Good afternoon. Good morning, everyone. Thank you for joining the Ermenegildo Zegna Group third quarter 2026 revenues call. Please note that today's material and presentation are available under the zegnagroup.com website. 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 statement, cautionary statements included on page two of today's presentation. I will now hand over to Paola Durante, Chief of External Relations and Sustainability.
Thank you. Thank you, operator, and good morning, good afternoon, everyone. Thank you for being with us. As usual, our call is led by Gianluca Tagliabue, Group CEO. I will start commenting our third quarter revenue performance. Gianluca will then share his closing remarks and take you through some of the quarter's key moments. The new Zegna campaigns dedicated to Su Misura and the Falcon jacket, and the Spring/Summer 2027 fashion shows of Tom Ford and Thom Browne. But first, let's go to our revenue results, key highlights on page 10 of the presentation. As always, when commenting on revenues, I will refer to the organic performance, which excludes foreign exchange impact and therefore better reflects the underlying business dynamics.
In the third quarter of 2026, the group reached EUR 434 million in revenues, up +8%, showing continued strength in the DTC channel, which grows 11%, with all regions contributing positively to this performance. Going now to page 11, and I will comment Q3 performance by brand, starting with Zegna. Zegna brand continued to lead the group growth, recording EUR 284 million revenues, a +13%. A performance which has been driven by a very solid DTC channel across all regions. Thom Browne reported EUR 45 million of revenues, down 7%, reflecting a more challenging consumer environment in Greater China and the ongoing professionalization of the wholesale channel. TOM FORD FASHION, EUR 70 million in Q3, up 5%, with both DTC and wholesale positively contributing to this performance.
And finally, on textile, revenues were up 5%, while other revenues, which as you know, mainly related to ready-to-wear garments produced for third-party brands, was - 14%, that off a very small base. Let's move now to page 12, the revenues by geographic areas. I will start commenting EMEA, which in the first nine months of the year represented 35% of group revenues. EMEA revenues were up 6% in the third quarter, supported by double-digit growth at Zegna, partially offset by the negative wholesale performance at Thom Browne and TOM FORD FASHION. The Middle East showed a strong sequential improvement in the quarter, with a double-digit performance in Q3. The Americas. Americas represented 31% of group revenues in the first nine months. In the third quarter, this region recorded a 14% growth, led by double-digit growth at Zegna DTC, partially offset by decline in the brand's wholesale channel.
Also, TOM FORD FASHION solidly contributed to the region's growth. Moving now to Greater China region, which accounted for 22% of total revenues in the first nine months of this year. In the third quarter, GCR revenues increased by 6%. Zegna DTC continued to deliver solid growth in the region, despite the increasingly challenging environment. Partially offset this performance by a negative performance at Thom Browne and TOM FORD FASHION. Finally, the rest of APAC, 20% of group nine-month revenues, reported a +5% growth in the third quarter. Zegna and TOM FORD FASHION delivered a positive performance, while Thom Browne revenues remained broadly in line with the prior year. I will skip to comment on page 13. Let me just highlight that in the first nine months of 2026, DTC for the group accounted for 85% of branded revenues, 3 percentage points higher than the prior year.
From 82%, we moved to 85%. Now let's go to page 14 of the presentation, and let's deep dive on Zegna brand performance. In the third quarter of this year, Zegna DTC revenues grew 16% with, as I said, a very good performance across all regions. The Americas, once again, outperformed the average of the revenues improved sequentially and delivered double-digit growth, while GCR also remained on a steady growth with the Chinese cluster accelerating in the quarter to a double-digit performance. In terms of retail network, Zegna closed four net doors during the quarter. In the wholesale, revenues were down 8%, reflecting our continued strategic focus on a retail-first business model and on delivering a more exclusive customer experience. We confirm that we expect the Zegna brand wholesale channel to be down in the low teens by the year-end.
Now, page 15, Thom Browne revenues by distribution channel. In the third quarter, Thom Browne DTC revenues declined 7%. This performance has been impacted by a more challenging environment in some key markets, in particular in Greater China region. The slowdown in the quarter also reflected the first full deliveries that were not optimally balanced, in particular in terms of fabric weights, as well as some deliveries shifts. In terms of retail network, the brand opened one door next during the quarter, including the new store at the Shanghai Plaza 66. The wholesale channel for Thom Browne reported 11% organic decline, reflecting the ongoing streamlining of the channel. For the full year, we expect a trend broadly in line with the first nine months. Let's move now to page 16, TOM FORD FASHION revenue analysis.
For TOM FORD FASHION, DTC revenues grew by 4% in the third quarter, supported by positive contribution from Americas, EMEA, and the rest of APAC. DTC performance was also in the quarter, has been also impacted by different cadence of deliveries compared to the last year, a timing effect which will be neutralized in Q4. In terms of retail network, TOM FORD FASHION, those network remain unchanged during the quarter on a net basis. Wholesale revenues were up 9%, reflecting the positive reception of the fall-winter collections among our wholesale partners. For the full year, we confirm we expect to have a low single-digit growth for this channel. Page 17, not much to add. As usual, you can find here our group store network. With this, I'll hand over to Gianluca for his remarks. Thank you.
Thank you, Paola. Good afternoon, good morning, everyone. Let me also welcome you to the call. Paola said we are pleased with our third quarter revenue performance, driven in particular by the ongoing solid momentum of the Zegna brand, which showed a very good DTC performance across all regions. These results reflect the successful execution of a strategy that we have been pursuing consistently. The momentum we first built in the Americas and in the Middle East is now increasingly extending to Continental Europe and to GCR, broadening the foundations of our growth. This is evident not only in the brand's performance across regions and customer nationalities, but also across product categories and client segments. Zegna brand is growing with existing and new clients across all categories, led by Su Misura, luxury leisurewear, and the continued strength of our footwear offering. Zegna brand is unique.
Its uniqueness is rooted in three pillars: legacy, family, craftsmanship. By staying true to its identity and uncompromising positioning while connecting with distinctive communities, the brand is increasingly attracting both loyal as well as new customers across markets. And within new clients, we see a promising pattern of new clients returning for a second purchase. Our recent fall-winter Su Misura campaign from father to son, was not only a commercial success, but even more importantly, a compelling expression of the brand vision and strategic direction. Another important milestone was the September fashion issue of the Financial Times, How to Spend It, featuring the first joint interview with our Zegna brand's Co-CEOs, Edoardo and Angelo Zegna, alongside our Executive Chairman, Gildo.
Set at the original Villa Zegna in Trivero, the story fully captured the essence of the Zegna legacy, a unique heritage, a strong sense of continuity, and a shared vision for the future. Moving now to TOM FORD FASHION, I want to start with the recent spring-summer 2027 fashion show held in Paris at the end of September. That was Haider Ackermann's fourth collection for the house. I believe that Haider and the entire TOM FORD FASHION team are defining the evolution of TOM FORD FASHION identity in today's landscape. TOM FORD FASHION is continuing to evolve towards a more intimate interpretation of the elegance seduction. Leatherware, tuxedo, evening wear remain enduring codes of the house, while new expressions are taking shape, notably a stronger tailoring proposition, including tailoring for women.
We are now focused on translating the TOM FORD FASHION creative momentum into increasingly tangible results, strengthening its positioning in the U.S. while broadening audience global. Product is clearly an important part of this journey. We are continuing to refine the collections across both menswear and womenswear, and we are encouraged by the performance of womenswear, which outperformance albeit from a smaller base. At the same time, we see further opportunity to sharpen the proposition across seasons. We are also continuing to strengthen our retail footprint. TOM FORD FASHION has just opened a beautiful new store in Costa Mesa, California, with two more openings in the U.S. coming shortly. One in San Diego, the second, Bal Harbour, Miami. Let me now turn to Thom Browne. Q3 was a challenging quarter for the brand.
As planned, we did not have the contribution from the ASICS collaboration, while the sharp deterioration in consumer demand across Asia, starting with China, created an additional headwind. In DTC, July and August were the most challenging months. September and October so far have shown some improvements, but we remain cautious given the continued volatility in the markets. At the same time, we are seeing encouraging signs around the brand. The highly acclaimed New York Spring 2027 fashion show held in September, together with the launch of the Thom Browne Bose Headphones collaboration, helped slightly improving momentum in the recent weeks. Our priorities are clear for Thom Browne, a highly selective approach to new store openings, a stronger in-store product proposition in terms of category mix and range.
A more flexible use of branding systems, alongside a communication strategy aimed at engaging a broader audience while remaining firmly rooted in the brand's distinctive codes and identity, all with one key goal, improving retail productivity. Sam is completing his team by year-end, which will bring fresh energy to the brand. The recently opened Thom Browne store at Plaza 66 in Shanghai is a good example of how we are continuing to elevate the brand's retail expression. A brief word on our textile platform, which continues to perform well despite the challenging environment. Lanificio Zegna, Dondi, Bonotto, and Ubertino keep gaining market share driven by quality, creativity, and ongoing innovation.
To conclude, let me say that the fourth quarter, although remaining highly volatile, in particular in China, started on a slightly better note for Thom Browne DTC and TOM FORD FASHION DTC, while Zegna DTC continues to deliver a very solid performance. As our Executive Chairman, Gildo, said in the press release, "Looking ahead, we remain cautiously confident, knowing that the uncertainty in the global environment remains pretty high." Within this context, what matters most is the solidity of the vision and the ability to engage with consumers. The appetite for luxury is and remains strong. Ultimately, the opportunity is there. It is up to each brand to earn its share.
Let's now open the Q&A session. Thank you, operator.
We will now begin the question -and -answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question.
Operator.
We will now begin the question -and -answer session. We ask that you pick your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. We are now ready to take the first question. The first question comes from the line of Adrien Duverger with Goldman Sachs. Your line is now open. Please go ahead.
Good afternoon, Gianluca and Paola. Thank you very much for taking my questions. I have three, if possible. The first one would be on current trading. Could you please comment on the performance throughout Q3, and if you see any material difference month-on-month, as well as if you could comment on the first few weeks of October? My second question would be on China and APAC. I see a deceleration in China as well as in APAC in Q3 compared to the last couple of quarters. What are you seeing in the region, particularly in terms of DTC trends? Are you seeing any difference in performance between mainland China and offshore spending?
Sorry. I think you are talking, but we cannot hear from here, so I don't know what is happening to the system. Let us a few moment to fix it. Very sorry for that.
Thank you very much. Thank you, Adrien. Please stand by everyone while the speakers get connected again. Thank you. As a reminder, the speakers are getting reconnected. We appreciate everyone's patience. Thank you. The speakers have reconnected. I will now open the line again for Adrien Duverger from Goldman Sachs to ask his question. Adrien, please go ahead.
Good afternoon, Gianluca and Paola. Can you hear me?
Yes.
Very well. Thank you.
It was not a trick to avoid the Q&A, huh?
No, no problem. Thank you very much for taking my questions. I have three, if possible. The first one would be on current trading. Could you please comment on the performance throughout the quarter? I just want to understand if there is any material difference month-on-month. Also, if you can comment on the first few weeks of October. My second question would be on China and APAC. I think there has been a slight deceleration in Q3 compared to the last couple of quarters. I wanted to know if you could comment on what you are seeing in the region, especially in terms of DTC trends. Is there anything different between mainland China and offshore spending? Have you seen any changes in consumer environment, especially after what some of your peers have reported recently? My third question would be on the Zegna brand.
In DTC particularly, could you help us understand where the performance is coming from? What has been the contribution of space, price, mix, as well as volume? Thank you very much.
Thank you, Adrien. Three questions, but I think they are a little bit more than three, but let's move to the first one, current trading and quarter and the first two weeks in October. I leave to Gianluca.
Across Q3, I would not point out to any significant difference across the quarter. In the months, if I may make a small difference, probably August was slightly more softer than the other two months, but I would not say that there has been a major difference across the months. In terms of October, as I said during my speech before, October so far is doing a touch better at group level, even though as you called out also some indication from the environment gives some sign of volatility. Of course, any comment for the trend is related to the DTC. To give some color on the October month to date by brand, Zegna is continuing to perform solidly across the regions, all regions.
Thom Browne, we are seeing some signs of improvement, also supported by a slightly better performance in Asia. I would say improved merchandise in the store. I have been in many stores in the last couple of weeks also with Sam in Asia, spending many time on the road with him in Asia. We have been seeing an improvement in the merchandising execution in the stores. TOM FORD FASHION is benefiting from the buzz around the fashion show, together with the actions that we are taking to further engage existing clients and attract new ones. Also, as I said in the last calls, putting some marketing dollars on the table, making a more intense marketing activities both on the one-to-few events as well as in the one-to-many. That is some broadcast amplification of the brand.
In October, happy to see a good start, but we cannot drive the strength of the quarter out of these few weeks. We know that we have still 10 weeks to go, nine, 10 weeks to go. We are very, as Gildo was saying, we are cautiously confident and optimistic knowing that what is out there it is partially not in our control, partially not. In terms of China performed solidly in Zegna in the entire quarter and is continuing the same direction in October. While for Thom Browne and Tom Ford, although for Tom Ford, Greater China is very small. We saw a deterioration of the demand in the region over summer, especially from aspirational clients. As I said, the exit rate in October is getting a touch better, yet is not a solid trend that we can project for the year to go.
In terms of color, I call out that Hong Kong is performing well, very well, and within mainland China, we see some regions performing much better than others. I would call out the east side, where Shanghai and Hangzhou, and on the west is Chengdu, which is performing better of the other. On the Zegna brand, the growth is not coming from space. It is basically an entire comp. As Paola reported also, we closed net four doors, so there is— the addition is not the driver of growth. It is really the productivity, and the productivity comes from both number of tickets as well as AUR. Where AUR, there is a very limited like-for-like component, and there is a very interesting mix component, which is the elevation of the offering. I think those are—
I think we answered to the three questions. Next?
It's very comprehensive. Thank you very much, both.
Thank you.
Your next question comes from the line of Bhumi Kanabar with HSBC. Your line is now open. Please go ahead.
Hi. Good afternoon, Bhumi Kanabar. I have three questions today, please. Firstly, what was the performance of the various clusters for Zegna brand? You already commented that the Chinese cluster was up double digits for Zegna brand, but I was wondering if you could also give the same figure for Thom Browne. Secondly, could you please quantify to what extent you see TOM FORD FASHION being neutralized in Q4 for the DTC channel, given the timing of shipments? Finally, is there any chance you can comment on the sales densities you're seeing at the moment in Zegna brand stores? Thank you.
Can I get to your first question again? Sorry, you asked about the Zegna brand?
Yes. It was the performance of the various clusters for Zegna brands. Because you already commented on the Chinese cluster for Zegna brand, but what about the other clusters?
Okay. The Chinese cluster. Yeah. Sorry.
And if you have the cluster comment for Thom Browne as well, given the weakness in the aspirational consumer there.
Okay.
Okay.
I take this, and then you help us in referencing the others. Comment on nationality clusters for Q3 Zegna brand. As we mentioned, and Paola mentioned, GCR clients have presented a sequential improvement going into a double-digit growth in Q3. This is, as we said at the beginning, I think that the execution that moved from west to east, we are starting to see some traction. I think it goes back to executing properly in the strength of the brand, whether it is some areas of the footwear, whether it is Su Misura, whether it is Belisario. So it is a holistic success on GCR. It is not just Triple Stitch. We are seeing the brand taking shape in the proper way, and we are happy to see Q3 with a double-digit GCR cluster performance.
U.S. solid double digits continued in Q3, even a touch better, but still a very solid double digit. LATAM, strong double digit. Where Middle East found a double digit, a couple of markets where a couple of clusters, where we are seeing some slight slowdown, but still solidly in the positive territory are European cluster and Korean cluster. Southeast, which is the last that I was forgetting, Southeast Asia, solid double-digit positive. So everything positive. If we have to point out a couple of cluster nationalities that have presented a slowdown still in the good positive territory is European cluster and Korean cluster. In Thom Browne, we don't report on a nationality, and we don't comment, but definitely the Chinese, especially the low tier of Chinese consumers, are the ones that have been dragging down the performance in Q3.
I would call out that as a major inflection point for Q3 compared to the first half.
The second question, Bhumi, was on wholesale, but can you help us if there was some specific questions?
Yeah. Sorry. It's the DTC, you mentioned that the timing of shipments affected TOM FORD FASHION.
Okay.
That was neutralized Q4. Could you quantify?
Okay.
No, I think that simply the winter had some longer deliveries, especially if you compare to last year. It's not a major shift. I don't think it's a major thing to call out as a driver of inflection between the quarters.
The last one on sales density. I think I got the question, but was it referring to Zegna brand?
Yes. Thank you. Zegna brand.
Zegna brand, of course, the productivity is going up because the growth that we are projecting is basically entire comp. It is same stores. We are pruning a bit the network and the numbers, the stores that we are closing are the low performing ones. Of course, there is a growth in productivity. That is the promising part. Also, when we talk about TOM FORD FASHION, the growth is comp in Q3. The addition of Thom Browne at this point is very limited. We had a lift in the first half by space in Thom Browne. At this point in Q3 is marginal. The space addition on TOM FORD FASHION is entirely comp. Going forward, looking forward, we will have, in the next quarters, some space addition on TOM FORD FASHION, as Gildo mentioned also in the interviews. We just opened Costa Mesa.
We are going to open Bal Harbour and San Diego. We will have the major flagship opening in Q1 of next year in Paris. We will enjoy some space addition looking forward, not looking backwards, it has been Q3, on a comp basis.
Thank you. Operator, the next one. Thank you, Bhumi.
Your next question comes from the line of Anthony Charchafji with BNP Paribas. Your line is now open, please go ahead.
Yes, good morning. It's Anthony at BNP Paribas. Thank you for taking my question. The first one is on wholesale. You maintained the full-year guidance for Thom Browne at 35 and at TOM FORD FASHION at plus low single digits, but I might have missed the guidance for the Zegna brand wholesale on a full-year basis. My second question is on China, and if you can give us a comment at group level if Tier 1 cities are holding up better than lower tier, given the stabilization of real estate price. I think that last year at the same period, you commented that Tier 2 cities outperformed Tier 1, so I'm just curious on this one. My third question is more into 2027, so it's the first quarter in a row of double-digit growth for Zegna DTC.
Looking into 2027, should we assume a new algorithm of growth for this channel with maybe a low single-digit volume to a single-digit pricing and mid-single digit mix to sustain double digits in the midterm? My last one is on Thom Browne. Given the top line and your guidance of breakeven at the EBIT level, are you significantly managing the base currently?
No.
Okay. Thank you, Anthony. The first one I just answered because I commented during the speech that we expect the Zegna wholesale channel to be down in the low teens range by year-end. So this is the guidance that we confirm is exactly the same we commented in the past. I leave Gianluca to comment on China and on Zegna and Thom Browne.
On China, hi Anthony. In China, some cities of Tier 1 are in our specific network. We have seen some cities of Tier 1, as I mentioned before, performing better. Hong Kong in Greater China. Hong Kong, Shanghai, Hangzhou, and Chengdu. Those are the cities that have been performing better. Some of the Tier 2 cities are lagging behind. That same pattern is partially, probably external. Partially it is driven by us because, of course, we are investing in top stores more than elsewhere. So we are putting the best people, the best merchandising, the best activations. So it is a self-fulfilling prophecy to some extent, and partially it is probably the traffic. In Hong Kong, we are seeing some resurgence of traffic. In the cities that I mentioned before, we are seeing solid traffic, and probably we are gaining market share with our focused investments in some key doors.
In terms of 2027, for the time being, I would stick to what we have said so far. We are working on the targets that we have set, which is the low range part of the range. So the EUR 2.2 billion revenues and EUR 250 million of adjusted EBIT. Then while entering the year, we will be more specific in guiding you how to split that.
In terms of your fourth question, sorry, Anthony, you were asking on Thom Browne and our indications on an EBIT closer to break even by year-end, or did you ask us something that we did not get?
Yeah. I am just curious how, if you are significantly managing the cost base currently to achieve this or not.
I think we are managing the EBIT at group level. We are managing the EBIT at group level towards the current consensus, with a different mix compared to probably what we have seen last time. Specifically at Thom Browne, we are working to improve the EBIT performance compared to the loss of H1 to close the year with a slightly smaller loss, which is different from what we had in mind some weeks ago. The overall number we are working to stay in the consensus on Thom Browne. On the back of Q3, we are seeing at this point a full-year loss smaller than the loss in H1.
Thank you.
Thank you, Anthony. The next one.
Your next question comes from the line of Oliver Chen with TD Cowen. Your line is now open. Please go ahead.
Thank you. This is Jonna on for Oliver. Thank you for taking our question. First question is just on Korea and Japan, if you can elaborate on what you're seeing in terms of the local demand versus tourism will be helpful. As you think about the upcoming holiday season versus last year, what are key differences or same points on inventory and marketing and product assortment? How are you just thinking about the holiday season? Thank you so much.
Thank you, Jonna. Your first question was on Korea and Japan, and the second one on marketing is referring to the group and marketing events or—
Yeah, group or brand that you can elaborate just as you think about the holiday season.
Okay. Thank you. On Korea and Japan, I leave to Gianluca. Of course, it's important to underline that for the group, they're very small markets for us overall.
On Japan, I talk about cluster. We are seeing some softness in Q3, not different than H1, cluster of Japanese. Korea, as I said before, we are seeing some slowdown after a very strong first half and super strong double digits. We are seeing still a positive performance of Koreans consumer in the positive territory. This is what we have said. In terms of heading into the winter season, I think at this point the deliveries are well set. We are seeing a good performance also reflected in the month-to-date numbers of the winter of TOM FORD FASHION, which is picking up well. We are seeing some inflection on the latest deliveries of Thom Browne. We are intensifying the communication side of TOM FORD FASHION.
Yes. With those events.
An important part for it that we are investing in order to gain benefit from the buzz and the momentum of the brand. On Zegna side, we are seeing across all the months, all the drop one, drop two, drop three, drop four of the fall/winter, we are seeing good reception by the collection. There has been, I think, an important new delivery, that is, Paola mentioned before, the Falcon jacket, which is a new iconic piece of the offering. It is an iconic piece in the outerwear section, in the elevated part of the outerwear section, which is grounded in sophisticated materials together with the history of the brand, because it goes back to the story of our founder and the mountains where the family comes from.
The Falcon jacket was delivered in drop three, and has been well received both in the ready-to-wear as well on the make-to-order. We are delivering in drop four, which is now basically new colors. We are going to build on the success also of these new iconic pieces that are also supported by the communication campaign.
And also, again, for Zegna, there is an ongoing activity in terms of suite around the world, which is—
Is another, yeah.
—that they are very important, particularly also for the fourth quarter. Okay, let's go to the next one.
Your next question comes from the line of Natasha Bonnet with Morgan Stanley. Your line is now open. Please go ahead.
Hi, Gianluca and Paola. Thank you for taking my question. Just one, and apologies if I missed it, but could you maybe give us some clarifications on the breakdown on volume price mix for Zegna and how that's evolved throughout the year and maybe your expectations for next year? Then I believe you said that you have strong growth across product categories, but anything else to call out on Su Misura, for example, maybe performing much stronger than the rest? Thank you.
Thank you, Natasha. On the breakdown volume price mix for Zegna, what we said that is
It's a balanced contribution of volume tickets and AUR. Behind the AUR, it's bigger, the component of mix than the component of like-for-like price increase.
Yeah. For next year, I don't think it's going to We don't expect a big difference. There will be a balanced contribution from both volume, i.e. traffic and tickets and conversion, more conversion than traffic, and mix.
I think in nuance it's important to be understood. The volumes come from, on one side, new clients coming into the brand because, of course, we communicate to the top of the pyramid, but there is a snowball effect on the lower tier. So we see more and more people coming into the brand. And what I said in my speech also, an important indication is the percentage of new clients are returning and buying for a second time. So the tickets growth comes from either people coming brand new or people that came in the last 12 months and are coming back. And the percentage of retention of new clients is increasing. So that's why looking forward, we don't see a major change of pattern.
Your second question, Natasha, was on the Su Misura growth and any color on the Su Misura performance for Zegna, but also for the other brands as well.
Zegna Su Misura is definitely, together with luxury leisure, one of the driver of growth. The example I made on the Falcon is a point in time, but we are more and more adding Su Misura on iconic items, and those iconic items on Misura with different materials or different colors are definitely one of the driver of growth. At the same time, this is, to a smaller extent, a driver of growth for TOM FORD FASHION. We added in this year some categories like tailoring on women, like leather outerwear, which is men and women. Of course, also on that side, leveraging on the internal capacity of the factories of the group, this is becoming more and more an important lever for growth. On Thom Browne, it's still a smaller business, but definitely there's an impact opportunity that we are chasing.
Thank you.
Thank you.
Thank you, Natasha. Next.
Your next question comes from the line of Chiara Battistini with JPMorgan . Your line is now open. Please go ahead.
Hello, good morning. Thank you for taking my questions. I just have a couple of follow-ups, please. One on wholesale for Thom Browne, especially thinking about next year as we are starting to see maybe some reduction of the pace of decline. How should we be thinking about wholesale for Thom Browne next year? Are we still expecting declines? In what kind of order of magnitude? The second question, just a clarification on your comment that you are managing EBIT at group level towards consensus. Does this mean that the margin uplift you are getting from the sales density improvement at Zegna is better maybe than what we had discussed before, so better operating leverage or there is also some work done on the central costs to drive better profitability at group level? Thank you.
Thank you, Chiara. I'll leave to Gianluca on the wholesale for Thom Browne and on the EBIT group level.
Wholesale for Thom Browne, we have been reducing from 2024 through 2026 in a pattern that we all know. I recall we were at EUR 129 million in 2024. We went last year to EUR 77 million. This year we are guiding into a decline that is not different than the nine-month decline. At this point, the level and the magnitude of Thom Browne wholesale business is becoming in the 20% range, slightly over there. We need to manage that business at this point in that range. That is more or less what we are looking ahead. We need to see this resized Thom Browne wholesale business in the 20% range of the brand. For next year, we might have still some plus or minus, but at this point, the biggest change of magnitude has happened.
Looking forward, we need to have that 20% size in mind.
EBIT, the group level, sorry, and Chiara was asking if we can assume Zegna slightly better from initially expected Zegna brand. Your comment on that.
Well, if you decline something that is compared to the prior estimate, that is the EBIT on Thom Browne, of course, there will be something of that, yes.
Yeah.
Sorry, just to clarify my question. I was wondering whether there's also some work done centrally on central functions to drive better efficiencies and drive margins centrally besides a brand level. That was the question.
Sorry, Chiara, can you reformulate because we could hardly understand?
Sorry. I meant, great to hear that Zegna brand is seeing better operating leverage. I was also wondering whether you're also doing work centrally on costs to drive better profitability, just thinking about the group structure at really a group level rather than a brand level.
I think it's more productivity than cost management. As we said, we are investing both on brands and we are investing also on group initiatives in order to create a group backbone. Today on cost, we are not squeezing cost. To the other side, we are investing, and that was also one of the statement why we moved sideways on the margin. We are not cutting costs in order to stay in the guidance.
For 2026.
2026.
Okay, perfect. Thank you.
Thank you, Chiara. Next, if there are follow-up questions.
Your next question comes from the line of Maria Meita with Bernstein. Your line is now open. Please go ahead.
Good afternoon, both, and thank you for taking my questions. I have a follow-up and then two questions. First is just a clarification on TOM FORD FASHION. Could you please give us more details around all these different product deliveries for the DTC and the wholesale channel? Then whether we should expect a catch-up in terms of DTC performance in fourth quarter as a result of all this phasing. Then my first question is on TOM FORD FASHION. Obviously we always talk about womenswear in TOM FORD FASHION because that's the most exciting category right now with Haider Ackermann. But you mentioned that their menswear is sort of slightly underperforming from a higher base. Could we please talk more about its positioning maybe, versus Zegna and Thom Browne, and whether Haider Ackermann has a similar sort of impact on the menswear category as he did for the womenswear?
Then finally, you very helpfully mentioned wholesale for Thom Browne in 2027 and your expectations there. Could you tell us how we should think about wholesale for the other two brands, for Zegna and TOM FORD FASHION? Thank you very much. In 2027.
Thank you, Maria. So on TOM FORD FASHION, on the deliveries. First of all, in wholesale, there were no changes in, no difference in deliveries. The growth that you see in the third quarter in the wholesale business is entirely driven by the demand coming from our wholesale partners and the very good reception of our fall-winter collections. In terms of DTC, what Gianluca said and explained before is that there was some plan. Also deliveries are different this year from last year, and we have more going to the end of September and October. So this is what Gianluca said, that not much is normally in a small quarter like Q3, this can create some differences.
In terms of menswear and womenswear, I would reformulate it. It's not that menswear is underperforming. It's performing well. It's womenswear that is starting from a low base that is ramping up quickly. So of course then the incidence is. I don't want to pass the message that menswear is not working on TOM FORD FASHION. It's working well. Of course, it's the incumbent biggest business and womenswear, which we recognize being an untapped opportunity for the brand, is giving signs of growth. That's how I would formulate it in this way.
Maria was also asking in terms of positioning and things, the men's that Haider Ackermann, even more from Tom Ford, is I think is even more different from the Zegna men in terms of positioning high luxury, but different, let's say, clients. Of course, very different from the Thom Browne one. I leave also Gianluca to comment more.
There is definitely a higher price positioning on Tom Ford, slightly higher price positioning than the Zegna tailoring. There is definitely a bigger component of evening wear and occasions.
Ceremony
Ceremony. So these are probably the biggest difference in terms of occasional use and price point.
And in terms of wholesale for Zegna, TOM FORD FASHION, the next year, TOM FORD FASHION?
I think let's freeze it for the next. So at least we guide on 2027 in a very specific way in the next round.
Let's move the question, this question to January. Thank you.
Your next question comes from the line of Chris Gao with CLSA. Your line is now open. Please go ahead.
Hi. Good afternoon, Gianluca and Paola. Congratulations on the great results amid a complicating environment. I have a few follow-ups. Firstly, we are very happy to see your Chinese cluster accelerating double-digit growth for the Zegna core brand this quarter, probably one of the strongest Chinese cluster performance of quarter among the luxury peers. We understand that you have got some better, larger locations, like Plaza 66 in Shanghai and also the newly renovated, the Beijing China World store and also Hong Kong Harbour City. These are all very beautiful boutiques. At the same time, you are also closing some small, low efficiency stores.
We just wonder how much sales density improvement do you see for the newly renovated or newly opened, very big from its own versus existing ones. We want to see how much improvements you are generating from this. This is the first question. My second question is also regarding the Chinese cluster outperformance. For this robust growth, how much is coming from the new consumer recruitment, and how much is coming from existing customers? Do you see the concentration level on top spenders increasing in China? My last question is regarding, for the Zegna core brand. Just wondering, how does the number of Zegna Friends grow year to date? Do you have any color on that? Thank you.
Thank you, Chris. As always, very interesting question. The first one is on the, how much of the, if I got it, the Chinese cluster growth is also driven by new store openings. Actually, Chris, you mentioned Plaza 66, but this is a Thom Browne.
We are going
We're going to open.
Overall, the trajectory, deposit trajectory that we are observing in Greater China, which ultimately translates definitely, as you pointed out, Chris, into an improved productivity per square meter, because definitely we are closing doors net, and we are opening better. As you pointed out, we've opened the one, Plaza 66 is a temporary. We will open a final store mid next year, I would say Q3 of next year. We are doing investment in people, investment in training. We are improving the network. As you observed, China World was an improvement. We remodeled. Harbour City was an important statement. We have been, under Angelo and Edo guidance, increasing the marketing spending. Some campaigns like the William Chan campaign, was very effective in terms of creating buzz around the brand.
Altogether, this ultimately ends in an important improvement on the productivity as well as an increase of both demand from aspirational and potential Zegna Friends. We are bringing into the brand fresh, new blood. And also what we are observing and carefully measuring is the growth, not only of the Zegna Friend, but of the potential Zegna Friends, the ones that we are breeding to come and stay with us for a longer journey. I think that all the leading indicators we continue monitoring GCR are giving us comfort that we are on the right track.
I think with this, we answered also the second question. The third one was on Zegna Friends overall, how they're performing.
Zegna Friends overall continue to grow on a nice double digit in line with our strategy, as I said before, also creating a snowball effect on the other clusters. I think across the regions, we are seeing a good, solid growth in the number of Zegna Friends, and this is going back to my comment before, we are nurturing the potential Zegna Friend in order not to finish with just a few current friends, but continue feeding the pipeline of to-be friends.
And potential are still there, very important, as we can see. I hope we answered your question, Chris.
Yes. Thank you. Thank you, Gianluca and Paola. Congrats again.
Thank you. Let's move to the next one.
Your next question comes from the line of Robert Krankowski with UBS. Your line is now open. Please go ahead.
Hello. I've got only two questions. Just maybe just starting on the Zegna brand. Taking all the comments into account to the questions and just generally, if we piece it together, even though you are cautiously confident, you are still very optimistic probably about the Zegna brand. Given the performance in the first nine months, is there any reason why we shouldn't think that DTC can sustain similar momentum into Q4 outside of a bit tougher comp? Then maybe the second question, I know someone tried already to ask about 2027, but if we look at the initial comments on Chinese cluster, we started the year with flattish assumption, and it turned out much better. When you look into 2027, what is your kind of initial assumption, behind reaching the low end of the guidance?
Are you assuming that the Chinese consumer is going to be still very challenging, and maybe you should be thinking that the cluster assumption is relatively cautious? Or maybe it improved, and it just now assumes that other brands will be a bit weaker, and that's why it's still lower end of the top line guidance. Thank you.
Thank you, Robert. Okay. Two questions, of course, for Gianluca. The Zegna brand Q4 momentum, what?
No, I think it is fair to assume, as we said, that we started the quarter in the same trend that we have seen in the last months. We are confident that this trend will continue. Of course, there are, as we pointed out, all the elements of volatility that are outside of our control. But the execution that we have been doing year to date in Q3, we are confident that will continue to come out also in Q4.
In terms of assumption in our, let's say, guidance of reaching the low end of our target range, what are our assumptions in terms of Chinese cluster?
I think it is very granular, this. I think that overall we are seeing if you look at the goal of next year, low range, and the consensus, there is quite a substantial step up. Everything, we are assuming that all the different components, whether the luxury line brands or whether it is the Zegna brand in its different forms of geography, will contribute in this important step up that we are setting ourselves as the target for next year. I think everything we expect to continue executing well in America, definitely, we expect to have a further journey of improvement in Greater China. All the different components need to give their contribution to fill the bridge between the current 2026 consensus and the EUR 250 million of EBIT.
We expect all of them, and we have been in the cycle of budget, and we are asking all the different groups of business units and brands of the group to give their contribution, therefore, also China.
Thank you. I think that is the last one, but I will ask the operator.
Your final question comes from the line of Daria Nasledysheva with Bank of America. Your line is now open. Please go ahead.
Hi. Thank you for taking my questions. This is Daria from Bank of America. I had a couple of follow-ups that I wanted to ask. Could you please comment on the reasons for such an acceleration in your European revenues? Is that due to the Middle East, or is there something else that we need to be aware of? Also, could you please comment on your outlook on Europe into Q4, considering, obviously, social unrest in France and Italy, anything we should be aware of? Then another one would be on Thom Browne. You mentioned the Bose launch since the start of October. Are there any other launches that we need to be aware of for the remainder of the year? For example, what about the next ASICS collaboration launch? When is that happening? A very quick one.
Last year, how does October compare to the rest of the quarter when it comes to the comparison base? Is it homogenous, or do comps get tougher as we progress through the rest of Q4? Thank you very much.
Thank you, Daria. The first question is, the reason for wholesale, did you ask?
No, Europe.
Europe acceleration. Sorry. No, because I understand Europe, but Europe acceleration.
There is definitely a good performance of Middle East.
Yeah.
And that, especially Middle East for Zegna DTC, improved sequentially to a solid double-digit growth. That is the biggest driver of the acceleration.
Absolutely. A little bit of. The second question is, Daria?
Mm-hmm. Basically, the continuation of the Europe question was on how should we incorporate, if anything, the social unrest that exists in France and Italy for the remainder of Q4.
Okay.
Then, Thom Browne launches for—
Thom Browne. On the second one, clearly we are monitoring the situation. So far, we didn't have any impact. Of course, the days with the protests, there were a couple of hours the stores being closed a little bit earlier, but overall, I would say we have not seen any impact so far. We monitor the situation. We will see the evolution. In terms of Thom Browne and the Bose collection and what—
ASICS, we will have a further product injection in Q4. It's a similar model to the one that we had in Q1, but since we had a very good sell-through, we left some clients behind. We will reinject also for the holiday season, more product. There will be further collaboration on ASICS next year, both in terms of same model, other colors, as well as new models. We will be more specific, starting in January. But those are the two biggest product collaboration. Of course, there is also an intrinsic development of product. We are investing more and more on some product categories, whether it's knitwear, whether it's outerwear, whether it's a jersey. We are investing, and I think Sam is driving a redesign of the collection architecture, working on ways, working on price levels.
I think that is the part that should be, aside from the collaboration, the area of the work stream where Sam and Tom, together with all the merchandising team, are working to create a more balanced product architecture.
Okay. This is a—
Yeah, sorry. Last question. This is Alice speaking, but before closing the call, let me just highlight that today we have also published the 2027 financial calendar, as you can also see on page 18 of the presentation. Our next release and conference call will take place on February 1st for the full year 2026 revenue release. Thank you for attending today's call, and of course, if you need any further clarification, do not hesitate to contact us. Have a nice busy day. Thank you. Bye.
Thank you to everybody from us all, and to the next one. Thank you.
This concludes today's call. Thank you for attending. You may now disconnect.