Good morning, good afternoon everyone. Please note that today's material and presentation are available under our zegnagroup.com website. Joining us today, the Ermenegildo Zegna Group leadership team. Before we begin, I need to point out that we will make certain forward-looking statements during today's call. Our actual results may be materially different from those expressed or implied by these forward-looking statements. Also, statements are subject to a number of risks and uncertainties, including those described in our SEC filings. Please refer to the forward-looking statements cautionary statement included at Page 2 of today's presentation. I'll now hand over to Gildo Zegna, Group Chairman and CEO.

Good morning and good afternoon. And thank you for joining today conference call on Ermenegildo Zegna Group, H1 2024 results. Before we speak about the numbers, let me make some comments on the sector and our strategy and then I'll let Gianluca to go in details through our results. So far, 2024 has been challenging around the world and across many industries, including ours. The luxury sector is experiencing a deep normalization phase. These cycles happen, we have been through them before in our more than 100 years of history. And I know they might happen again in the future. It is our job to deal with them with pre-decision and sharp actions, not only to handle the current situation, but also if possible to come out stronger. This is what we did during COVID when we launched the One Brand strategy for Zegna. This is what we are doing now with some important action for all our brands. At Zegna, we are doubling down on the One Brand strategy. We are evolving our communication from a broad audience approach to a targeted audience approach to engage deeper with our community of value customer. We are evolving our clientele from relation into experience. And we are evolving our collections from lifestyle to icons, as we did with our [Super Stitch] (ph) shoe collection. VILLA Zegna New York, the second chapter after [Villa ZEGNA] (ph), Shanghai, it is a clear example of the direction we've taken. Two weeks ago, we celebrated with an immersive experience, a journey that our Founder, my grandfather, took in 1938 above the ocean liner 'Rex' to reach New York City to meet Italian tailors and started our group's American [Blue Pageant] (ph). VILLA Zegna New York were designed to celebrate Zegna’s heritage through a series of…

Thank you, Gildo. Good afternoon, everybody. Let me move to Page 8 of the presentation, where you find the first half '24 results key highlights. The preliminary revenues for H1 '24 were already disclosed at the end of July. So they confirm then they will not comment much further on that. I'll just remind you that in the semester, we reported 6% growth year-over-year growth, driven by the Zegna brand and by the consolidation of Tom Ford fashion that, as you know, entered in our perimeter last year on April 29, 2023. Therefore, in all the results you see today in this presentation, Tom Ford fashion performance compares six months consolidated this year versus at two months and two days consolidated last year. In the first semester of 2024, the group generated EUR637 million of gross profit, EUR81 million of adjusted EBIT, EUR31 million of profit intended as net profit. I will not add many comments at this point since in the next pages, we will go more in detail on the dynamics and analysis of this results. So let's move to Page 9 to deep dive on the main metrics of our P&L. Starting with gross profit. In H1 of this year, gross profit rose by 10 percentage points to EUR637 million with a margin of 66.4% on the revenues. The 220 basis points improvement from H1 of last year has been driven mostly by two factors: first, a better channel mix given that the DTC revenues generated this year's 76% of branded revenues vis-a-vis 72% a year ago. And as you all know, DTC gross margin is longer than the wholesale one. And second factor is a better inventory management. Channel mix, the first of the two factors is estimated to justify around half of the gross profit…

Thank you, operator. Can you open up to the Q&A.

Thank you. [Operator Instructions] Our first question today comes from the line of Anthony Charchafji with BNP Paribas. Please go ahead, Anthony.

Hi, thank you. Good morning. It's Anthony Charchafji from BNP Paribas. I hope you are doing well. I have two questions, please. So the first one would be on China trading. If you can give us some comment how it was during the summer in July and August and if you have early indication of September? And my second question would still be in terms of top-line. So your midterm target that you -- that you laid out last December was calling for a 10% top-line CAGR and 20% EBIT CAGR with 2023 base. So just wanted to know if this still holds so you expect a rebound and if we can have this rebound in H2 or in 2025?

Okay. Thank you, Anthony. On China, I'll ask Gianluca to answer and then on the midterm target ask Gildo to answer for you. Thank you. We are fine. Actually, sorry, you started your question asking how we are doing. So, thank you so much.

Hi Anthony. So China, we are still seeing the same trajectory of challenging and volatile environment. So July and August has not been -- we have not seen an inflection point on China so far.

Let me add one piece of information, I’ve been in China two weeks ago and I met all major landlords, surely the situation remains challenging for almost everybody. I would say they all are still positive on the midterm as we are, but it's, I would say, kind of a normalization process or consumption and everybody is watching closely the dynamic. But from our standpoint, we have the full trust of landlords. We have a good traction by our potential and loyal customers. I think the VILLA Zegna Shanghai a few months ago was approved. And so we are watching the situation with positive mind. And I think that we will be still be careful on 2025, hoping that the situation can evolve rapidly then I can tell you.

Within the quarter if we need to give you flavor within the quarter, August worse than July versus August, we have seen soft traffic, soft demand, so softer than July, August.

And so by brand, clearly, Thom Browne in August over the soft --.

Yes. I would say -- yes, I would say that Zegna is holding up better than Thom Browne and I think Tom Ford is a small -- a not more potential, I mean it’s a more reality with still big potential. We just opened a new store in China world, and we’ll be watching the development of that very careful. But we are still a bit on the mid-term, and we will not slow down our plan on China. In terms of target, you asked Anthony about target, whether the target of the center are confirmed. I must be fair to you that there is no doubt that '24 has turned to be below our initial expectations. These are facts, both for internal and macro reason. And in particular, the wholesale sector is facing the same situation. And this, I think, goes beyond one country, I think that is a macro situation. However, as I anticipated for China, our ambitions have not changed. And it could possibly take a bit longer, but we are committed to delivering our promises.

Okay. Thank you. It's very helpful. Maybe I have just one follow-up on China and maybe to talk a bit about margins. So your gross margin was up 220 bps, which is a nice surprise. I mean, you mentioned, Gianluca that half of it was on channel mix and the other half on -- on inventory management. But could you quantify maybe the impact of China in the regional mix? Was it a drag? And maybe then the magnitude of the inventory boost, if you can quantify it? Thank you.

We don't disclose the gross margin by country. So of course, it is been surprised China is the longest margin in the industry. So of course, I think China soft is not helping. But despite this, we have been able to define our gross profit. So it means that the actions on prices, the actions on inventory. We are able to more than offset the fact that the longest country in term of margin has not been positive. So I think we are not going to disclose sort of margin by country because we have never done so. But definitely, if you point out the point that is we read it as a positive thing. The fact that the brands were able to make a further step in terms of margin, and that is -- that was one of -- and still is one of the areas where we want to recover vis-a-vis some peers. It is having a stronger margin, knowing that, of course, we have part of our business is B2B, the textile. So it's not really like-for-like the comparison of our gross margin. But -- compared to last year, we were able to increase. And this despite, as you correctly pointed out, the fact that China went behind. And -- so I think it's an indication that our initial margin, the brand power of our brands is sustaining the prices, although we have little by little increase the prices. At this point, maybe touching also a point that you might ask or someone else, -- we are -- I don't think at this point, we still have huge price increases on a like-for-like to be done. As we have already said, we want to manage prices to offset cost and to offset currencies, which we are still doing. We expect still to have positive impact from mix because we are increasing even more, and the current drop through of [indiscernible] an example. We are more and more creative products, iconic products at high price point, the fact that we are seeing recognition of customer means that -- we are in the right direction, as Gildo mentioned.

I think that let me just say something about the importance of the merchandise mix. I think that for any brand, it becomes key. What you drop in the market and the timing of the drop. And we see the importance of continuative product. However there is a risk that brand relies too much on continuity product and not enough in innovative products. So we've seen that the drop to that was delivered after the summer, I mean, had positive effect across the world. So this is a push for us to continue with this new strategy, not only in Zegna, but also in the other two brands because we see that when we come out with newness performing to brand, delivered well in the store to our customer, potentially a new customer, you get a reaction, whether it's China, United States or whatever. So I think that since fall/winter was the first drop strategy season, we confirm the validity of that strategy together with the validity of the continuity program, replenishment program that however, has to be moderated in order to leave more room for newness. And I think that we are gearing up the entire supply chain, the Filiera material, the fabric, the yarn is becoming extremely important. We are ready to unveil a couple of new projects for [mid-wear] (ph) early next season, and we think that on the upper end of our scale, and we think that those projects will be really coming out at the right moment. So the customer is there and is able to react provided you come out with newness, and that's -- we see it across the board.

Okay, thank you very much. Very helpful.

Thank you, Anthony, and we can move to the second set of questions, actually.

Our next question comes from Louise Singlehurst with Goldman Sachs. Louise please go ahead.

Hi, good afternoon everyone. Gildo, Gianluca, and Paola thanks for taking my question. Just one quick follow-up on China, just to clarify. Are there any changes in terms of the plans for stores? Or have you delayed any kind of store rollouts or refurbishments for the time being, just to check that there is nothing happening medium-term? And then my main question is actually in regards to the EBIT and the profitability. Obviously, a really good gross margin expansion. Can we expect that to hold just in terms of gross margin in the second half? Are there any kind of factual in terms of like currency, et cetera, headwinds that we should be considering in the second half. And when we think about the underlying OpEx, OpEx cost growth looked at around 20% in the first half, obviously accelerated with Tom Ford, but can you help us think about the underlying inflation and the outlook for the second half and if there is any cost-saving activity to consider and to help protect the margin in a tougher macro environment. Thank you.

Yes. I will pick the first on China. At least in 2024 [indiscernible] go. And so we had a few projects, a few opening, a few refurbishment of stores and so we did them, and I think that we are happy to have done it. For '25, we are considering certain doors, whether to confirm that to postpone them. And there is a potential study to consolidate some doors, maybe in certain markets -- we have too many doors and maybe we have to consolidate. And so we are working on a plan that doesn't stop, if you want me -- development of our brand in China, but maybe consolidating some doors and rebalancing, if you want the small with the mid there with a big size doors that would help. I just make an example, in Europe, we had a good traction with some resort doors. We have opened smaller doors and this is quite new to us. So the testing we are doing in some area could be helpful to the other. I mean another example, Villa Zegna, Villa Zegna and Salotto Zegna, have been tested -- will be tested in New York, and we will try to take the best out of it to [China] (ph). So there could be maybe fewer and less doors and maybe in addition, a few addition of Salotto Zegna to current doors in major markets that can make our offer even more precious and even more of our luxury than the one we have in-line with the personalization or approach of our brand, which is proving to be very effective and the same experience can hold true for Tom Ford and Thom Browne. What Rodrigo and Tom are doing in Thom Browne with the cultural events also with the help of our made-to-measure service in the most commercial part of the collection is proven to be effective. Likewise applies to Tom Ford. To Tom Ford, we have given them the maximum, the best of our made-to-measure organization, and they see that the [indiscernible] the organizing the event and proving to be very effective in particular in the United States. So I think there is an important cross-utilization also among brands in terms of product, in terms of what is right and what is less right in order to foster growth in -- for each of the three brands regardless of the geography.

Thank you Louise. And for the second, I leave to Gianluca.

So the question was on the EBIT.

Was on gross margin, if what we have seen in the first half, please correct me if I'm wrong, but is something that we can project in the second part of the year. And actually, there was some differences and then on the OpEx, yes.

So he’s right. On the gross margin, the number that we are publishing, which is between 66% and 67% is something we don't see a major element that can move the needle up or down. I called out already, but it is not material. There is a EUR3 million PPA that is not recurring. For the rest, I'm not calling out anything that is material that might move the needle for instance, also some currencies we are already covered on the fall/winter '24. So from a hedging perspective. So I think we are in a good shape to bring the same gross profit margin through the year. In terms of OpEx here, I would couple marketing from SG&A. In marketing, the incidence in the first half has been 7%. And last year, full year, the incidence was more close to 6%. And so our full year will be closer to the 6% rather than 7% and that's exactly the point that we mentioned before. So we have a balance of expenses in marketing that is much more weighted on the first half. But the full year will go back to an incident that is closer to the one of last year. In terms of SG&A, I don't call out any major trajectory of change compared to last year. Of course, we are reducing selectively some CapEx, which might differ depreciation more through next year. We are reconsidering some discretionary costs. We are intervening and that is mostly on the G&A side. So -- but I don't think it is a major change, if you look at the first half, it's more an inertial pattern from an inflation standpoint. And of course, we are paying all the attention to no priority and discretionary costs that we can reconsider. So that will be probably in the element of inflection point in the second part of SG&A, the biggest one being on market.

I don't know if we -- if we answered to your questions if you have any follow-up.

That's great, thank you.

Thank you. I don't know if we have any follow-up questions. Otherwise, I think we can we can close the call. If you have any follow-up questions, any questions we are here, operator but let us know. Otherwise, we thank everybody.

At this time, we do not currently have any questions registered.

Okay. So thank you so much for the questions. And we are going to see in a very short period of time. So on October 22, we will have our Q3 revenues results conference call. We will meet again there. Thank you for the time being and for any follow up any questions, any deep dive, Alice and myself as usual, we are here whenever you want. Thank you, Gianluca.

Thank you, everyone, for joining us today. This concludes our call, and you may now disconnect your lines.