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Operator: Good afternoon. Good morning, everyone. Thank you for joining the Ermenegildo Zegna Group first-half 2026 financial results call. Please note that today's material and presentation are available under the zegnagroup.com website. Before we begin, we need to point out that the team will make certain forward-looking statements during the call. The group actual results may be materially different from those expressed or implied by these forward-looking statements. Also, these 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 on page two of today's presentation. I'll now hand over to Paola Durante, Chief of External Relations and Sustainability.
Paola Durante: Thank you. Thank you, operator, and good morning, good afternoon, everyone. Thank you for being here today with our conference call on first half of 2026 results. I will briefly comment on our financial results, which highlights you can find on page three of the presentation, and then I will leave the floor to Gianluca Tagliabue, our Group CEO, for some final remarks, of course, before opening to your questions. On page three, we skip commenting on H1 revenues since they've been already fully analyzed during the July call. Let's move directly to page four of the presentation to deep dive on the main metrics of our reported profit and loss. Starting with gross profit. In the first half of 2026, gross profit reached EUR 668 million, with a margin on revenues of 67.6%. Gross profit remained supported by a favorable channel mix, given that DTC revenues generated 86% of branded group revenues, up from 82% in the first half of last year. As you know, DTC gross margin is higher than the wholesale one. This positive effect was partially offset by adverse foreign exchange movement. As a reminder, Forex movement in the first six months of this year reduced top-line growth by 3 percentage points. Selling, general, and administrative. SG&A expenses amounted in the first half of 2026 to EUR 531 million, with an incidence on revenues that has slightly decreased to 53.8%. This has been primarily driven by improved operating leverage and lower impairment costs, and it happened despite ongoing investments in the expansion of the DTC distribution network. Finally, on marketing expenses reached EUR 68 million, remaining broadly stable at 6.9% of revenues, reflecting our brand's disciplined approach in supporting their equity through focused and selective investments. Let's then move to page five, where we report adjusted EBIT for the group and by segment. As you know, adjusted EBIT is the main metric used by management to analyze business performance at groups and segment level. In the first six months of 2026, adjusted EBIT landed slightly above EUR 74 million compared to EUR 69 million in the first six months of last year, with a margin of 7.5%. Looking at the results by segment, the Zegna segment, which includes Zegna brand, the textile division, and the third-party brands, generated an adjusted EBIT of EUR 107 million, which corresponded to a margin of 14.8% compared to 14.3% in the first six months of last year. The 50 basis points increase in margin has been largely driven by operating leverage in the DTC channel, benefiting from higher revenues per square meter and improved DTC KPIs, including the sell-through. Adjusted EBIT for Thom Browne segment was EUR -8 million compared to EUR 4 million positive in the first six months of last year. The decline reflects the adverse impact of foreign exchange movements, which for Thom Browne has been more severe than the group's average. Inventories and bad debt reserve evolution in line with the business trend and the cost related to talent acquisition and other investments to support the brand's transition towards a retail-first culture. Moving now to TOM FORD Fashion segment. The TOM FORD Fashion recorded a EUR 12 million of adjusted EBIT loss compared to a EUR -19 million in the first six months of last year. This improvement is primarily attributable to revenue growth, which allowed for greater absorption of fixed costs together with an ongoing cost discipline. Let's move to page six. Here you find summarized our reported income statement for the first half of this year and last year. I will comment here on profit specifically. In the first six months of 2026, profit reached EUR 28 million compared to EUR 48 million last year, which, as you remember, included the positive effect from the remeasurement of the Thom Browne put option liability, that remeasurement that did not occur this year. More specifically, the sum of financial income and expenses, foreign exchange gains and losses in the first half of 2026 move to EUR -23 million from EUR +6 million in the first half of last year. This difference mostly reflects the just mentioned remeasurement of the Thom Browne non-controlling interest put option liabilities. That is, I remind you, denominated in the U.S. dollar. The value of the put option was reduced in the first half of last year, also reflecting the sharp dollar depreciation. This generated non-monetary and non-taxable income for EUR 28 million in the first half of 2025. As a reminder, in fiscal year 2025, the total positive impact from the Thom Browne put option was at EUR 37 million, so only an additional EUR 9 million income was recognized in the second part of 2025. Commenting now on income taxes. First half of 2026 income taxes resulted in a higher effective tax rate equal to 39% versus 30% in the first six months of last year, mainly due to the already mentioned tax effect on non-taxable income. Tax rate for the group is normally higher in the first part of the year, therefore, also in this year, also in 2026, we expect the tax rate in the second half to be lower than what we recorded in the first six months. As already said in the past, commenting our results, a normal tax rate for the group is around 28%-30%. Moving now quickly to page seven, CapEx and trade working capital. CapEx, in the first six months, reached EUR 64 million. The EUR 10 million increase compared to last year was mainly related to higher investments in production, including the new shoe production plant in Parma, which should start to operate by the end of the year. Very happy for that. Trade working capital stood at EUR 420 million at the end of June, compared to EUR 442 million at the end of June last year. The reduction has been mainly driven by lower receivable as a result of the streamlining of the wholesale business. Finally, on free cash flow and cash surplus, page eight and page nine. On page eight, you can see that we generated [EUR 19.9 million] of free cash flow this year, compared to a EUR 23 million absorption in the first six months of last year. This thanks to a stronger cash generation from operating activities, which of course was driven by higher EBIT and also by an improved trade working capital. Finally, on page nine, our net cash was EUR 60 million at the end of June, an increase higher than the EUR 52 million at the end of December 2025. With this, I finish my brief comments, and I leave the floor to Gianluca.
Gianluca Tagliabue: Thank you, Paola. Before we open the floor to your questions, let me leave you with a few final thoughts by brand. In H1, the results once again reflect the excellent work that the Zegna brand team is doing to strengthen the brand. The consistency and discipline behind the clear strategic vision continue to translate into solid top-line growth while also supporting the margin expansion. This trend continues to be supported by the brand's ability to both increase its market share among the loyal customers, as well as attract new clients, all while remaining highly consistent in its positioning. Indeed, the very solid momentum has continued through July and August. As you may have noticed, we launched our fall/winter campaign today, fully dedicated to Su Misura, Made-to-Measure, which is also featured on the cover of this presentation and in several major publications. The campaign is a tribute to our legacy and to the craftsmanship expertise and personalized approach that have distinguished Zegna brand for generations, because a Zegna Su Misura suit is not just a suit, it's a legacy that will be carried forward across generations. Regarding TOM FORD Fashion, this fall, we unveiled a powerful marketing campaign that, in my view, effectively conveys the brand's evolution and its increasingly sophisticated expression of elegance and seduction. Marketing is a strategic area where we are prepared to selectively deploy additional resources to further strengthen brand awareness and hype. In the past weeks, TOM FORD Fashion has continued to perform well, with healthy momentum as awareness and engagement continue to build. Now let me focus on Thom Browne. As you know, the brand's deep transformation is ongoing as it moves away from a wholesale-driven model into a retail-oriented go-to-market approach and culture. This transition is taking place in several phases. We are completing the reduction and upgrading of the wholesale network, and to be honest, the process has been taking longer than initially anticipated partially due to a challenging macroeconomic environment. In 2025, we also began evolving the brand's leadership team. Sam Lobban, Thom Browne's new CEO, is building the organization with a stronger focus on DTC and a more customer-centric culture. As part of this effort, he has been reshaping the senior leadership team. We are confident that Sam, together with Thom, of course, are bringing the brand towards the right direction. Transformations of this nature require time and may temporarily weigh on results. The operating performance in H1 this year reflects both the decisions we have taken and the actions we continue to implement to strengthen the brand's long-term foundations. The success of the ASICS collaboration confirmed that the Thom Browne brand continues to resonate with consumers. However, while brand desirability is essential, it is not enough on its own. We are working with Sam across all the key levers of the business, including collection merchandising, open-to-buy planning and assortment, marketing, go-to-market execution, in order to ensure that both existing and prospective customers are engaged, can find the right product offering, and continue to build a relationship with the brand over time. The more recent marketing campaign of Thom Browne, which went out in the last few days, I believe, offer evidence of the brand intention to widen its customer base. Fashion operates on long lead times. Building a stronger brand and a more sustainable growth platform requires patience, disciplined execution, and consistency. As we did a few years ago with the one brand strategy of the Zegna brand, our focus for Thom Browne is exactly this, building a stronger brand with foundations able to deliver sustainable and profitable growth for the long term. Looking ahead, we expect Thom Browne H2 2026 EBIT to return positive in the semester, bringing full-year EBIT close to breakeven. In H2, Forex will have less negative impact, our comparison base will become less demanding, and we have implemented actions to support gross profit and to control costs. Let me conclude now with a comment on our Parma factory, which is a strategic project that we launched a couple of years ago. We are now completing this important investment, which is much more than a manufacturing facility. It is a center of excellence, bringing together craftsmanship, innovation, and operational capabilities in a unique setting, surrounded by a wonderful natural environment. As we have done since the group's foundation, we continue to invest in the Filiera, our distinctive and unique Italian integrated supply chain to support the group developments for years to come. We look forward to welcoming you in Parma next year. With that, let's open the Q&As.
Operator: Thank you, Gianluca. We will now begin the question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you mute your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Robert Krankowski with UBS. Your line is now open. Please go ahead.
Robert Krankowski: Hi. Thank you. I have only two questions. My first one is on the Zegna segment margins in the second half. Comparatives are becoming somehow tougher in the second half of the year, but you mentioned that July and August were still very solid. Should we expect the pattern seen in 2024, 2025 when the EBIT margin was better in the second half than in the first half to continue? The second one, and I appreciated the call about the profitability rather than current trading. You mentioned already that the trends were very solid in July and August. Should we think that there was some level of improvement compared to your commentary from July when there was a bit more volatility? Anything to call out related to China because we hear a bit more mixed things, and I think the comparatives are getting a bit tougher. Thank you.
Paola Durante: Thank you, Robert. On the first and the second, I will leave Gianluca to make some comments. The first one is on Zegna segment EBIT H2 versus H1 or full year.
Gianluca Tagliabue: Let's talk about the full year. In Zegna segment, we expect the adjusted EBIT margin in the region of 15%, driven by all the positive trends that we have mentioned, and if I need to label it in one word, it's about high-quality growth. That's what we see for the year for the Zegna segment, around that mark.
Paola Durante: And for the comment compared to July, of course, Robert, in July, there was only a few weeks of the quarter. Now we have a little bit more weeks, still important months to go, but I will leave Gianluca if he wants to give a sense of if we are more confident or different from July. This is what Robert meant in his question.
Gianluca Tagliabue: As Paola is saying, of course, the quarter is missing still the important month of September. We just delivered important drops of product for Zegna, and also recently for the winter of TOM FORD. So the comments cannot be complete. They are definitely partial. But let me give you some highlights by brand on the DTC, of course. Overall, we continue to see a substantial, solid, double-digit positive trend for Zegna DTC with good performance across all regions and across all nationalities, and we continue to support with confidence the business. TOM FORD is seeing a good trend across markets, and Thom Browne has seen a visible deceleration in Q3, partially expected, having been Q1 and Q2 positively impacted by the new store openings and by the ASICS launch, which was across March and April, the big numbers. As I said before, we are in a transition phase on Thom Browne. Sam with Thom are building the new team. We are carefully assessing the store network, and we are investing on all the retail functions, departments, activities. And this, as I said before, is taking some time, but we are really confident that under Sam leadership, we are moving in the right direction. You asked, the third question was about GCR. We are reading, as I think you are reading, some question marks and volatility on the market. We see that volatility. We do not comment for the other brands, of course, but it is important to have, in China like everywhere, very consistent brand strategy. And this is what we are doing with the Zegna brand. And in China, I think we have found a unique position that we believe is allowing us to get market share. It is a journey, things needs to be done, but we are confident that we have undertaking the right steps in China, and we are seeing some good momentum in terms of market share gain on the Zegna brand, which is continuing to do well also in July and August. In any case, the softness that we are seeing reported in many personalist reports, in many news, the factor that it is probably impacting the most the Thom Browne performance in the market over the summer. So I would bifurcate China in these two ways, Zegna performing well and an impact on the Thom Browne performance.
Paola Durante: Thank you.
Operator: Your next question comes in the line of Adrien Duverger with Goldman Sachs. Your line is now open. Please go ahead.
Adrien Duverger: Good afternoon, Gianluca and Paola. Thank you very much for taking my questions. I will have two, if possible. The first one is on the wholesale channel. Could you please comment on the performance of that channel and the trends you're seeing for the second half of 2026? More specifically, what are you seeing with the order book, and if there are any timing issues to be aware of? My second question is on profitability. With the solid set of numbers today, is there anything that we should be aware of in terms of phasing of costs or investments for the second half? Also, if you can please comment on your thoughts about the 2026 consensus. Do you continue to expect margin at the group level to be broadly stable year-on-year? And given these numbers, are you more confident on the full year 2027 EBITDA guidance? Thank you very much.
Paola Durante: Okay, Adrien. Thank you so much. On wholesale,
Gianluca Tagliabue: On wholesale, I think, hi, Adrien, we commented in July, and I go back to those comments, probably with some slight adjustments, but we expect wholesale not to be a driver of growth, to continue to contract. We expect brand by brand that Zegna in the low double digit due to icon protection, because we are very selected on distributing through third parties our recognizable items and great attention improving the network of distribution. TOM FORD, probably we said was slightly negative. I think we could be between slightly negative and stable, probably stable, leveraging on what you were asking about order book, probably we could be in the stable area. Thom Browne, negative. As I said, we are cleaning the environment. At this point, since the numbers are not as big in absolute term, I think it is important to talk about absolute because more than percentage. If you remember in 2024, Thom Browne had EUR 129, EUR 130 million of wholesale business. Last year went to EUR 77 million, so a decline roughly of EUR 50 million. We expect this year the decline in absolute term to be an order of magnitude much lower, so kind of half.
Paola Durante: The absolute term.
Gianluca Tagliabue: of the absolute decline of last year. I think at this point, the percentage of the business through wholesale is less impacting the overall picture, but we still see a decline, which in absolute terms will be probably 50% of the absolute decline of last year.
Paola Durante: In terms of profitability, Adrien is asking if we have some different phasing and about 2026 consensus.
Gianluca Tagliabue: As you remember in the call at the end of July, we said that we felt comfortable. We believe that the consensus at that time was reasonable, and that time was around EUR 190 million.
Paola Durante: Adjusted EBIT.
Gianluca Tagliabue: Adjusted EBIT. The consensus moved slightly up to EUR 195 million adjusted EBIT, and we still confirm it is reasonable, even if of course a bit more challenging. There was a grade of EUR 5 million, but we still believe that target is reasonable. The same thing I would say on the guidance of 2027, so that we confirm in the same dimensions that we have said over and over in the last calls.
Paola Durante: Thank you.
Adrien Duverger: Thank you. Can I just confirm from 2027, you said you were looking for an EBIT at the lower end of the range. Is that still the case? Thank you very much.
Gianluca Tagliabue: Yes. Correct.
Adrien Duverger: Perfect. Thank you.
Gianluca Tagliabue: It's the EUR 250 million.
Paola Durante: EUR 2.2 billion and EUR 250 million, the lower range of the guidance. Yes. Thank you, Adrien. Next.
Operator: Your next question comes from the line of Anthony Charchafji with BNP Paribas. Your line is now open. Please go ahead.
Anthony Charchafji: Yes, good morning. It is Anthony at BNP. Thank you very much for taking my question. The first one would be on Thom Browne profitability, being back to profitability in H2 to be breakeven. Can you please help us understand the moving part at Thom Browne in terms of margin, if you can help us quantify the impact at the gross margin level, specifically. Also, interested to know if there is a risk of inventory write-down that could impact the gross margin for Thom Browne. My second question would be on marketing. Out of the EUR 68 million spent in H1, just curious to know the percentage that was allocated to the Zegna brand specifically. That would be my second question. And my last question is below the lines or below EBIT, so it is a bit for housekeeping. If you can, help us understand the expectation on the financial expense and the FX impact below the EBIT. If you can give any indication on a full-year basis so we can realign correctly. Thank you.
Paola Durante: Thank you, Anthony. Yes, absolutely. So on Thom Browne, and just to help Anthony understanding the second part and the moving parts of the second part of the year, Thom Browne profitability.
Gianluca Tagliabue: Hi, Anthony. So we said that we expect Thom Browne adjusted EBIT to be close to the breakeven. I tell you which are the moving parts, and they are spread across gross margin and OpEx. There are three moving parts. The lower currency headwind, if you remember, the headwind on Thom Browne was 5 percentage points compared to almost 3 percentage points at group level. So especially being particularly exposed to Korea and Japan in proportion, they suffered from that headwind, which will be lower in the second half of the year for both external as well as internal factors like price adjustment. The second part, it is a better, a more focused open-to-buy management and goes into the topic of inventory management. So we are optimizing the open-to-buy. We have started optimizing open-to-buy, starting from fall/winter 2026 onwards. We will have a benefit from that part in terms of also inventory burden. Then there is the tight cost control, which is happening and will continue through the second half. Those are the elements. Of course, what we have said before, building the team is a fact that at a certain point gets to an inflection point. I think it will be more next year, but we start having a deceleration of cost increase. These are the moving parts on Thom Browne that let us believe about a second part, which is accretive to the bottom line.
Paola Durante: In terms of marketing, how much is related to Zegna, you can assume that more than 2/3 is around 70%-75% is Zegna segment related. In terms of the lines below the EBIT, to help modeling a bit full year in terms of net profit.
Gianluca Tagliabue: As we have seen for EBIT, also for net profit, we normally generate more profit in the second half than in the first half. In full year 2026, profit after tax will not be too far from last year, despite the fact that in 2025, we have recognized, as Paola was mentioning, financial income and the effects gains related to the pooled option remeasurement that will not occur this year as such. To give you a sense of direction, should not be too far despite of this material last year financial income and FX gain that overall in the full year was a positive impact in the range of EUR 37 million.
Paola Durante: Yes, and-
Gianluca Tagliabue: Non-monetary and non-taxed.
Paola Durante: Non-taxable. As I said during the speech, of this [EUR 37 million, EUR 28 million occurred in the first part of the year. So the first part, the one that we reported, had a higher base of comparison. The second point is that the tax rate, as we said, that as normal in the second part of the year for the group is lower, so it will.
Gianluca Tagliabue: I add also one point, as a positive, less demanding base of comparison. If you remember last year, at the end of the year, we had also the impact that was recorded of the Saks group credit write-downs, which of course this year we are not expecting.
Anthony Charchafji: Thank you. Very helpful.
Paola Durante: Thank you, Anthony. The next one.
Operator: Your next question comes from the line of Oliver Chen with TD Cowen. Your line is now open. Please go ahead.
Oliver Chen: Hi, Gianluca and Paola. Thank you very much. As you think about Americas, what is happening there in terms of the key brands, and is the wealth effect being a positive driver? Your comments on China are also very encouraging. Do you expect a lot of those trends to stick in terms of the consumer sentiment is somewhat volatile in China, but the Zegna brand has executed clearly really well. My second question on Thom Browne, the wholesale network taking longer, why is that true? Why is that happening, and what have been your learnings in terms of that happening? I know the brand continues to evolve and has a special artistic place in the fashion universe as well. Thank you.
Paola Durante: Thank you, Oliver, as always, very interesting. The first one is on U.S. and GCR. I understood mainly really focused on Zegna brand, and the second one on Thom Browne. Gianluca.
Gianluca Tagliabue: Hi, Oliver. I do not enter too much in the breakdown by nationality because I think we will do it at the end of Q3, but I give you a sense that we are not seeing a significant difference in trend by nationality, by markets. We keep on seeing a positive performance in America, of course, driven by the Zegna solid positioning, but also TOM FORD is doing well. Overall with the North American consumers, we keep on seeing, also in July and August, a very solid double-digit growth. So no material difference in the trajectory on America. On China, I think, as I said before, there is, in the marketplace, volatility. Probably Zegna is moving, as I said, at a different pace because it is gaining market share, and I think that the recipe there is really the focus. I think Angelo and Dedo and the team overall have picked their battles, and the battles were and are the untapped opportunities of Zegna brand, which was underrepresented in Triple Stitch, underrepresented in Su Misura, underrepresented in some other categories, and I think that part is playing a game. Broadening the picture, I think that what encourages us is that overall, America, GCR, Europe, Zegna brand is seeing a growth on number of consumers and is seeing a growth in volumes in the first half of this year. Because of course we are losing some volume in some categories, but the categories that are key for us, whether it is shoes and not only Triple Stitch, but also 232 and the other models, knitwear, five-pocket pants, those are categories that are solidly growing. Eyewear, fragrances.
Paola Durante: Thank you.
Gianluca Tagliabue: This we are seeing. Of course, all our strategy is top of the pyramid, but this is creating a very positive snowball effect in the lower tier of clients and the number of clients is growing. So it is solid. It is not picking the top of the pyramid, it is squeezing the level. So I want to make it sure that it is clear.
Paola Durante: On Thom Browne, why it is taking longer, that was the question.
Gianluca Tagliabue: On Thom Browne, it is taking longer because I think the fact that we are reshaping entirely the senior leadership team, it is a point that probably the team was very well-versed in wholesale-driven model. The team, like teenagers, at a certain point, you need to change habits, patterns. I think we probably needed to change the team almost entirely and infuse capabilities on the retail side. We are working, as I said before, on open-to-buy assortment, and that is another direction. We are also, with Sam, changing, but it is early to say, some components of our future assortments. So, definitely it is taking some time. I think I am not putting any excuse, I think it took some time also to make the turnaround of Zegna. We probably were optimistic in the change of the revamp and relaunch of Thom Browne, but I reaffirm that we are still positive, and we believe that Sam is making the right changes and the right intervention in collection merchandising, in marketing. The goal is overall to widen the base above and beyond the lovers and the niche of the brand. We believe that we have the elements, investing on the preppy Americana codes, creating further options for new clients to come into the brand, and this will be probably, in the next collections, more visible, not yet out there. So I just tease that we are working on both marketing and collection in order to welcome more people into the brand. The brand-
Oliver Chen: Okay, thanks.
Gianluca Tagliabue: as ASICS showed, has appeal. We need just to create more options for people to come in.
Oliver Chen: Thanks, and one follow-up. Thom Browne clearly has really strong awareness. As you think about product and Thom Browne, the women's ready-to-wear, the day wear, the leather outerwear, and made to measure, what should we focus on in terms of where you are with the path ahead and the biggest opportunities within product at Thom Browne? Thank you.
Gianluca Tagliabue: Well, there is short-term opportunities and long, middle, mid-term opportunities. I am not saying long-term, mid-term only. In the short-term opportunities, we still have a lot. The low-hanging fruits is more in the apparel. I think we are creating more opportunities for higher frequency of use in women in day wear. We are using the Filiera capabilities to have higher, and that is growing quite nicely, the make to measure in TOM FORD. We launched, in the first half of the year, women tailoring, that it is a unique offer proposition in the marketplace because if you want to have a women tuxedo or a women tailleur on measure, TOM FORD is the best option in the marketplace. We launched the leather outer, which is an iconic offering for TOM FORD, also on make to measure, amplifying colors and materials. I think these are the low-hanging fruits. Of course, the mid-term goal and the untapped opportunity is getting a solid platform on women bags. The team is working on that. We are not yet there, and we are aware, but this is the opportunity we see up there, and where we need to keep on working.
Oliver Chen: Thank you. Best regards.
Paola Durante: Thank you, Oliver. Next.
Operator: Your next question comes from the line of Chris Gao with CLSA. Your line is now open. Please go ahead.
Chris Gao: Thank you. Hi, Gianluca. Hi, Paola. Thanks for taking my question. I have three, if I may. My first question is a quick one regarding tourist demand. Just wondering, how does the tourist demand among your key nationalities look like heading to July and August? Any comments on that? My second question is regarding your Chinese demand guidance. Going back to earlier this year, remember the guidance was largely flattish this year, but since your GCR performance was already 7% organic in the first half and your comments on GCR trends during the summer is still solid, would you consider lifting the guidance for your Chinese demand for the FY 2026, and how should we also look into the 2027? My last question is regarding your space contribution by brand in 2026 and 2027. Since we are approaching the end of 2026, do you have any changes of your space contribution plans? Also, you mentioned some 10 store net closures of Zegna stores in China over time. What will be the progress by the end of 2026, if we may ask? Thank you.
Paola Durante: Chris, I hope we get all your questions because there were many. In terms of nationalities, I would say Gianluca has commented on the current trend, and I will leave the comments to what he said, also in terms of nationality, and particularly for Zegna, he mentioned that we-
Chris Gao: Yes, we are focused on the tourist demand.
Paola Durante: On tourism.
Chris Gao: We're focusing on the tourist demand. Yes.
Paola Durante: I would say, I wouldn't really add much more, Chris, but one thing that you might remember is right in July, we commented that there was a little bit of a softness in Europe due to tourism, which was probably related to World Cup, and this was actually the case because August saw an improvement, but I wouldn't go much more in details. In any case, you know that for us, tourists are, yes, important, but less than for others. In any case, I would stop on this comment for tourists. While on the Chinese demand, I think you said you ask if we change our guidance for year-end because it was a flattish.
Gianluca Tagliabue: Well, hi, Chris. In the first half, we finished the first half at organic +6.8%. Organic wise, we keep on having, on Zegna, as I said before, a good trajectory. On Thom Browne, a soft trajectory. Overall, as I said before, we don't see a big change in pattern, so we keep on having I would say positive performance. So probably the flattish can result a very cautious outlook. Although, of course, we are very attentive in monitoring the evolution also from a consumer mood about the new taxes on offshore investment. So that's the lingering question mark, whether in the coming months it may have an impact, but so far, we stay in the positive territory.
Paola Durante: Absolutely.
Gianluca Tagliabue: Space, we said that Zegna is, as you mentioned, we are going to close, and that's not only this year, but we will take more because we are not closing just for the anticipating the closure by the lease. We are expecting the lease expire. So it will be little by little, the reduction of some stores in China. Overall, the picture of space will be next year more affecting TOM FORD fashion than any other brand.
Paola Durante: In the positive sense.
Gianluca Tagliabue: On the positive sense. On Zegna and Thom Browne will not be material. We have on TOM FORD instead, four openings from now through January, which are material. I recall them, are three in U.S., which is the house of the brand. It is Costa Mesa, which is a beautiful location in the mall. It will be in October. We have San Diego, which will be again around October, and [Bal Harbour] Miami, again, same, more or less September, October. Then finally, we will have in January, end of January, the flagship in Paris, which will represent the new house of the brand because it will carry the new store concept.
Chris Gao: Thank you. Very helpful.
Paola Durante: Thank you, Chris. The next question.
Operator: Your next question comes in the line of Jean Danjou with ODDO BHF. Your line is now open. Please go ahead.
Jean Danjou: Good afternoon. I had two questions. The first one is, could you be a bit more precise on the tax rate full year 2026? The second one is on the medium-term margin for the Zegna segment. You seem to be on the verge to be at 15% in 2026. Obviously, the brand has a lot of momentum. It is evolving positively on the leverage side. How much more can you get on the margin on Zegna segment? Would it be reasonable to look at the margin of Brunello Cucinelli to get a sense of where you could go on the Zegna segment medium term?
Paola Durante: Thank you, Jean. On tax rate, as I commented, normal tax rate for our group in the region of 30%, 28%-30%. We do not expect this year to be different from that at year-end, of course.
Jean Danjou: Okay.
Paola Durante: In terms of the Zegna segment, I leave it to Gianluca.
Gianluca Tagliabue: As we have said many times, we want to reach 15%. Of course, now we need to look behind the 15% goal. Of course, the sweet spot for us is to be between the 15% and 20%. Of course, you mentioned Brunello, which is in that range. We do more or less, it is the same mechanics, the same markup, and the same size curve, which means obsolescence of inventory. I think that is the number. We need to move towards the 20%. That is our journey, the next journey, which will take time. It is not a one year, two years, three years goal, but we clearly have not finished the upgrade of our margin on the Zegna segment.
Jean Danjou: Thank you.
Paola Durante: Thank you. Next, and maybe last one.
Operator: Your final question comes in the line of Maria Meita with Bernstein. Your line is now open. Please go ahead.
Maria Meita: Good afternoon, and thank you for taking my questions. I have two. First, a clarification on Zegna. Do you have any store openings planned for the second half of the year? Second, on TOM FORD fashion, given the strong progression to date, but also your ongoing investments, you mentioned marketing. When do you expect the brand to break even? Thank you.
Paola Durante: Thank you, Maria. I leave to Gianluca the store opening for the second part of the year for Zegna. We just opened Harbour City in [inaudible].
Gianluca Tagliabue: We did a couple of important openings in China, and this goes back to what was mentioned before by Chris. Of course, we are reducing the size of presence Greater China, but we are reinvesting in fewer, better doors. The example has been in the last couple of months, we opened a second store in Shenzhen.
Paola Durante: Shenzhen.
Gianluca Tagliabue: Shenzhen Bay. We opened a very meaningful, and we are proud of the store in Harbour City, Hong Kong.
Paola Durante: We opened Madrid.
Gianluca Tagliabue: We opened Madrid. In the remainder of the year, we do not have material openings. We will have other next year Geneva and others, but we will disclose more in the upcoming calls. We have definitely, as I said before, important openings on TOM FORD in the next four or five months. Those are the big openings that we have to accomplish. Zegna has done these three important openings in the last few months.
Paola Durante: TOM FORD, when it will be break even?
Gianluca Tagliabue: Let's start from 2026. We expect the journey of TOM FORD to regain a more interesting level of P&L in the second half of this year. In the second half of last year, TOM FORD recorded a positive adjusted EBIT, and we believe that this will be the case also in the second half of this year. Therefore, we expect an adjusted EBIT for full year 2026 for TOM FORD in the region of a few million negative, and that is the outlook for this year. I will pause for the time being on this, and it's one step at a time.
Alice Poggioli: Great, so I think we reach the end of our-
Paola Durante: One second. We forgot to mention that we are going to open the new Saint Moritz store in the second part of the year.
Gianluca Tagliabue: Yeah, true. The second, yeah, we are opening in Saint Moritz, the new store.
Paola Durante: It will be a nice store that we open in Saint Moritz in December. Of course, you mentioned San Diego also for Zegna brand. Sorry, Alice, I interrupt you.
Alice Poggioli: Now I think we reach the end of our call. Let me just remind you that our next release will be on October 22nd, so our silent period will begin on October 1st. Thank everyone for attending today's call, and if you need any further clarification, of course, do not hesitate to contact us. Have a nice rest of the day. [Non-English content], everyone.
Paola Durante: [Non-English content] to everybody. Thank you.
Operator: This concludes today's call. Thank you for attending. You may now disconnect.