What Ermenegildo Zegna (ZGN) Said on Its Q3 Earnings Call

Key Points

• Q3 revenue rose 8% organically to €434 million, driven by an 11% increase in direct-to-consumer sales across all regions. DTC represented 85% of branded revenue in the first nine months, up from 82% a year earlier.
• The Zegna brand led growth with a 13% organic revenue increase to €284 million, while TOM FORD FASHION rose 5%; Thom Browne declined 7% amid weaker Greater China demand and wholesale pressures.
• Management remains cautiously confident, citing slightly improved October trading, but continues to target the low end of its long-term goals of €2.2 billion in revenue and €250 million in adjusted EBIT.

Ermenegildo Zegna NYSE: ZGN reported third-quarter 2026 revenue of €434 million, up 8% organically from the prior-year period, as direct-to-consumer growth across all regions offset pressure in parts of its wholesale operations and a more difficult consumer backdrop in Greater China for Thom Browne.

Chief of External Relations and Sustainability Paola Durante said the group’s direct-to-consumer, or DTC, channel increased 11% during the quarter. DTC represented 85% of branded revenue during the first nine months of 2026, up from 82% a year earlier.

The Zegna brand remained the company’s primary growth contributor, posting revenue of €284 million, up 13% organically. TOM FORD FASHION generated €70 million in quarterly revenue, up 5%, while Thom Browne revenue declined 7% to €45 million. Textile revenue rose 5%, while other revenue, primarily garments produced for third-party brands, fell 14% from what Durante described as a small base.

Zegna Brand Extends DTC Momentum

Zegna’s DTC revenue climbed 16% in the third quarter, supported by growth in every region. Chief Executive Officer Gianluca Tagliabue said the brand’s growth was not being driven by store expansion, noting that Zegna closed four stores on a net basis during the quarter.

Instead, Tagliabue attributed the performance to higher store productivity, with a balanced contribution from ticket growth and average unit retail value. Within average unit retail value, he said product mix contributed more than like-for-like price increases.

Management cited demand for made-to-measure Su Misura offerings, luxury leisurewear and footwear. Tagliabue also said customers were responding well to the Falcon jacket, a new outerwear product that was introduced during the fall-winter delivery cycle and is available in ready-to-wear and made-to-order formats.

On customer trends, Tagliabue said the brand was adding new customers while also seeing a rising share of newer clients return for a second purchase. The number of “Zegna Friends,” the company’s term for key clients, continued to grow at a double-digit rate, he said.

Zegna’s wholesale revenue declined 8% in the quarter as the company continued to prioritize a retail-first model and a more exclusive customer experience. Management reiterated its expectation that Zegna wholesale revenue will decline by the low teens for the full year.

Regional Results Led by Americas, With China Mixed

In the Americas, which represented 31% of group revenue in the first nine months, third-quarter revenue rose 14%. The gain was driven by double-digit Zegna DTC growth and a solid contribution from TOM FORD FASHION, partly offset by lower Zegna wholesale revenue.

EMEA revenue increased 6%, supported by double-digit growth at Zegna. The Middle East posted double-digit growth and showed a sequential improvement, while negative wholesale performance at Thom Browne and TOM FORD FASHION partly offset regional gains.

Greater China revenue rose 6% in the quarter. Zegna DTC continued to grow despite what management called an increasingly challenging environment, while Thom Browne and TOM FORD FASHION recorded weaker performance in the region. Tagliabue said Hong Kong, Shanghai, Hangzhou and Chengdu were among the stronger markets, while some lower-tier cities lagged. He added that the company has been concentrating investments in higher-quality stores, personnel, training and local brand activity.

For the rest of Asia-Pacific, revenue grew 5%, with positive contributions from Zegna and TOM FORD FASHION and broadly stable revenue at Thom Browne. Tagliabue said Korean customers remained positive but slowed from the “super strong” double-digit growth recorded in the first half, while Japanese customer demand was softer in the third quarter.

Thom Browne Faces Challenging Quarter

Thom Browne’s DTC revenue declined 7%, while wholesale revenue fell 11% as the company continued to streamline the channel. Management said the brand was affected by weaker demand in Greater China, particularly among lower-tier Chinese consumers, as well as first full deliveries that were not optimally balanced in fabric weights and included timing shifts.

Tagliabue said July and August were the most difficult months for Thom Browne, although September and October showed some improvement. He cautioned that markets remain volatile.

The company opened one Thom Browne store on a net basis during the quarter, including a location at Shanghai Plaza 66. Management said it is focusing on selective openings, improving in-store product assortment and category mix, using branding more flexibly and broadening communications while maintaining the brand’s core identity.

Thom Browne’s wholesale business, which management said was €129 million in 2024 and €77 million in 2025, is expected to settle at slightly above 20% of brand revenue. The company expects the full-year wholesale trend to remain broadly in line with the first nine months.

TOM FORD FASHION Builds on Collection Reception

TOM FORD FASHION’s DTC revenue rose 4%, helped by the Americas, EMEA and the rest of Asia-Pacific. Wholesale increased 9%, reflecting what management described as a positive reception for the fall-winter collections among wholesale partners. The company maintained its expectation for low-single-digit wholesale growth for the full year.

Management said DTC performance was affected by a different cadence of product deliveries compared with the prior year, with more deliveries toward late September and October. Tagliabue said the timing effect was not material enough to be considered a major driver between quarters.

The company said womenswear is growing quickly from a smaller base, while menswear also continues to perform well. Tagliabue described TOM FORD FASHION as having a somewhat higher price positioning than Zegna tailoring, with a greater emphasis on eveningwear and occasion dressing.

TOM FORD FASHION opened a new store in Costa Mesa, California, and plans additional U.S. openings in San Diego and Bal Harbour, Miami. A Paris flagship is expected to open in the first quarter of 2027.

Outlook Remains Cautious

Tagliabue said trading in October had started “a touch better” at the group level. Zegna DTC continued to perform solidly across regions, while Thom Browne saw some improvement in Asia and TOM FORD FASHION benefited from interest surrounding its fashion show and expanded marketing activity.

Management said it was working toward group-level earnings before interest and taxes in line with consensus expectations, while emphasizing that it was pursuing improved productivity rather than cutting costs. The company continues to target the low end of its longer-term objectives of €2.2 billion in revenue and €250 million in adjusted EBIT.

“We remain cautiously confident, knowing that the uncertainty in the global environment remains pretty high,” Tagliabue said, citing comments from Executive Chairman Gildo Zegna.

About Ermenegildo Zegna (NYSE:ZGN)

Ermenegildo Zegna N.V. is a global luxury-goods group specializing in menswear, accessories and related lifestyle products. Its portfolio includes the Zegna brand, known for tailored clothing, ready-to-wear apparel, footwear, leather goods and fabrics, as well as Thom Browne, a luxury fashion brand offering menswear, womenswear, accessories and footwear.

The company also operates the TOM FORD FASHION business, which includes luxury apparel, accessories and footwear under the TOM FORD brand.

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