Ermenegildo Zegna N.V. (ZGN)

Ermenegilo Zegna (ZGN) stock fell by 14.20% following the unveiling of its full-year earnings report, which highlighted both strengths and weaknesses. The fashion label, based in Milan, reported a remarkable 27.6% surge in revenue for 2023, amounting to 1.9 billion euros ($2.06 billion), with organic growth rising by 19.3%. Additionally, the company achieved significant gross-margin expansion, with gross margin increasing from 62.2% to 64.3%.

• Operational Challenges in Second Half: Despite the strong revenue growth and margin improvement, Ermenegildo Zegna faced operational challenges in the second half of the year. Operating profit dropped to 92.6 million euros ($100.36 million) in the second half, down from 116.5 million euros ($126.37 million) in the first half, despite higher revenue in the latter period. The operating margin also declined from 13% in the first half to 9% in the second half.
• Investor Reaction and Future Outlook: Investors reacted negatively to these operational weaknesses, leading to the stock's significant decline. However, the company's strategic initiatives suggest a positive outlook for the future. Ermenegildo Zegna delivered double-digit revenue growth in its Zegna and Thom Browne segments and acquired Tom Ford Fashion, contributing 235.5 million euros ($255.22 million) in revenue for the year.

Ermenegildo Zegna Stock (ZGN) dropped by 5.88% from $12.25 to $11.53 in the trading on Tuesday October 24, 2023. The reason why ZGN stock down today is due to the profit-taking after strong Q3 FY23 results.

• Q3 Revenues of €431M, up +20.8% Y/Y thanks to strong performance in the US and a focus on direct-to-customer sales.
• Revenues for the first nine months of 2023 reach €1.33 billion, up 22.9% year-over-year and with an organic growth rate of 19.2%.