Italian luxury fashion house Ermenegildo Zegna Group has reported a strong 20 per cent year-on-year (YoY) increase in profit to €109.5 million (~$125.9 million) for fiscal 2025 (FY25) ended December 31, even as revenues declined 1.5 per cent to €1.9169 billion (~$2.204 billion). On an organic basis, however, the group posted a modest growth of 1.1 per cent.
The gross profit remained broadly stable at €1.2940 billion versus €1.2966 billion a year earlier, but the gross profit margin improved by 90 basis points to 67.5 per cent from 66.6 per cent. This was mainly supported by a more favourable channel mix, with direct-to-consumer sales rising to 82 per cent of total branded product revenues in FY25, compared to 78 per cent in FY24.
The operating profit, however, declined to €139.5 million from €166.9 million, reflecting higher overheads, continued investments in retail, personnel and IT, as well as negative operating leverage, especially at Thom Browne, the Zegna group said in a press release.
Adjusted EBIT stood at €163 million in FY25, down from €184 million in FY24. Excluding a €10 million provision for expected losses on trade receivables related to Saks Global following its Chapter 11 filing, adjusted EBIT would have been €173 million.
The adjusted EBIT margin narrowed to 8.5 per cent from 9.5 per cent a year earlier. Selling, general and administrative expenses rose to €1.0339 billion, or 53.9 per cent of revenues, from €1.0083 billion, or 51.8 per cent, in FY24. Marketing expenses were broadly flat at €120.7 million.
Ermenegildo Gildo Zegna, executive chairman of the group, said: “In 2025 our Group delivered solid revenue and net profit growth despite a continued challenging environment for the sector. Group revenues reached €1.9 billion, +1.1 per cent organic, which translated to a Profit of €109 million, up 20 per cent compared to last year. We also closed the year with a cash surplus of €52 million, further strengthening our Group’s financial flexibility.”
“Looking ahead, recent developments in the Middle East have introduced additional uncertainty across the sector. In this more complex environment, our priorities remain clear: disciplined growth, strong cash generation, and rigorous execution to deliver on our targets. While we remain vigilant to potential risks, our ambitions are unchanged—and so is our determination to deliver on them, together,” added Zegna.
Zegna segment, which includes the Zegna brand, textile and other, generated revenues of €1.3632 billion, up 1.1 per cent YoY and 3.7 per cent on an organic basis. Its adjusted EBIT rose 4.9 per cent to €196.7 million, with margin improving to 14.4 per cent from 13.9 per cent, helped by a favourable channel mix, steady revenue growth and cost control. At the brand level, Zegna revenues increased 1.5 per cent to €1.1816 billion, or 4.7 per cent organically.
Performance was weaker at Thom Browne, where revenues fell 14.6 per cent to €268.9 million, or 12.1 per cent on an organic basis, as the brand continued to streamline its wholesale channel. Adjusted EBIT plunged to just €952 thousand from €27.3 million in FY24, while the adjusted EBIT margin dropped sharply to 0.4 per cent from 8.7 per cent. The group said the decline was driven by a 40 per cent fall in wholesale revenues and investments linked to selected store openings as it shifts further towards direct retail control.
Tom Ford Fashion posted a modest 0.8 per cent rise in revenues to €317.1 million, with organic growth of 3.1 per cent. However, the business remained loss-making at the adjusted EBIT level, reporting a negative €15.5 million compared to a negative €10.1 million in FY24. The weaker profitability reflected ongoing investments in personnel, IT systems and the direct-to-consumer network to support the brand’s development.
Capital expenditure declined to €102.9 million from €125.5 million, with around 60 per cent directed towards the store network, alongside spending on a new footwear production plant in Parma and IT projects. The group ended 2025 with a cash surplus of €52.1 million, compared to net financial indebtedness of €94.2 million a year earlier.
Looking ahead, the group said geopolitical tensions, particularly recent developments in the Middle East, have reduced visibility on luxury demand in 2026. Even so, management said it remains focused on delivering its 2027 targets, while closely monitoring risks linked to the duration of the conflict and its potential impact on global growth and consumer spending.
Fibre2Fashion News Desk (SG)
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