Hello, everyone. And warm welcome to today’s Ermenegildo Zegna Group First Half Results Webcast. My name is Melissa, and I’ll be your operator today. [Operator Instructions] I now have the pleasure of handing over to your host, Francesca Di Pasquantonio, Director of Investor Relations. Francesca, over to you.

Thank you very much, Melissa. And welcome to everyone joining us today to discuss Zegna Group financial results for the six months ended June 30, 2022. We will be using the presentation material posted on our website earlier today. You can find the material along with the related press release under Investor page of the Zegna Group website. Today, I’m joined by Zegna Group Chairman and CEO, Ermenegildo Zegna; and our COO and CFO, Gianluca Tagliabue; and CEO of Thom Browne, Rodrigo Bazan. First, Gildo will walk through our results at high level, provide the business updates and discuss strategy and guidance and recent ambition. Gianluca will spend time going through the numbers and then -- and Rodrigo will cover Thom Browne. At the end of the call, we will have time for Q&A. Before we begin, I need to point out that we may make certain forward-looking statement during our call. Our actual results may be materially different from those expressed or implied by these forward-looking statements. All such statements are subject to a number of risks and uncertainties, including those discussed in our SEC filings. I refer you to the Safe Harbor statement which is included on page two of today’s presentation and this call will be governed by such language. Again, thanks for joining us, and with that, I will turn the call to Gildo.

Yeah. Maybe want to chase also in the Northwest [inaudible] In Italy, where we had our recent Board. I must say that after the dynamic and a war in 2021, a year, which was a milestone for our company and the year where we performed quite well and we continue to show the strength of our strategy confirmed by the results of the first half of this year and this despite the complex macroeconomic and geopolitical context. And I think that we are satisfied with results, both in terms of revenue and in terms of margin. And I must say that one of the key milestone of the first half has been the launch of the Zegna One Brand, what we call the rebranding project, which launched in July in our store with the product highly recognizable by icons. And I must say that another milestone is the recent corridor with Real Madrid, which was announced Wednesday, and which we believe it will be an incredible step forward to amplify our One Brand strategy and target new customers around the world and enhancing the value of two over Centennial [ph] brands layer and Real Madrid. If you move please to slide number four, there are some numbers I want to share with you. You can see from the slide that our performance has been quite remarkable. We have grown at the topline by 21% year-over-year, reaching revenues over approximately €730 million in the first half. Excluding Mainland China which was disrupted by COVID-19 related lockdown, because of closure compulsory from mid-March till end of May, our growth rate was remarkable 53% with U.S. and Europe doubling. Our adjusted EBIT margin ticked up by 20-basis-point to 11.3%, despite the planned step up in cost and unfavorable country mix from the weaker…

Thank you. Thank you, Gildo. Good morning or good afternoon, everyone. I will run you through some of the highlights of the Thom Browne performance. Thom Browne is continuing to make progress on our road to doubling sales in the mid-term, like we announced in the month of May, particularly I think with a focus on stepping up visibility for the brand. Today’s results a testament of the strength of our brand and the focus on the connection with our clients, despite a very severe set of disruptions in the first half of the year. During the second part of Q1 and during most of Q2, at least a third of our stores saw closures or hugely disrupted traffic, including our warehouse close in Shanghai for 10 weeks serving the business. The focus on the strength of our e-business allowed us to bounce back very quickly from store closures and much disrupted traffic due to COVID in Greater China. Our global e-business and thombrowne.com, Tmall and platforms such as Farfetch.com continue to see very strong growth and very healthy profit growth. We have a clear focus on stepping up visibility in our brand awareness, to name a few significant moments. Thom Browne stage our Men’s and Women’s Fall/Winter 2023 Show in late April in New York City, just the head of the Met Gala with outstanding visibility. I think it’s important to note that this is our first ever show outside of professional week and we’ve got a very significant visibility and success of that. Thom Browne few weeks after was back in Paris after more than two years with possibly one of his best man shows in the last 10 years, which generated rev reviews from professional critics, as well as outstanding exposure to consumers globally to fashion social…

Sorry. Yeah. Not [inaudible] I think it’s still my turn. I think we have gone through another important chapter of our story, which is the Made in Italy background. I say that the Made in Italy platform was, as you know, affected by the COVID problem, in particularly, Gildo did explained, but we came out very, very strong and we see tremendous growth in the first half of 2022, with Textile up 55% and Third-Party brands up 44% and hence the later all those going forward. These means we are really working to capacity in our supply chain plans, which is very, very good. ESG, this is a really important chapter of our history and our future. That means responsible growth which is really for over 120 years and if you recall during Capital Market Day in May, we shared our sustainability strategy, as well as 2026 with a commitment and I just want to mention a few that we marked in the last three months. In July we announced a number of sustainability-linked financing agreements and in August we submitted our target to SBTi and green mobility that is now we are car fleet. We have approximately 25% of the journey to reaching 100% fully electric or plug-in hybrid corporate vehicles by 2025. So we are updating you on this step by step progress on we achieved. On slide eight, I would say that, mid-term highlights some of the key points in the first half and these happen despite some disruption of the global environment, and I must say that, our global revenue excluding Mainland China shows restoration, also in second quarter 2022 with a growth rate of 59% from 48% in first quarter 2022. And the good news is that we delivered a strong profitability with 11.3% of…

Thank you, Gildo. Good morning, good afternoon, everybody. Today, I will drive you through the journey of our revenues, profits, cash, as well together with Gildo, on the guidance for 2022. First, page 10, let’s look at the revenues plus 21%, €729 million. The group achieved across -- good performance across channels, segments or lines and regions, of course, excluding the GCR, Greater China Region, which as we know, was affected from mid-March to the end of May by store closures. So what we look also to isolate this phenomenon, which, given the importance of Greater China for the Group is skewing the numbers. Let’s look at global numbers excluding Greater China Region and the revenues were up 53% with the second quarter was accelerating compared to the first quarter 59%, compared to 48% in the first quarter. We see that the positive trends on domestic consumers, we see a return of tourists with a particular rebound in Western Europe. Second, EBIT, adjusted EBIT was €82.7 7 million with a margin of 11.3% and revenues 20 basis points over the same period of last year. If we look at the Zegna segments was up 19%, but was up also in terms of margin in few basis points from 8.4% to 9.2%, despite the slight step up in costs, both at central level, some are related to logistic and the step up in the amplification of the One Brand. On the Thom Browne part, the growth was 30% in sales and EBIT margin was moving slightly down to 17% essentially, but still very good, due to the growth investment phase in stores and people. Profit came in at €21 million for the first half of the year, down from €32 million of last year. So outcome the profit is down given…

Okay. There is a little bit to me with a couple of good news that all, as you’ve seen in the first half of 2022 has been better than our expectation. The situation in Greater China has been improving since June and overall we had a good start of Q3, as well as a solid order collection, positive pricing for both the Fall/Winter 2022 and Spring/Summer 2023 season. As a consequence, we are raising our full year 2022 revenue guidance from low-teens to mid-teens growth at actual exchange rate versus 2021. We also expect a solid improvement in adjusted EBIT, with adjusted EBIT margin in the range of last year’s as topline tailwinds should mitigate the expected increase in industrial costs and logistics, and the step up in listing related overheads and rebranding. And together with this, we expect the increase in the cash surplus in the second half. Now all this assuming that no further deterioration or geographic extension of the war in Ukraine and a continuing normalization of the COVID-19 pandemic in Greater China and no significant macroeconomic deterioration and no other unforeseen events. But at the end, we have decided to raise the revenue guidance for the reason I mentioned. I think, at this point, I turn to Gianluca for a couple of more highlights and details.

Thank you, Gildo. So page 27, for the ones that were present in person or remotely at the Capital Markets Day. This was the chart where we explained the assumptions behind the guidance for 2022. We refreshed it so you can compare it to the one in May and why we believe that from low-teens, we can be in the mid-teens range. I’ll help you making the comparison, so Greater China we had in mind. At that time, the assumption was easing out at the end of the summer of the disruption, which is luckily happening. U.S. & EMEA we had in mind a number for the year around 30%. At this point, we believe it will be higher than that. For the Zegna brand we had at that time in mind around 10% and now we are looking at double-digit number. Thanks to what Gildo said, we now have the order also in the Spring 2023, we have the full collection to be delivered before 2022 and we are ready to go. Thom Browne we have in mind around 20%, now we see more than that, more than 20%. So all this improvement let us look at the year in a mid-teens growth and bottomline we declare a solid -- we declare improvement on the adjusted EBIT in absolute terms, now we see a solid improvement and we qualify that the adjusted EBIT margin we see it in the range of last year. We need to consider the step-up in margin and central costs this year a demand. So we stick to an adjusted EBIT margin in the range of last year’s for these reasons for the one up -- one-time step up of these costs. This I think and just to conclude the presentation. And thank you everybody for joining us and with that I’ll hand it back to Francesca for the Q&A.

Thank you, Gianluca. Thank you, Gildo. At this time, we’ll have lots of time for Q&A. Operator, can you please open the Q&A session. Thank you.

Of course. [Operator Instructions] Our first question today comes from Susy Tibaldi of UBS. Susy, over to you.

Hi. Thank you so much for taking my questions and congratulations on a very strong set of results. I have a few questions. So the first one would be you already commented on the performance of July and August, and was very helpful. And but I was wondering more from a qualitative point of view, if you are seeing at all, if you feeling any change in the way that the consumer is behaving, because of course, now it’s been several months of a lot of negative news flow on the macro situation and everything? But suffice is that the luxury sector is continuing to be very strong. So I just wanted to hear also from you. You can see any change at all in the consumer behavior that would suggest that something maybe starting to become a little bit more fragile. Secondly, on the outlook for this year, I want to do, again, ask a little bit about your expectation, because if you -- in the H1 it was growing very strongly over 20% and so your topline, I think, it’s flattish to a 10%? But you mentioned an acceleration for Thom Browne in H2. You have very strong visibility now in order books. So it does seem like it is a little bit conservative you’re subscribed that helps a bit, so on volume, it seems a bit conservative. So I just wanted to check your assumptions there again, because it sounds like the trends result which to have been very strong. Then last year marketing, can you specify again what kind of marketing you expect for this year and is this is a level -- you said these are levels that will continue to be higher? So if you can just specify what kind of range in the marketing spend we should expect and differs to the margin, and so now China is back, so it’s not as bad as it was in Q2 so your country mix should be positive and helping the margin. So I guess these questions are a little bit on the lines of how much cautiousness are you implying into your H2 guidance? Thank you so much.

Many questions?

Thank you for this.

[Inaudible]

Yes. All right.

[Inaudible]

Okay. So I think, Gildo, start with the question on whether the current global market financial situation is impacting the consumers actually?

Listen, on China we have so much said, the closing of with two and a half months of lockdown, not exactly the past all the rules valuing and so I think it’s premature to go with rules and even though we see a positive trend in this way. However, I can talk more deeply on both amidst America and United States, North America and Europe, and in particular, EMEA, at least we have seen an incredible attraction by the current customer and also by a few number of new customer. They just want to shop for newness or they just want change the work flow. And so I think that what we have it seems to please them I think there’s more [inaudible] work out, which is the last confirmation of our luxury leisurewear we still believe that. And I think that they are affected by the economy from not simply by the product and by the original material many products. So I think we are going through a new shopping experience, which goes throughout the world. On top of that, if you ask the users and the North Americans travelling mainly in Europe I think surely have -- beneficial the strength of the dollar and the fact that American are back in Europe and talking about the last material then went America and that really have shortening as well. And in terms of decrease in tailoring side, I am not saying that, we are off to good start, it seems that, hence business people are going back to their office there had to report at work, so its pleased to know in particular in the last couple of weeks, a good traction on continuing, I am sure a nice, which is quite interesting. So I must say that all-in-all we’re to a good start and we are watching carefully, whether these dynamics will need to for the COVID in China. Last word on EMEA, I mean, Dubai is on fire, it’s unbelievable to see a low and we are in the low probably decision and how tourist or even business people are shopping. So we are, again, we are doing better than our expectations. So all in all a positive trend and we see that what we offer overall the trend will continue. Gianluca?

So the first question, I think, your underlying message was, are you sure that you’re not conservative in the guidance? If I understood correctly, that’s the key point. Of course, there is volatility we need to take that into account in the guidance. We don’t disclose guidance by specific market channel. But we have been cautious by putting the mid terms -- mid-teens guidance on Q4 in China without giving detailed numbers, but the underlying assumptions that is not far off last year. So when you consider Greater China retail Q4 close to last year, you understand why we project in teen, if it will be higher than that, we might enjoy the call little different. But adding that assumption, we believe that mid-teens is a fair representation of our outlook. Then, in marketing, the question was on marketing we declared in the Capital Market Day in the IPO journey, that we were ready to step up by 1 point marketing, this is happening, the journey a step up will happen in 2023 against 2021. So this year, consider that the first half of the year, all the marketing activation that were planned for China, we are put on hold, of course, because we didn’t amplify anything since restrictions were up and running. So we’ll start amplifying heavily now, from September, we are the cashmere campaign as of now we’ve Real Madrid. So the journey of spending the extra 1 point is not changed and will be finalized next year with the step up of 1.2 marketing spending.

And the margin guidance, Gianluca.

And the margin guidance, we have been plus 20%, sorry, 20 bps in the first half compared to last year. And also, as I said, considering a conservative Q4 on Greater China, we assume for the full year similar margin. Again, as I said on the revenues, the two things are very combined. If the Q4 in China is different than our assumption we might have different revenues and different margin on the bottomline. That is I wanted to be explicit what’s behind. On the other side, there is no assumption and it’s a fact we will have to step-up in marketing, actual money and also some basis points and we have to step-up on central costs, which of course are related to being a corporate company and all the compliance that is related New York.

And Susy does that answer?

Yes. Very clear. Thank you so much to all of you.

Thank you. Thank you, Susy. Operator, we are ready for the next question.

Perfect. Thank you. So our next question today comes from John Guy of Jeffries. John, over to you.

Thanks very much, Gildo…

Hi, John.

…and to Gianluca, Rodrigo and Francesca. Thanks for taking my questions. The first one is on markdown reduction. Could you talk a little bit more about that the percentage of markdown reduced in the first half of 2022 versus 2021. And just confirmation that you said, you were going to eliminate end of season sales I think by the end of 2023? That’s my first question. Are you able to quantify the step-up of investments that you’ve made for both Zegna and Thom Browne brands across marketing stores? And for Thom Browne what do you think is a sustainable sales contribution on the expansion of space over the next three years? And then I just had a question around Made in Italy. Do you think it’s fair to say that, when you look at your assets that you have on the manufacturing side, relative to peers, do you think that’s pretty unique and what other assets would you like to add to the portfolio going forward, if I could start with those, but that would be great? Thanks.

Thank you, John.

Let me start. It’s Gildo. Hi, John. With the last one and we then lead to Rodrigo on Thom Browne and to Gianluca for the lockdown in the same part. Now the Made in Italy, I think this split in two, one is the Made in Italy platform, which is, I would say, the textile part, which we have seen -- we’re doing joint works and the result are quite exceptional and we did not expect and we are really running the shift in order to make up for the production. And to be honest with you we thank God that we have a material on the site, because there are a textile that has not performed with the material, they are in trouble, that’s why they long lead the supply chain or delivery. So we are very thankful to have the full control of the supply chain particular from the textiles. And the fact that we have a diversified textile base emphasis to be very creative in the private we have to use. And it’s no more seasonal, I mean, they have seen in winter, they have especially in summers. So I think that -- so -- so the point I’m making is that we want to strengthen the chain which we are finally actually we are looking is more likely to be added to the textile supply chain, in order to each scale the plant that we are able to do so. I will be telling you that we are working on something on small things, but we won’t describe the chain. On the other side, we are increasing our parts of probably in Italy, Made in Italy some new brands and the fact that we are raised our luxury. If you want content of also power, maybe delivery is becoming more than that. If you compare Made in Italy outside, potential acquisition, we keep our ears open and I don’t have any comments related to that. So, overall, strengthened capability, yes, and we are watching to see what could be interesting to our platform.

Gianluca?

So, the first was on markdowns by confirming that our forecasts to, the reduction of markdowns is advanced. So in the first half of the year, it was very, very low incidence of markdown, we’re talking low single-digit. From fall 2022 we are not planning on markdowns in the boutiques and e-commerce, and we start on the essentials that is the continuity product on Wholesale. From 2023 we extend the policy of no markdown to across the Board in the channels. So this is confirmed in the context of moving to a luxury position. In terms of marketing, I think, you asked something. Did you…

Yeah. He asked about Thom Browne and…

Thom Browne.

…the composition of three and Rodrigo will give the answer.

Yes. If you want me to address the space contribution to Thom Browne, its actually limited, because as we introduce in May during the strategic plan presentation, we are envisioning around 50 additional stores, this is total amount of stores, stores that are further franchises where they shops and we’re going to be in roughly 100 by the end of this year. So there is limited contribution of square meters of additional stores, we’re not changing our store format or store our model, retail model. And but we are looking for a much more significant growth of clients and we’re much more focused on the growth client, that’s why client value management, it’s a very important project for us, where we have the right tools and the right focus to double the amount of clients that we have, the influence of the brand, including the amount of clients within the DTC network.

John, does this answer your question.

Yes. That’s very clear on the stores. I guess the only part to the question which hasn’t been addressed yet is to do with the quantification of investments made in terms of millions for both Zegna and Thom Browne in the first half of the year. So across things like investments made, additional investments in marketing, additional investments made in stores, people, et cetera, what are the numbers, the incremental investments made for both of those brands? Thanks.

So, you can see from the P&L, the investments, there was a growth both on personnel in terms of overall cost that was lower than the growth of the topline. Of course, there has been -- that’s why we are not disclosing by nature the cost or increasing market. I tell you, we are -- in marketing for the year we are increasing the expectation is to increase more than the mid-teens, so in the region of -- for this year, next year in the region plus 20%, plus 25%, this year and next year. So every year 2022 and 2023 plus 20%, 25%. This year is more 20%, next year will be more 25% marked, to give you an idea. I need also to stick to the compliance of what we disclosed in the SEC and what we don’t. So I’ll give you some hints of our model then. So the marketing definitely the step up and there has been some step-up against that it was not part of this SEC compliance. So I cannot be more specific in terms of number of central cost increase, but that was the drag in the first last -- half of last year we were in known listed company. So we didn’t have some costs, like, the insurance of the Directors and to serve that it’s linked to the New York Stock Exchange. We didn’t have the SOX compliance. In terms of CapEx, which we said, we disclosed, we do disclose, you can see it’s the 4% at the end of the year, you need to consider that probably it will be more, it will be 5%. And CapEx is for Thom Browne openings, they are concentrated in the remainder of the year and for Zegna there is lots of relocation and renewals more than store opening. This is also a trend for the next coming years. Thom Browne is adding now 52 stores definitely that will be addition of stores in the coming years. Overall, this year, it’s close to nine stores that Thom Browne is opening and we need to expect that this growth rate of store footprint for Thom Browne might replicate for the coming years. So that number you could have in mind in terms of store opening. Zegna, Zegna is more renewal and rebranding. You need to consider that mean so far we have rebranded with a new logo under 30 stores. We will have by the end of the year almost entirely the network done. That is another task force for this year to complete the rebranding. And together with rebranding we will take also the opportunity often to renew the entire store to be more in tune with the new collection and also where possible to reduce the square meter in order to optimize the spaces, now we don’t carry three lines, we carry more lines.

Absolute, Gianluca. That’s very clear. Thank you, Gildo.

Thanks.

Thanks, John.

Thank you, John. Melisa, I think, we would like to close today’s call. We thank you everyone for attending and our next results announcement will be the Q3 revenues on the 27th of October. Have a good day and again thanks to everyone.

Thank you, everybody.

Thank you, everyone. This concludes the call today. You may now disconnect your lines.