Zegna Reports Strong Direct Sales Growth but Faces Profit Decline
Ermenegildo Zegna Group (NYSE:ZGN) reported first-half revenues of €987.3 million, up 6.4% year over year and 9.3% on an organic basis. The growth was primarily driven by a surge in direct-to-consumer sales, which rose 15.8% organically and now account for 86% of branded revenue. Despite this strong performance, headline profit declined to €28.4 million from €47.9 million the previous year. The Zegna segment generated €724.3 million in revenue with a 14.8% adjusted EBIT margin and improved free cash flow. However, challenges emerged as non-cash gains did not repeat this year, tax rates increased to 38.8%, and financial expenses turned negative. The Thom Browne brand also contributed concerns due to declining revenues and an Adjusted EBIT loss of €8.3 million. Despite the profit decline, institutional interest in Zegna has risen with hedge fund ownership increasing from 16 funds to 23. Short interest remains at a moderate level (6.14% of float), suggesting skepticism but not extreme bearishness.
Tickers: $ZGN
Topics: Adjusted EBIT Margin Direct-to-Consumer Sales Profitability Revenue Growth