Zegna Profit Jumps 53% in Q2 2025

Zegna(NYSE:ZGN) reported first-half 2025 results on Sept. 5, 2025, with revenues of 928 million euros, a 2% organic decline year over year, and net profit up 53% to 47.9 million euros. The company’s direct-to-consumer (DTC) channel now accounts for 82% of branded sales, and management reaffirmed guidance for low single-digit organic sales growth for the full year, while highlighting ongoing volatility in the Greater China Region (GCR).

The following insights highlight key strategic developments, margin drivers, and management’s approach to risk and capital allocation.

DTC expansion lifts Zegna margin

Gross margin rose 110 basis points to 67.5% in the first half of 2025, driven by a higher mix of DTC sales, which increased to 82% of branded revenues from 76% in the prior-year period. This shift occurred alongside continued investments in IT, talent, and new store openings, with DTC organic growth offsetting wholesale declines.

"The 110 basis points margin improvement has been driven mainly by a better channel mix since the DTC revenues generated 82% of our group branded revenues, which is higher -- 6 percentage points higher compared to the 76% in the first 6 months of 2024. And as you know, you perfectly know, DTC gross margin is higher than the wholesale."
-- Paola Durante, Chief of External Relations

The rising DTC share enhances Zegna’s pricing power and margin resilience, but also increases exposure to retail cost structure and capital intensity, making disciplined store-level economics critical for sustainable profit growth.

Zegna segment margin climbs on cost control

The Zegna segment, which includes the main brand, textiles, and third-party brands, achieved an adjusted EBIT margin of 14.3%, up from 12.8% in the first half of 2024, despite sector headwinds and currency drag. Group adjusted EBIT margin declined by 100 basis points due to investments in subsidiary brands and overhead, but the core segment’s margin improvement reflects operational efficiency.

"This important 150 bps increase in adjusted EBIT margin for the Zegna segment versus H1 2024 has been led by higher operating leverage, largely due to a more efficient DTC channel and cost control measures."
-- Paola Durante, Chief of External Relations

This margin expansion in the core segment demonstrates effective cost management and validates the DTC transition, supporting future investments in growth and brand elevation.

Consensus-aligned outlook and capital discipline

Management confirmed that consensus expectations for full-year revenue (EUR 1.923 billion) and adjusted EBIT (173 million euros) already reflect adverse foreign exchange swings versus the U.S. dollar and renminbi. Full-year capital expenditure is expected to remain at 6%-7% of revenue, with greenfield footwear production investments ramping up in the second half of 2025.

"So if you look at that number on an organic basis, corresponds to low single-digit organic. And on the adjusted EBIT, I think that our -- the consensus that we have in front of us that is 173 million euros indeed is incorporating the same thing about the currency swing. And we believe that this adjusted EBIT at consensus 173 million euros is realistic."
-- Gianluca Tagliabue, Group CFO and COO

By openly embracing consensus forecasts and preempting currency headline risks, management signals earnings visibility, but also highlights ongoing sensitivity to FX and macro volatility, especially in GCR.

Looking Ahead

Management reiterated expectations for low single-digit organic revenue growth in 2025, with consensus full-year revenue of 1.923 billion euros and adjusted EBIT of 173 million euros, both net of adverse currency impacts. Capital expenditure is projected at 6%-7% of revenue, with increased investment in greenfield footwear production in the second half. No outsized recovery is assumed for GCR in 2026, and Zegna is planning for China to remain in a 'new normal' of persistent volatility through next year.

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