Ermenegildo Zegna NV

China's tentative luxury spending recovery appears to be losing momentum, with early third-quarter data showing a sharp slowdown that raises the risk of another false dawn for the sector, according to Bernstein analysts. Luxury shopping mall sales in mainland China weakened sharply in June and July, culminating in a 12% year-over-year decline in July, following broadly flat growth in the first quarter and low-single-digit growth in the second. The slowdown interrupts a gradual revival over the previous four quarters, as consumer confidence remains depressed and middle-class shoppers are weighed down by weaker economic growth and substantial price increases implemented by luxury brands. New tax measures, including greater scrutiny of offshore wealth and tougher enforcement, are curbing spending among high-net-worth individuals, who had remained resilient. In response, Bernstein cut its third-quarter industry organic growth forecast by 110 basis points to 4.9%, down from 6.3% in the second quarter, and trimmed the full-year 2026 estimate by 40 basis points to 5.1%. Performance is diverging sharply among brands, with Zegna, Gucci, and Richemont's Jewellery Maisons showing relative strength, while LVMH has been weaker. Richemont remains the preferred luxury name, while Gucci's 20% to 30% price cuts could support Kering's near-term performance but risk weakening brand equity over time.

Ermenegildo Zegna Group reported first-half revenues of €987.3 million, up 6.4% year over year, with direct-to-consumer sales climbing 15.8% organically to account for 86% of branded revenue, but net profit slid to €28.4 million from €47.9 million a year earlier. The profit drop was driven by a €27.8 million non-cash gain that did not repeat, a higher effective tax rate of 38.8% versus 29.6%, and a negative swing in financial expenses and foreign exchange. Group-wide adjusted EBIT rose to €74.5 million, and the Zegna segment's adjusted EBIT margin improved to 14.8%, while Thom Browne revenue fell 4.9% to €123.1 million and its adjusted EBIT swung to a loss of €8.3 million. The company also reported a net cash surplus of €59.6 million and positive free cash flow of €19.2 million, with capital expenditure rising to €64 million for a new shoe plant in Parma. Hedge fund ownership increased to 23 funds, and the stock trades at a forward P/E of 21.74.

Ermenegildo Zegna Group announced that all resolutions at its June 26, 2026 annual general meeting were adopted. Shareholders approved a dividend of 0.12 euros per ordinary share, totaling approximately 32 million euros based on outstanding shares. Gianluca A. Tagliabue was appointed Executive Director and Group CEO, and Nagi A. Hamiyeh was appointed non-executive director. The amended Remuneration Policy for the Board of Directors was also approved. The dividend will be paid in US dollars on July 29, 2026, with an ex-date and record date of July 6, 2026.