measures. In contrast, Thom Browne's adjusted EBIT was EUR4 million, compared to EUR20 million in the first half of 2024, due to a decrease in revenue, particularly in wholesale, and increased selling costs related to DTC expansion. Tom Ford Fashion segment recorded a EUR19 million adjusted EBIT loss, compared to EUR12 million in the previous year, due to planned investments in store expansion, talent acquisition, IT infrastructure, and production capacity for footwear.

Outlook and Guidance

The company expects adjusted EBIT to be higher in the second half of 2025. The company maintains its full-year outlook of low single-digit revenue growth, with the biggest risk remaining the pace of recovery in China. The U.S. market has been stronger than anticipated, and pricing increases have not negatively impacted volumes. Analysts estimate next year's revenue growth at 4.8%.

Valuation

With a P/E Ratio of 26.0, P/B Ratio of 2.19, and P/S Ratio of 1.0, the company's valuation appears reasonable. The EV/EBITDA ratio of 10.61 suggests that the company's enterprise value is reasonable relative to its earnings. The ROE of 8.72% and ROIC of 5.04% indicate a decent return on equity and invested capital. The Net Debt / EBITDA ratio of 3.14 is manageable.

Investment Thesis

The company's commitment to investments in Zegna, particularly in events like Art Basel Miami in December, may lead to some margin contraction in the second half of 2025, but the company believes these investments are necessary for long-term growth. The implementation of a DTC-centric approach for Thom Browne is expected to drive double-digit EBIT growth for the brand. The company's cautious outlook on China and plans for a "new normal" situation suggest a conservative approach to growth expectations.

3. NewsRoom

Ceredex Value Advisors LLC Sells 87,700 Shares of Ermenegildo Zegna N.V. $ZGN

Nov -29

Source: defenseworld.net

Ermenegildo Zegna N.V. (NYSE:ZGN) Given Average Recommendation of “Moderate Buy” by Analysts

Nov -29

Source: defenseworld.net

Ermenegildo Zegna Group Prepares for the Future with New Leadership Structure

Nov -24

Source: businesswire.com

Ermenegildo Zegna: Stay Buy Rated As The Setup Has Gotten Better

Oct -29

Source: seekingalpha.com

Top 3 Breakout Stocks to Buy Now for Active Investors

Oct -28

Source: zacks.com

Ermenegildo Zegna N.V. (ZGN) Q3 2025 Sales Call Transcript

Oct -23

Source: seekingalpha.com

Contrasting Ermenegildo Zegna (NYSE:ZGN) and SuperGroup (OTCMKTS:SEPGY)

Oct -20

Source: defenseworld.net

ZGN vs. ONON: Which Stock Should Value Investors Buy Now?

Oct -13

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.78%)

6. Segments

Zegna

Expected Growth: 9.0%

Zegna's 9.0% growth is driven by increasing demand for luxury menswear, successful brand diversification, and strategic expansion into Asia. The company's focus on high-quality materials, craftsmanship, and innovative designs resonates with affluent consumers. Additionally, Zegna's strong online presence and omnichannel retail strategy contribute to its growth momentum.

Thom Browne

Expected Growth: 8.5%

Thom Browne's 8.5% growth is driven by increasing brand awareness, strategic expansion into Asia, and a strong online presence. The brand's unique blend of tailored clothing and accessories resonates with a growing demographic of fashion-conscious consumers. Additionally, Ermenegildo Zegna's investment in digital marketing and e-commerce capabilities has enhanced the brand's reach and appeal.

Tom Ford Fashion

Expected Growth: 8.0%

Tom Ford Fashion's 8.0% growth is driven by increasing demand for luxury menswear, strategic partnerships, and expansion into new markets. The brand's focus on high-quality materials, craftsmanship, and sleek designs resonates with affluent consumers. Additionally, Ermenegildo Zegna N.V.'s strong distribution network and marketing efforts contribute to the brand's growth.

7. Detailed Products

Luxury Menswear

High-end clothing and accessories for men, including suits, dress shirts, trousers, and outerwear

Made-to-Measure Suits

Customizable, tailored suits made from high-quality fabrics and crafted with precision

Leather Goods

Luxury leather accessories, such as bags, wallets, and belts, crafted from high-quality leathers

Silk Accessories

High-quality silk ties, scarves, and pocket squares in a variety of patterns and colors

Fragrances

Luxury perfumes and colognes for men, crafted with high-quality ingredients and unique fragrances

Home Furnishings

Luxury home decor and furnishings, including textiles, carpets, and decorative items

8. Ermenegildo Zegna N.V.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Ermenegildo Zegna N.V. is medium due to the presence of alternative luxury fashion brands, but the company's strong brand reputation and high-quality products mitigate this threat.

Bargaining Power Of Customers

The bargaining power of customers is low due to the luxury nature of Ermenegildo Zegna N.V.'s products, which are often considered exclusive and high-end, reducing the negotiating power of individual customers.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium due to the company's reliance on high-quality raw materials and the presence of a few large suppliers, but Ermenegildo Zegna N.V.'s strong relationships with suppliers mitigate this risk.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the luxury fashion industry, including the need for significant capital investment and the difficulty of establishing a strong brand reputation.

Intensity Of Rivalry

The intensity of rivalry is high due to the competitive nature of the luxury fashion industry, with many established brands competing for market share and customer loyalty.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	38.47%
Debt Cost	3.95%
Equity Weight	61.53%
Equity Cost	7.21%
WACC	5.96%
Leverage	62.51%

11. Quality Control: Ermenegildo Zegna N.V. passed 3 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

LPP

A-Score: 5.7/10

Value: 3.8

Growth: 8.0

Quality: 5.7

Yield: 6.2

Momentum: 6.0

Volatility: 4.7

1-Year Total Return ->

Hugo Boss

A-Score: 5.5/10

Value: 7.4

Growth: 5.1

Quality: 5.6

Yield: 4.4

Momentum: 5.0

Volatility: 5.7

1-Year Total Return ->

Moncler

A-Score: 5.2/10

Value: 3.2

Growth: 7.4

Quality: 8.1

Yield: 3.8

Momentum: 3.5

Volatility: 5.0

1-Year Total Return ->

Zegna

A-Score: 4.3/10

Value: 4.4

Growth: 5.6

Quality: 4.4

Yield: 2.5

Momentum: 6.5

Volatility: 2.3

1-Year Total Return ->

SIG

A-Score: 4.2/10

Value: 5.9

Growth: 5.3

Quality: 3.9

Yield: 6.2

Momentum: 0.0

Volatility: 3.7

1-Year Total Return ->

Albany International

A-Score: 4.1/10

Value: 4.4

Growth: 4.9

Quality: 4.9

Yield: 3.0

Momentum: 2.0

Volatility: 5.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-1.23%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

5.96%

Ermenegildo Zegna N.V. - NL0015000PB5

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on ZGN

1.c. Company Highlights

Average Yield

Fairly Valued

Medium Volatility

Earnings Beats

Revenues Miss

More Volatile

Weak Momentum

Earnings Miss

Average Growth

Revenues Beats

Stable Momentum

2. Ermenegildo Zegna's H1 2025 Earnings: A Mixed Bag

Segment Performance

Outlook and Guidance

Valuation

Investment Thesis

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.78%)

6. Segments

Zegna

Expected Growth: 9.0%

Thom Browne

Expected Growth: 8.5%

Tom Ford Fashion

Expected Growth: 8.0%

7. Detailed Products

Luxury Menswear

Made-to-Measure Suits

Leather Goods

Silk Accessories

Fragrances

Home Furnishings

8. Ermenegildo Zegna N.V.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Ermenegildo Zegna N.V. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

10.61$

Current Price

10.61$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA