Hello, and thank you for your patience. Today's Ermenegildo Zegna Group 3Q 2023 revenues Call will begin in just a few moments time. Today's call will be hosted by Francesca Di Pasquantonio, Director of Investor Relations. [Operator Instructions] Hello, and welcome to today's Emendeendia Group 3Q 2023 Revenues Call.

My name is Bailey, and I will be the moderator for today. [Operator Instructions] I'd now like to turn the call over to our host, Francesca Di Pasquantonio, Director of Investor Relations. Please go ahead. .

Hello, everyone, and thank you for joining us as we discuss Zegna Group results, revenues for the third quarter and first 9 months of '23. I am Francesca Di Pasquantonio, Director of Investor Relations at Zegna, and I will kick it off today. Please note that today's presentation materials are available on our website together with the press release.

Today, joining the call are the Group Chairman and CEO of Zegna; the COO, CFO, Gianluca Tagliabue. And for the Q&A, we will also have Rodrigo Bazan, CEO of Thom Browne. Before we begin, I need to point out that we may make certain forward-looking statements during the call.

Our actual results may be materially different from those pressure 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 2 of today's presentation.

And of course, this call will be governed by that language. I am pleased to now hand the call over to Gildo Zegna. .

Thank you, Francesca, and welcome to everyone who are joining us today.

Before we start, let me say that we are deeply troubled by the tragic events in the Middle East, and our thoughts go to all the people who live -- whose lives have been affected during these difficult times, and we do hope that peace will be restored in the region as soon as possible.

On the number that we have published, I'm very proud of the execution of our brand transformation so far. And I'm pleased to share that we recorded a rather strong quarter, continuing the successful performance we have been experiencing since the beginning of the year as we continue to execute the group's strategy.

In fact, our growth has been strong for several years now with a 2-year compound growth rate of close to 25%. We are a stronger player today. And thanks to our strong management team, we have been further shapening our execution. .

We have a diversified portfolio of brands and activities and an increasingly more balanced geographic mix. Our brand resonance with customers around the world, supported by our sophisticated clienteling and CRM capabilities is also driving market share gains, and we are particularly proud of the process that Jane has made since the rebranding.

And our exposure to womenswear initially to from Brown and now also with [indiscernible] is also contributing to these gains. The geographic diversity of our business is one of the main reasons for the positive results we are seeing. Our business across different markets remains very healthy, and it is a clear result of where our focus has been.

Europe, Middle East and the U.S. continue to be particular areas of strength for us. .

Importantly, our engagement with customers from these regions remains dynamic and American in particular are seeing strong trends after more than doubling since 2021. We are now in full rollout mode also in China, which remains a key growth market for the luxury industry.

And after 2 years during which we could not visit and therefore, could not follow and support the debrand transformation elevation efforts over the quarter have finally been able to travel with the team 3 times this year to China.

Training, events, store allocation and revamping are a key focus for all our brands and much like we have been doing in the U.S. and Europe over the past couple of years. This is why we remain confident that China remains such a big opportunity for us with the 3 brands, Zegna, Thom Browne and Tom Ford.

The China brand is also leveraging its new positioning by resuming a gradual expansion of its store network with 12 new opening stores in the first 9 months of the year in selected locations, including such [indiscernible], Kuwait City, Copenhagen and a few Chinese second tire cities. .

But the majority of our growth is coming from the ongoing and substantial improvement in our store productivity as we are well ahead of the plan shared previously in which we targeted a productivity increase of 50% increase by 2025 versus 2021.

Beyond Zegna, we see good expansion opportunities for Thom Browne and the absorption of the Korea business into the group, added 17 to round point of sales also strengthening control of the brand, plus several openings also in China.

And of course, the integration for our fashion, the arrival of CEO, Gildo, in the success of the buzzsaw by Teslin, admin passion week in September show exactly why this economic brand is a perfect fit for our group.

We are aware of the challenges facing our operating environment around the world for next year, but we are a stronger player today as the new setup of the group makes us more resilient in terms of brands and geographies and generates meaningful market opportunities. .

We do see valuable tailwinds. The full rollout of the general branding in China, the expansion opportunities for Thom Browne and the integration and the evolution of Tom Ford Fashion, all supported by our main Italy manufacturing platform, which remains a key competitive advantage.

We will remain flexible and vigilant with an eye on cost control and cash protection. But at the same time, we will continue to invest in the desirability of our brand powered by our marketing as well as strengthening our operate stores for our sustainable long-term growth. .

Now please turn to Page #4 in which we have some highlights of the past quarter and going forward to next year, and I must say that for the past quarter, it has been a very busy time for all 3 brands. And then important available was taking control of the South Korea retail distribution by Thom Browne this year.

But also in Korea, just today, we announced the agreement to take forward the distribution of Zegna. That shows how much we believe in this part of the world, Korea, Japan, China and Southeast Asia. These projects will add 15 Zegna stores in Korea to our direct-to-consumer portfolio, since we operate in full year 1997.

And we believe that this market will boost the strategy of the Zegna brand as it has happened in the rest of the quarter. We also launched a few commercial partnerships worth mentioning.

The first is a collaboration with the Los Angeles based understatement, which showed the Cashmere collection enhancement resulted by the collaboration of our Creative Director Alessandro Sartori. With Craig Chi that is the founder and creator of the statement. .

And I think it's another example of the creativity behind Zegna in our uncompromising attention to quality and the focus and sustainability since the Zegna case that has been used also in this project is full traceable. We also renewed our partnership as the official as travel were partner for Madrid, bringing these 2 economic brands together.

And we are very happy to continue addressing the world's best fits to compete our made soccer and basketball teams. And the amplification ages from this partnership is quite remarkable, as you can leverage, they are a huge fan base of over 150 million followers on Instagram alone.

The past quarter also brought a significant milestone for Thom Browne brand, which celebrates its 20 and birthday to commemorate this great accomplishment. The brand also published a monograph celebrating Tom's legacy and this contribution to the fashion world.

And as a matter of fact, Tom and Rodrigo and the old team have been traveling extensively for the few past weeks across the globe, London, Tokyo, Saul, Shanghai in order to sign copies of the book and meet customers and promote this fantastic brand. .

Finally, this quarter witnessed the next step in the evolution of Tom Ford Fashion and the brand beginning as part of the Zegna Group. Peter kinin factoring we was widely celebrated by the industry, and we are very excited to work with Peter and the new CEO, Ermenegildo Di Monte, to build on the legacy of this great fashion house.

Now please do turn to Page #5 for some figures. We show that the strength of our brand is evident on the runway in the stores and in the numbers. Our revenue for the third quarter of 2023 came in at EUR 131 million, a 20.8% increase from the third quarter of '22 or a 25% increase in constant currency, 11.3% of that growth was organic..

This brought our total revenue for the first 9 months of the year to EUR 1.3 billion and almost 23% increase for the same period last year, almost 30% in constant currency and 19.2% on organic growth.

Our revenue for this quarter confirmed that we are in line with the medium-term financial trajectory we laid out, and we are reaffirming our guidance that by the end of fiscal '25, we expect annual revenue to exceed EUR 2 billion and our adjusted EBIT margin to reach at least 15% excluding the Tom Ford fashion business. .

Which is why on December 5, we will be holding a Capital Market Day at the New York Stock Exchange to share our group strategy and our updated medium- and long-term financial goals, which will factor in the integration of Tom Form Fashion into the group. And now let me turn to Gianluca Tagliabue, our CFO, will talk in details about our revenue. .

first, the change related to Tom Ford which last year was a third-party client within the Zegna segment, while this year gets consolidated line by line since the end of April. Second aspect, the change related to the internalization of the South Korean business for Thom Brown as of July 1. .

So far, in the first 9 months of the year, our revenue, as Gildo has mentioned, have reached EUR 1.334 billion, up 19.2% year-to-date organic growth, driven by a solid high double-digit growth, both for Zegna and Browne segments. Our revenues for the quarter reached EUR 431 million with continued growth for the Zegna and Thom Brown.

Growth in the third quarter was led primarily by the strength of the Zegna branded product, especially in the DTC channel. The third quarter witnessed a material negative effect on revenue from currency, which is in the range of 4 percentage points after a partial positive mitigation offered by our currency hedging policy.

Revenue for Zegna segment reached EUR298 million for the quarter, a 3% increase over the same period of last year on a reported basis and 12.7% organic growth. On the organic metric, the effects of Tom Ford, which was a third-party license last year get neutralized.

Tom From -- Thom Browne segment revenues reached EUR 74 million, 6.3% increase year-over-year and 8.5% organic. Tom Ford fashion, revenues landed at EUR 75 million for the quarter. .

Moving to Page 8. I give you a gains of each segment before entering to the different breakdowns of revenues. The Zegna segment includes, I remember, Zegna brand, the third-party brand products and the textile business.

The 12.7% year-over-year organic growth for the quarter and 20% organic growth for the first 9 months for the Zegna segment reflects a very strong performance for the Zegna brand product, especially through the retail channel. The segment saw also a positive contribution for textiles.

And it was, as described before, negative reflected by the end of the Tom Ford manwear distribution license, which ended with the full winter '22 and affected the segment in terms of reported revenues, not in terms of organic growth.

The organic growth of Thom browne was 85% year-over-year for the quarter and 15.7% for the 9 months, reflected a good performance for the brand across both DTC and wholesale. .

I remind that at the reported and also at constant currency level, the revenues of Thom Browne include the internalization of the Thom Browne business in Korea, starting from July 1, with revenue shifting from wholesale to DTC.

Finally, the new comfort fashion segment saw revenues at $75 million in the quarter and $39 million year-to-date starting from April 28. Moving to Page 10, we can see our geography break now.

As you heard from Gildo at the top of the call, our geographic mix, we believe, is one of our strengths as we are happy to see that the strategic focus on Americas and Europe is producing good strides. U.S. now represents almost 20% of our revenues in North America 21%, up 4 percentage points versus pre-COVID.

And EMEA is at 36% compared to 32%, 33% in 2019. In the third quarter, revenues from EMEA came in at EUR 152 million, growing 27% from last year, 18% at organic level. .

The Emirates United Arab Emirates continues to outperform, growing 33% on a reported basis in '21 organically. North America came in at $111 million, 44% increase over the last year, 12.3% organic in the quarter with the U.S. being the most majority of the region, growing 50% on a reported basis and almost growth in a percentage.

Overall, looking at the first 9 months of this year, all geographies were up by solid double digits, showing that the business continues to perform well around the world, proving exceptional resilience to regional economic softness. Page 11. Next, Page 12, sorry, next, you see the breakdown of revenues by product line.

In the first 9 months of 2023, Zegna branded products contributed 59% of group revenues for a total of EUR 784 million, showing 20.6% increase over the same 9 months of last year. .

Organic growth for Zegna branded products was 22.9% in the first 9 months. For the quarter, revenues for the Zegna brand came in at EUR 242 million, 8% increase over the third quarter of last year, 12.2% in constant currency. Shoes continue to overperform and now make up around 15% of the brand's revenues.

Luxury leisure made to measure also continued to perform very well. Thom Browne made up 21% of group revenues in the first 9 months of the year, contributing EUR 280 million, a 10% increase over the same period of last year. For the third quarter, Thom Browne revenues came in at 73% with 8% organic growth.

Women continued to show impressive growth at Thom Browne making up close to 30% of the brand's revenues. .

As we said Tom Ford contributed EUR 139 million, which is 10% of the group revenues over the first 9 months of the year, knowing that it started to be consolidated only at the end of April. The textile products, which means 8% of the group revenues are EUR 109 million with a 9.4% increase over the same period over the same 9 months of last year.

And in the third quarter, there was a very solid 17% compared to last year. The textile business continued to show strength with [indiscernible] outperforming and all business units contributing positively.

Finally, third-party products were down 86% in the third quarter on a reported basis due to the change in scope driven by the end of Tom Ford mens wear distribution after fall/winter '22. .

Now moving to Page 14. Breakdown by channel. Here, there is a snapshot on direct consumer channel, which contributes at this point, 65% of group revenues compared to 59% in the first 9 months of last year, and this is the weakness of our increased control of distribution as well as on our strong improvement in retail productivity.

DTC revenues in the third quarter came in at EUR 282 million, 29.9% increase over last year with a 12.9% organic growth over last year third quarter. For the 9 months, revenue from DTC came in at EUR 865 million with a very solid 34% increase and a very solid, again, 24.6% year-to-date organic growth.

Zegna DTC revenues in the third quarter came in at EUR 195 million, thanks to the brand performance outstanding in U.S., Europe and Middle East.

And in the first 9 months of the year, the Zegna DTC revenue came in at EUR 661 million, up almost 22% over last year with a brilliant 25% year-to-date organic growth, driven by store productivity, healthy retail KPIs, higher traffic, higher average price per unit compared to last year. .

In the third quarter, Thom Browne DTC revenues came in at EUR 43 million, up 18.6% over last year, including the conversion of the 17 stores of Korea. In the first 9 months, Thom Browne, revenues came in at EUR 126 million, up 23% over last year.

The addition of Tom Ford fashion DTC contributed to EUR 78 million for the period between end of April to end of September. Turning at Page 15, to the wholesale channel, we can appreciate high single-digit organic growth in the third quarter and also in the first 9 months of the year.

The revenues in the 9 months were EUR 466 million with 9.9% organic growth. And in the third quarter, wholesale revenues came in at EUR 148 million, with 8.1% organic growth. .

I would skip all the details by brand in order to save time. Page 16, a snapshot on the store network. We see at this point Zegna network of EUR 251 million directly operated stores, as Gildo was mentioning business, 12 stores up compared to the end of 2022.

This is a change in pattern compared to the flat level around EUR 240 million in the recent period. We're seeing the first increase of the network of the Zegna DTC, the brand at now Zegna 154-monobrand wholesale location down 2 doors since the end of 2022.

Thom Browne instead saw the incorporation of 17 stores from wholesale to the direct to consumer from South Korea, bringing the total DTC DOS 284 and the acquisition of Tom Ford Fashion added 121 monobrand stores, of which 51 DOS and 70 wholesale monobrand location. .

Going to my last page, Page 18, for the outlook. As Gildo mentioned, we are confirming the outlook that we shared last year on the Capital Markets Day, knowing that there will be a refresh in 1 month's time, beginning of December.

I would like to take also the opportunity to remind you in terms of outlook short term of a technical accounting factor affecting our 2023 profitability affecting also the adjusted EBIT metric, which relates to the impact of the purchase price allocation or PPA on our adjusted EBIT.

As we have already shared in earlier thoughts, but I pointed this out because it can be tricky, then Francesca and myself can be also available for big dive. We have 2 effects from the PPA arising from the Tom Ford deal. .

One is the annual ongoing amortization coming from the amortization of the right of use of the license agreement for 30 years, which as we disclosed during the first half financial means EUR 3 million a year of amortization. Of course, this year, this will be prorated over 8 months and not 12 months.

The other impact is a one-off nonrecurring charge, which affects adjusted EBIT, stemming from the allocation of part of the price on inventory and on the order portfolio for Winter '23, which will negatively affect COGS in '23 and to a lower extent, also the first half of '24.

The combined negative effect on the adjusted EBIT in the first half '23, which means actually 2 months, end of April, end of June was disclosed in our first half financials into an amount of EUR 4.4 million, of which are many related to the pro-rated ongoing amortization of the license and around EUR 4 million as a one-off impact on COGS deriving from the PPA on inventory and order portfolio.

.

I invite you to use this EUR 4.5 million, EUR 4.4 million amount as a semi linear guides to calculate the impact of PPA on 2023 P&L, which means that on a full year basis, you can expect an impact from PPA in the mid-high-teens euromillion range, most of which is one-off. And as I repeat, will not be treated as cannot be treated as an adjustment.

Available, Francesca myself, as I declared for clarifying this topic of line if needed. I -- at this point, I turn back to Gildo. .

Yes. Thank you. Please turn to Slide 19. And I think that so far, we can say that we had a very good year. I do believe the addition of Tom Ford fashion was a big step for the group. And this meant that we need to look at our financial goals with a new lens as a group consisting of 3 iconic brands, not 2.

And in addition to our great Meditel Luxe platform remains a very important support for all 3 brands. That is why on December 5 will be welcoming our investor many of and analysts to the New York Stock Exchange for our second ever Capital Market Day.

At that time, we will share our updated financial goals, including the Tom Ford fashion business and Ermenegildo new CEO, will be with us, and you will get to hear from our leadership team about the group strategy and plans for the future. .

Thank you. Thank you, Luca. Thank you Gildo. Will now open the call up for questions, please. .

Thank you. [Operator Instructions] Our first question today comes from the line of Susy Tibaldi from UBS. .

The first one on China and the Chinese cluster overall. I remember that H1 you said on a 2-year stack, the Chinese were more or less flattish. Can you comment what was the trend in Q3? And given that the growth has been a bit weaker in the Chinese compared to some of the years.

Could you elaborate a bit what you think is the issue if it's really no macro driven or you feel like maybe the rebranding is not resonating as well as in the West perhaps given your long in China, the brand is not yet perceived as high end as cities in Europe or in Asia or in the U.S? And then my other question to linked to this.

The fact that Asia is underperforming the rest of the group, does it have a negative implication for margins? Because I think in the past, you mentioned that China as a region, is more profitable. So I don't know if now this has changed given that your sales densities in other markets must have gone up so much over the past years. .

Thank you for the interesting question, which I think the first part I partially answered in my script, but I will go over again I think that there is some slowdown in China this quarter.

But I think that -- I do believe that overall business continues to perform well because I think that with the 20% organic growth over the past 9 months, I can't -- I do believe that we can be positive for the rest of the year and for the coming year '24. That said, I've been 3x challenge here. And unfortunately, I could not go before.

So I would say that the rebranding is a little bit behind as compared to other important geographies, in particular, Europe and the United States. And also, I must say that there has been an impact by the data Zegna conversion that, as you recall, was represented quite interesting part of the total sales by '21.

So I think that we are well ahead of our journey that has not completed. And so there is some work in products to do, but we remain extremely confident with our team that the transformation will come through pretty soon. .

And as I said, we are implementing all sort of means to make it happen, like training to the staff, by organizing events like relocation and ramping and exactly what we have been doing in the United States and Europe. So I think that we see with a positive are overall regardless of what will happen for next year.

But overall, we remain strongly positive on China, which is a very important market and which we will continue to invest not only with Zegna, but also with Tom Browne and Tom Ford. On the margin side, I think... .

Margin side... .

Will answer you. .

So no, we are not concerned about dilution by growing on the rest of the business. What happened actually, we have been raising prices more on the western side of the world in order to move towards global pricing logic that we are happy with. So if you take, for instance, our iconic triple-stage sneaker, now we are at an index price around 120.

And typically, we were enjoying a different, much higher price range in China. So we have been rebalancing prices -- raising prices in Europe and in U.S. And therefore, the effect of the moving -- of moving a lot business westwards, we are not concerned because we have taken a move towards more global pricing logic.

So I think that we are ready for a balanced at this point do mix. .

Okay. And are you able to say what for the Chinese of doing in... .

I reiterate what I said in July. So we are flattish to 2021. And I reinforce what Gildo mentioned, that 2021, there was a very strong leasing business. So being flat, it's -- of course, it's the outcome of a reshuffle of moving out from the brand using a business and bringing in higher price point, more affluent business.

So Zegna incidents was much higher in Greater China than anywhere else, not only because we had a few 5, 6 monobrands rising, but because the incidence of some product lines of the Zegna like Merino was much bigger.

So when you look at flattish to 2021, it's a transformation, which, as Gildo mentioned before, we see it as an untapped opportunity because we started moving out the Zegna business accessible price point to a real luxury.

And as Gildo was mentioning before, now we have lots of levers still to exploit in China, which we were a bit ahead in the Western world also because of capacity of traveling. .

So we are, at this point, in terms of merchandising in terms of marketing events, CRM activities, reshuffle of stores. So we are, at this point, ready to make the 360-degree transformation in China, which occurred a few quarters ahead in U.S. and EMEA.

That's why we see China as a big opportunity looking forward because we are in the middle of the transformation there. .

Let me add one thing, Susy. We have seen an increase of Chinese buying in Asia recently. I was just -- I'm just back from Japan and Korea, and particularly in Japan. Part of the increase in Japan is thanks to Chinese shopping high end Zegna, particularly in our Ginza Osaka shop. Not to mention the super high double-digit increase in onco.

We cannot give you the specific on the number, but we surely are very happy on Hong Kong bouncing back and also Macau. So I think that these are some talented we do believe that by taking over the distribution of Corio from Brown and Zegna. I think this strictly will also be manifested in Korea for 2024.

So overall, we do believe that the Chinese will keep shopping in Mainland China not so of the world. .

So just to make a final point to be explicit on your question, do we believe that the brand transformation is not happening in China? The answer is no. The answer -- we are announced and as mentioned is happening and is going to deploy the results that we've seen elsewhere in China with Chinese as everywhere.

So yes, there is a strong note to your question if we are not happy with our trajectory in China and with Chinese. .

Okay. That's very clear. Just one last follow-up. 2 others, but if you have a quick... .

Go ahead. Hello, Susy? Okay. Operator, I think I can operate that. .

I'll move on to the next question. If you would like to -- the next question today comes from the line of Matthew Garland from Deutsche Bank. .

I just had a quick question around, again, the China cluster. I think from memory in September, you were saying that clusterin total had turned negative. When I look at obviously 3Q growth for China, for the Greater China region, it looks more like, I guess, high single digit.

I just wanted to clarify, it was my understanding that the cluster going to negative growth in 3Q incorrect? Or was there a benefit to regions outside of China?.

Matt, Gianluca. No, we didn't say that the clusters were negative. We said that the cluster in the first half was flat to 2021, and we confirm the same trajectory also for Q3. That is what we said. We said in first half, we never said that the cluster was negative. We said it was flat 2021 and it's flat also in Q3. .

And then... .

Make a further step, which I think I anticipate a question by you or by others, on the current trading, we are not seeing any major swings in nationality, and we are seeing still a solid double-digit growth for both Zegna DTC and solid -- solid double-digit growth for Tom Brown DTC.

So the same solid trajectory we are seeing also in the 3 weeks beginning Q4. No changes in terms of European, North American dynamic and the same pattern for Chinese. We are seeing more and more Chinese outside of Greater China. But for us, as we remember, we are not seeing the same incidence of Chinese out of Greater China as other brands.

Most of our Chinese spending occurs structurally occurs within the domestic market. .

Okay. And then in terms of, I guess, the outlook for sort of 2024, are you able to give any details at this stage around your view on sort of the growth given some of the macro headwinds that we've seen in 2024? I know you've already spoken about China, but any of your thoughts on one of the city other regions, Europe and the U.S. .

We cannot give you any numbers. And I'm sure you don't mind that -- but we remain on a positive mind. I can tell you one thing. We were really in pain during COVID and we came out very, very strong. Whatever it will happen in '24, we are ready to react in a positive way.

And I can tell you that we've been discussing with Gianluca the team budget for the past few weeks between one trip and the other, and we have been very attempt on cost control and cash protection. But we are ready to go either way, but we remain positive still on '24, let's call it this way. .

As a hint on what we are discussing during the budget sessions, we are we keep on investing in fueling the long-term midterm health for the brand by increasing marketing by increasing CapEx, both for relocation and new openings.

The new openings that you have seen for Zegna, especially in Europe and North America will continue the relocation in China are part of our budget and 3-year plan. The openings for Thom Browne and Tom Ford are a big driver for next year.

So we are not pulling the brake on marketing and CapEx dollars as a mindset for next year, of course, with the consciousness and flexibility that do was mentioning. But the attitude is packing not defending for next year. .

Perfect answer. If so, I would move to the next person. .

The next question today comes from the line of Adrien Duverger from Goldman Sachs. .

I have 2 if possible. So the first one is, could you please comment on the resilience from the higher spending cohort? Have you seen any increase in the proportion this year versus last year? And if so, have you seen any difference between geographies, so Europe versus the U.S.

and China? And the second question would be, if you could give us an idea of the breakdown between pricing and volume in Q3 and how you think about pricing going forward?.

Yes, I'll take the first one, and Gianluca will take the second one. In terms of resilience, I think that we have seen a good trend by the wealthy buying more luxurious product.

That's why we are adding an uber luxury product to our product offer because I think that for those folks, price is not an issue, and they just want to still go in with [indiscernible] project and product around the world. I must say that among the nationalities in America, I would say, remain #1.

And I would say this trend we have seen in both in the United States but also in Europe. And we do hope that American will continue shopping in Europe. So that's my takeaway from this year as compared to the past one. And that means that most of the wealthy shopper are attracted by the new Zegna strategy and of our branding.

And I must say that maybe, Rodrigo, you can comment also on Thom Browne because surely, the same is happening in Thom Browne, and I'm surely the same will happen in Tom Ford.

Can you just maybe develop the resilience on your customer, Rodrigo?.

Yes, absolutely. In Thom Browne, we are extremely excited about what we're seeing in terms of the measure in the for high-end closing. And just to clarify, our business is largely closing and in a very committed and very high spending a true luxury client, and we're seeing great refence as Gildo mention on a global basis from that point of view.

In fact, I'm speaking from Shanghai right now. .

Thank you.

Gianluca, do you want to take?.

Yes, I take the breakdown of volume mix price. So in terms -- I look at the organic growth for the quarter, which was 11.3%, knowing that we have typically a mid-single-digit growth in terms of pricing every season, season oversea over counter season. So you can expect that slightly less than 50% of that growth comes from price.

And the remainder, it's more volume than mix because last year, we had already the Zegna new brand strategy up in place. So the mix effect at this point, I would say, 40-40-20, 40% price, 40% volumes and then 20% mix because at the end, the big step-up in terms of brand and collection elevation started with the fall winter '22.

So we are comparing against already rebranded collection. .

And if I may, just a quick follow-up on my first question.

Would you be able to give us an estimate of the proportion of the higher spending cohort of your sales?.

On the Zegna side, it's 5% of the revenues, 5% of clients represent 40% of revenues. And I defer to Rodrigo. This is DTC, of course, because on the wholesale side, we cannot. I don't know if Rodrigo you want to give some flavor on the Thom Browne side probably. .

From the Thom Browne actually fairly similar, early similar to clients above 35,000 a year, make at least 35% of our revenue in DTC. .

[Operator Instructions] Our next question today comes from the line of Anthony Charchafji from BNP Paribas. .

It's Anthony Charchafji from BNP Paribas. So I have I have a few questions, please. So the first one would be on FX. So it was a 4% drag in Q3 after hedging, which is less of a drag versus the sector. So wondering what should we expect for the full year... .

Sorry, Anthony, can I interrupt you. Can you repeat because the line is not very clear. Just to maybe... .

So first question on the FX. So 4% drag in Q3 after hedging, which is less of a drag versus the sector. I was wondering what we should expect for the full year in '23. On margin for full year '24 and probably in H1 '24, we should expect some headwind.

I was wondering how you're planning to offset this if it's price increases like mid-single digit or if it's rather cost control or cutting some marketing. My second question would be on Tom Ford. Also, if you can give us some feedback you received from the September spring '24 collection..

And if you already have any view on the order book, as I'm not sure about the seasonality of Tom Ford, should we expect Q4 similar to Q3? Or is Q4 much higher like the rest of the sector in general? And yes, my last question would be on Thom Browne. So the wholesale was up 8% organic in Q3, which is year-to-date mid-single digit, which is quite weak.

I was wondering, you've been mentioning women's wear outperforming for quite some time now. It represents 30% of sales. So does the push of womenswear compared to menswear is something you're planning or because maybe women's wear have maybe better margins? That would be my question. .

Rodrigo, can you go with Thom Browne, please? You start. .

Thank you for the question. No, there's no difference to be honest on profitability per category. We don't do it for that. The reason we started to really push women's on 7, almost 8 years ago was just to balance the business to have the brand potential to be both men's and women's overall.

Today we are extremely pleased that there's a very significant women's business to comparable when it was 6 years ago. On top of that, the quality of client is extremely high. It's a very committed clothing client.

And we are -- what we're doing fundamental point, we also want to make sure that we continue to have the very loyal client engage with Thom Browne and buy more Thom Browne..

And we manage the growth of Thom Browne men's to make sure that we don't lose that original clients, and we mindfully add key clients to the brand. So women's business still is a great opportunity.

and by traveling right now and doing what we did brand events, i.e., present Q&A at on diving several new homes around the world our 20th year and also the presidential book. We've also done client events.

So we saw incredible profile of clients, both in London, in Tokyo in Solan right now, 2 just completed one in Shanghai for a couple of days, 3 days actually. And the quality of clients, both in women's and mens outstandingly high, really, really high. And in women, this was a dream that we had 8 years ago and has begun reality. .

Okay. I'll take the forward one. Even though Larios the new CEO is on the call listening to us, and it will be with us, as I said, New York for Capital Market Day.

First of all, I think we had a strong commercial response to the Spring/Summer4 fashion show in September and [indiscernible] -- and we wanted to come out with a strong women ready-to-wear collection, and we did, and so has been the response by our world customer.

And as a matter of fact, you will see some of the line already in the early delivery by the year-end, and we are enhancing their collection in the store that we have. So we are on a good start with that part.

In terms of in terms of control of the business, I think the is laying out the strategy and this includes product merchandising marketing everything..

And to strengthen the organization, but more details will be giving you with numbers for Capital Markets Day.

I think that the other -- the third point, which is very important, is sharing some of the synergy synergetic effect with Zegna group from the industry side, from the service side and so that we really think that starting an integration among the business would be very helpful.

So overall, I think that we are -- everything is going according to plan, and we are ready to invest more in marketing and in new store openings next year.

Gianluca?.

So I think the third question was the fourth quarter, if it's similar dissent third quarter, of course, if I give you -- the answer is substantially higher fourth quarter than third quarter. If I give you the percentages like declaring the full year guidance of revenues, but I can give you an indication that definitely our full year.

So fourth quarter is substantially different because July and August to present some soft months of retail sales. So we are expecting a solid Q4, much higher than the third quarter. In terms of FX, how we work, we definitely have a hedging policy that covers the risk of margin. And so we sell currencies well ahead of the -- when the revenues come up.

So that justified for instance, for the quarter, the fact that. .

Thank you for your question. There are no additional questions waiting at this time. So I'd like to pass the call back over to Francesca for any closing remarks. Please go ahead. Thank you for your participation. We'll be back with you momentarily. Thank you for your patience, we are now back. Please go ahead Francesca. .

Yes, I just would like to understand what we should repeat when were we at all? Or if the audience has been able to hear all the answers that we have provided. .

We had the end of the question. .

Yes, but we were disconnected while answering to the last couple of questions. So can you confirm that this audience as far our reply. .

To the past you asked the question has disconnected, but the answer was received. .

Okay. So I think if that's it, we are at the end of our call, and we will re-adjourn in New York on the 5th of December for our Capital Markets Day. So for the inconvenience, but I hope you got all the answers in the technical problem didn't affect the food -- the full conference call. Thank you very much. Bye. .

This concludes today's conference call. Thank you all for your participation. You may now disconnect your lines..