Good afternoon, and good morning, everyone. Thank you for joining the Ermenegildo Zegna Group FY 2025 Preliminary Revenues Call. Please note that today's material and presentation are available on the Zegnagroup.com website. Joining us today, the Zegna Group leadership team, including Gildo Zegna, the Group Executive Chairman; and Gianluca Tagliabue, Group CEO. Before we begin, we need to point out that the team will make certain forward-looking statements during the call. The group's 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 at Page 2 of today's presentation. I will now hand over to Gildo Zegna.

Good morning, and good afternoon, everyone. Thank you for joining today's call on our group fiscal year 2025 results. Before we run through our performance, I wanted to take a moment to express our deep appreciation to our colleagues in the Middle East for their dedication, professionalism and commitment during this complex period. On behalf of the group and of the Zegna family, I want to affirm our support for them and for all our friends and partners across the region. The Middle East remains an important region for our group. And although in the short term, we are adjusting our activities to reflect the situation, we expect the region to continue to play an important role in our business over the longer term, in particular, thanks to the resilience of our customers. Let me now turn to the business update, starting with the recent Tom Ford fashion show, which, as you know, took place earlier this month. Haider Ackermann's third runway show presented in Paris on March 4 has been widely acclaimed. Haider has further demonstrated his ability to interpret the brand's codes and DNA in a way that is unique, contemporary and deeply personal. The selective elegance of Tom Ford, its craftsmanship and tailoring heritage and these iconic leather pieces reimagined with modernity were all powerfully affirmed in this collection, which also added innovative knitwear garments. I found the whole collection very confident and consistent — in one word, very strong. And I want to extend my applause to Haider and to the entire team who worked alongside him to bring these shows to life. We all know that fashion shows are important, but they only translate into results when they are supported by strong production, commercial and marketing execution. We're confident that Lelio Gavazza and the Tom Ford fashion management team supported by Gianluca Tagliabue and the whole group are working to build on this success. I was also very pleased to see the promising start of the recently launched Thom Browne sneaker in collaboration with ASICS. First presented during the Fall/Winter '26 fashion shows, the brand hosted an event in San Francisco ahead of the Super Bowl. These limited sneakers were officially launched worldwide on March 2. The launch was supported by several high-visibility pop-up events, including sites in London, Isetan in Tokyo and Plaza 66 in Shanghai. The collaboration is achieving strong resonance ahead of our expectations, not only in terms of social media visibility, but more importantly, in terms of revenues. This collaboration will be a way for the brand to attract and retain new customers. Sam Lobban and his team are focusing on these critical KPIs, aiming not only to ensure the commercial success of the collaboration, but also to drive meaningful acquisition of new customers. There is a journey our clients, especially these new clients, should undertake. Jersey and even more so knitwear are important as a second purchase for them. I'm also excited that in June, Thom Browne will show in Milan during Menswear Fashion Week for the first time. Moving to Zegna. As you know, at the beginning of this year, Zegna presented its Fall/Winter '26 show in Milan titled The Family Closet. The idea behind this collection was simple, but deeply rooted in our history. Clothes are never just garments. They carry memories. They move across generations, preserving experience and stories over time. This concept of memory as leaving legacy continues to inform many of the initiatives we are developing across the world. Finally, looking ahead, Zegna presented in March 'Memory,' a fragrance collection that translates moments from the founder's life into scent. Rather than being conceived as a traditional perfume launch, Memory distils more than a century of Zegna history into chapters rooted in a place, a gesture or an object from the founder's life. The collection is currently available in selected Zegna locations with a progressive global rollout continuing through '26. Beyond this launch, we are also very proud that Zegna has been announced as the main sponsor of the Italian Pavilion at the 61st International Exhibition La Biennale di Venezia 2026, one of the most important platforms for contemporary art worldwide. The Italian Pavilion will present Contenuto, a project created by Cecilia Cantiani with whom we have developed a meaningful dialogue over the past decade. This initiative, alongside our global partnership with Art Basel, reflects how Zegna increasingly operates not only as a luxury brand, but as a cultural platform connecting fashion, contemporary art and landscape, continuing a vision that has been part of the company since our founder first imagined Oasi Zegna. Finally, looking ahead, Zegna will present the Spring/Summer '27 fashion show in Los Angeles by Creative Director Alessandro Sartori, together with the launch of Villa Zegna L.A. Following the experience we created in Dubai last June, Los Angeles will allow us to showcase our collection within one of the most dynamic markets of our group. The city resonates not only as a global fashion hub, but also as a cultural capital whose influence extends far beyond its borders. Together, this initiative reflects Zegna's long-term vision, building a brand that moves seamlessly between fashion, culture and landscape while remaining deeply rooted in the values of its founder. And now let me hand over to Gianluca. Thank you.

Thank you, Gildo. Good morning, good afternoon to all of you. Let's move to Page 7 of the presentation, where you find full year '25 results key highlights. The revenues for full year '25 have already been disclosed early February, and we confirm them at EUR 1.917 billion, minus 1.5% year-over-year on a reported basis and plus 1.1% on an organic basis. In '25, the group reached a 67.5% gross margin and adjusted EBIT of EUR 163 million, which does include EUR 10 million of provisions related to losses on trade receivables for the Saks Global Chapter 11 procedure. Thus, without this EUR 10 million bad debt provision, the adjusted EBIT would have been EUR 173 million. The group also reached EUR 109 million of profit, up 20% from EUR 91 million last year. More at the end of the year, the group had a net cash surplus of EUR 52 million. Let's move to the following pages to comment more on these results. Page 8. In full year '25, gross profit rose by 90 basis points to 67.5%, driven mostly by channel mix with DTC that reached 82% of branded revenues versus 78% last year. As you know, DTC gross margin is higher than wholesale. Moving to SG&A. SG&A in full year '25 reached EUR 1.034 billion with 53.9% incidence on revenues compared to 51.8% last year. This increase in the SG&A incidence is linked to the following factors: investments in talent, systems and organization across different functions and brands looking at the long-term vision for each of the brands; store network expansions, in particular for Thom Browne and TOM FORD; and the negative operating leverage caused by the streamlining of wholesale at Thom Browne. This SG&A line of EUR 1.034 billion also includes EUR 10 million provisions related to the losses on trade receivables owed by Saks Global. Moving to marketing expenses. In 2025, they were EUR 121 million, equal to 6.3% of revenues, in line with the prior year and our indication of a fair midterm marketing-on-revenues incidence of around 6%. Let's move to Page 9, where we report the adjusted EBIT of the group and by segment. As always, this is the main performance metric used by management to analyze the performance of the business at group and at segment level, and you can find the reconciliations in the appendix. Let's move to the analysis by segment. The Zegna segment, which includes the Zegna brand, the Textile division and third-party brands business, generated an adjusted EBIT of EUR 197 million and a margin of 14.4% versus 13.9% last year. This result reflects and includes EUR 3 million of provisions in relation to Saks Global because these provisions are not in the adjustments and are affecting the adjusted EBIT. Without them, the adjusted EBIT for the Zegna segment would have been EUR 200 million with a 14.7% margin. The Thom Browne segment has been the most hit by the reduction in revenues driven by the wholesale streamlining and achieved EUR 1 million of adjusted EBIT. This performance includes EUR 2 million provisions in relation to Saks. The Tom Ford Fashion segment reported a loss at adjusted EBIT level of EUR 16 million generated in H1, while in the second half of the last year, TOM FORD Fashion recorded a positive adjusted EBIT performance. Full year '25 results for TOM FORD include EUR 5 million of provisions in relation to Saks Global. On the positive side, corporate costs decreased mostly due to lower insurance costs. Moving to Page 10. You can see here summarized our reported income statement. A brief comment on taxes. As you see, the effective tax rate decreased to 22% compared to 30% last year due to non-taxable income in '25 related to the remeasurement of put option liabilities, mainly the one on the remaining 8% stake on Thom Browne. As a result of the above, we reported group profit in full year '25 at EUR 109.5 million, up 20% versus EUR 90.9 million in 2024. Based on this result and in line with our dividend policy, the Board of Directors proposed a dividend distribution of EUR 0.12 per ordinary share, which equals a total dividend distribution of approximately EUR 32 million. Let's now move to Page 11, where we comment on CapEx and trade working capital. Cash out for CapEx in 2025 reached EUR 103 million, 5.4% on revenues, of which about 60% are related to store network and the remaining 40% to investment in production, including the shoe factory we are building close to Parma, and in IT. As we have already anticipated, 2026 is going to be an important year in terms of CapEx since the investments related to the new shoe factory in Parma will be completed this year. For this reason, we expect CapEx in 2026 to be closer to the 7% mark. Trade working capital reached EUR 408 million at the end of December '25, equal to 21.3% of revenues compared to EUR 460 million and 23.6% of revenues at the end of 2024. This was the effect of improved inventory management, control of trade receivables and FX impact. Looking at free cash flow at Page 12, let me highlight that the group generated EUR 82 million of positive free cash flow compared to EUR 10 million in the prior year. This despite the already mentioned CapEx of EUR 103 million paid and EUR 150 million for lease liabilities and right-of-use assets. Finally, on Page 13, you can see that thanks to the positive free cash flow and the inflow from the sale of treasury shares to Temasek for EUR 107 million, the group reported at the end of December a positive cash surplus of EUR 52 million versus EUR 94 million of net financial indebtedness at the end of 2024. Let me conclude again with a brief comment on the impacts of the current situation in the Middle East. As you know, the Middle East is a relevant region for our group and for the Zegna brand in particular. Revenues for the region represent a mid- to high-single-digit share of the group's total. All our stores in the area are open and operating. At this stage, it is difficult to fairly assess the potential impact of this conflict on 2026 results as it will largely depend on the duration and possible implications for the global economic outlook. As our Executive Chairman also said, we continue to work toward delivering our 2027 targets, knowing that the overall outlook has become increasingly uncertain due to these factors. Now to Paola for your questions.

Thank you, Mr. Gildo. Thank you, Gianluca. And then operator, we open up for the Q&A session.

Our first question today comes from Chris Huang with UBS.

It's Chris from UBS. I have three. Firstly, starting with the top-line momentum. At the previous conference call in Q4, you were saying that excluding the Chinese New Year timing impact, things were not seeing any meaningful change on a sequential basis versus Q4. So I'm wondering if you can give an update on the latest trends you are seeing by different regions, nationalities, or whatever you can provide. Secondly, on the margin, it seems like the Zegna segment, excluding the Saks impact for the year, ended around 14.7% EBIT. If I look at the latest consensus, people are modeling around 14.1%. Are there any reasons why you believe that given the pickup in theory for like-for-like growth in 2026, you shouldn't be able to do a margin that is higher than what you did in 2025? That's my second question for the Zegna segment. Last but not least, FX moved a bit over the last few weeks. Part of your caution on 2026 margins was coming from the fact that FX is not supportive. I'm curious to know if the recent moves of FX make you feel a bit more comfortable in meeting the 2027 targets in terms of profitability.

Thank you, Chris, and thank you for the three questions. I think the first one is for Mr. Gildo and is related to the current trend and an outlook or a comment across all the regions. Of course, sales information will be more given at the end of April when we release the Q1 numbers, but I'm very happy to provide a comment on the current trend.

Thank you, Paola. Overall, the year has started well with a trend slightly better than Q4 '25 in DTC. This is notwithstanding the uncertainties we are facing in the past few weeks with the war in the Middle East. We saw a good performance in TOM FORD FASHION, thanks to the new spring/summer product and the continuation of a good trend also in Thom Browne, in particular in recent weeks after the launch of the Thom Browne ASICS. Maybe a comment on China, where we are seeing some sequential improvement in the region; however, we remain cautious, and we continue to assume a flattish performance for the year. But we are satisfied with the performance of Chinese New Year, slightly ahead of expectation. So we know what we have to do and we will adopt a focused store strategy to enhance the quality and efficiency of our DOS network in the region. On the other two major regions, in particular, the Americas — United States and Latin America remain very resilient, and we see a continuation of good growth as we did last year. I would say that also Europe looks pretty resilient besides the conflict in the Middle East. So overall, not a bad situation for the first eight to ten weeks of the year.

Okay. The second is for Gianluca, and it is related to the Zegna segment's EBIT performance.

Chris, you pointed out an important angle: the profitability of the Zegna segment EBIT margin in the second half, if you exclude the Saks Chapter 11 provisions, would have been close to 15%. So we are pleased with that step. We know that the Zegna segment deserves stronger profitability still. We are working on it. On the other hand, we also know that we have projects critical to support the long-term trajectory of the brand, and we don't want to chase short-term quick results. We observed with pleasure that we got there. Linking to your last sentence, it's true that in recent weeks, when we talked early February, the dollar was around 1.18 and now it's around 1.15–1.16. And the renminbi was at 8.10 and now is below 8. So we have seen some inflection points on currency, which should favor us. But still, if we compare '26 to '25, we are in the mindset of having a couple of points, almost around 2 points, of headwind from currencies. So this is still a factor that will impact the group and will impact also the Zegna side. So having around 2 points of headwind expected from currency will definitely be a dragging factor on profitability. That's why I linked this to the statement I made last time that we expect to move sideways on profitability for the group in 2026, taking aside the one-time provisions related to Saks. So I think I put together the second and third questions.

Perfect. Maybe just to clarify: the commentary on Q1 DTC momentum, you're referring to an acceleration versus Q4, which was 10% at group level. Is that correct?

It's correct.

Thank you, Chris. Next?

The next question comes from Adrien Duverger with Goldman Sachs.

I have a couple of questions. First, on the current environment: have you seen any changes in consumer behavior in the last few weeks? Have you seen any second-order impacts in other regions? And within the Middle East, are you taking any specific initiatives to maintain your relationships with clients there? Second, on resilience from the higher spending cohort: have you continued to see an increase in the proportion this year compared to Q4? And if so, have you seen any differences by geography?

So in terms of the current environment, if we have seen any headwind or negative impact after the conflict?

No. As I said previously, with the exception of the Middle East, where stores were initially closed and then reopened but with less traffic and less energy, customers are down quite a bit there. I would say that we are scoring better than what we have heard, which shows the brand is very well placed in that part of the world. The event that we did last year has created an incredible resonance for our brand. Many of those customers probably will be buying outside the area, and these are the top resilient customers that we are talking about. So overall, with the exception of that particular area, the rest is continuing the expected growth.

And the question on cohorts — in particular, whether the high spenders are continuing to drive growth?

We have a program around the world of personalization. We are becoming known for doing that extremely well, with appointments and store events that go beyond Villa Zegna. That could be a good flow of business for product you don't find in standard stores. That helps keep the resilience of those customers high.

In terms of relationship and what we are doing with Middle East customers — was also asking if there's something particular we are doing so far in that region?

We have two good partners there: Altair for Zegna and Chalhoub for Tom Ford. We are following events very closely. We know that they are trying to keep the malls as open and active as ever. The partnership with local teams is important, and we are supporting them with merchandise and with some local promotion.

And the relationship that our client advisors have with all our customers continues, which clearly helps in this situation. Adrien, I think we answered your questions.

Can I follow up with a quick question on pricing — what you're seeing for the pricing environment this year and whether there is more opportunity to continue to drive higher pricing, both from like-for-like and mix?

As we said last time, we continue doing low mid-single-digit price increases on a like-for-like basis. We continue having an evolution of the mix upwards. That is our approach both through exclusive collections and in-store ready-to-wear where we keep elevating the offer. This applies to Zegna, but also to the other brands. So the rule of thumb remains a low mid-single-digit price increase to offset cost factors.

One addition in particular for Zegna is the drop strategy of coming up every several weeks with new deliveries and with product that looks different from the previous delivery. That brings incredible excitement to the store. Color is a driving force. Iconic products and other categories are meeting customers' desires. Keeping the interest in-store high is extremely important in times of somewhat lower traffic. Applying the same rules to Browne and Ford is very important. The excitement that Haider brings with the new collection is important not only to retain customers, but to attract new customers. Having Thom Browne show in Milan will strengthen presence in Europe, particularly in retail. Showing in Milan will enhance the brand's awareness and exposure to the local market. We expect flows of foreign customers, but the key is to work well with local teams and have staff in the store that create the relationships that made Zegna so strong in the United States and other parts of the world.

Next question.

The next question comes from Chiara Battistini with JPMorgan.

I have a follow-up on the situation in the Middle East. In terms of shipments of merchandise to the Middle East, have you reduced or suspended shipments to the region? Or is it still business as usual from that point of view? Also, a clarification on rents in the Middle East — are they variable or fixed? That's my first question on the Middle East. The second question on TOM FORD: profitability improvement in H2 — excluding the tax provision, the profit release went back to positive territory. Could you expand on the margin drivers for TOM FORD in H2 and whether that comes mainly from gross margin or OpEx? Finally, can you remind us the extent to which you are exposed to local spend rather than tourism — what proportion of sales come from tourist spend at the group level?

I didn't get the third question.

Okay. Chiara, maybe you can help us going through the questions. The first is on Middle East in terms of shipments and rents, and I'll leave it to Gianluca to comment.

We are at the tail of the spring/summer shipments. We have basically most of the collection already delivered before the end of February to the market. There will be some tail of summer still to be delivered, and we monitor the situation. So product has been shipped until late summer deliveries to the market. In terms of costs, some relevant stores have variable rents with some fixed components, but it is skewed more toward variable than fixed, unlike a typical Western European street-side store. Tom Ford: we have built the infrastructure for TOM FORD at this point. We have come to a point where we have built the OpEx, and we are starting to enjoy some scale. On gross margin, there has been some step-up linked to the effort we are doing in terms of full-price sell-through with the merchandising team and with Lelio Gavazza. So it's a combination of both: improvement in gross margin quality and an inflection where we see some benefit from the investment in the headquarter and market structure for TOM FORD. That is, in a nutshell, the situation of the second half of Tom Ford EBIT.

The last question was on the level of tourists. Chiara, were you asking in general or about a certain area?

No, in general. I think you have a very high exposure to local consumption, but I wanted to confirm what the tourism exposure is at group level.

It's minimal. If you take Greater China, it's mostly locals. In the Americas, non-locals are low double digits. In Europe (excluding Middle East), tourists can be 30%–40% in some locations. Our client base is for the intrinsic nature — especially for Zegna, Thom Browne and Tom Ford which skew to men's — a large component of locals and a significant portion at the top of the pyramid. That's why we see resilience in our customer base.

Chiara, thank you. Next one.

The next question comes from Anthony Charchafji with BNP Paribas.

It's Anthony Charchafji at BNP Paribas. Three questions. First, in 2026, within your portfolio, would you expect a lot of difference between the top-line growth of the three brands, especially now that maybe there should be less impact from wholesale adjustments? Any update on wholesale and which brands have the most exciting prospects for 2026? Second, on gross margin: what are the moving parts, notably channel mix? I'm not sure I understood the FX impact: when you said a couple of points, was it a minus two impact on the top line? Or was it an impact in basis points on margins? Finally, on the Middle East: given the mid- to high-single-digit exposure, within that, how much are people who are not originating from the Middle East (i.e., tourists or temporary residents)? And what's the percentage of Middle Eastern consumer spending elsewhere, notably in Europe?

Thank you, Anthony. On 2026, I'll ask Gianluca to comment on expected growth by brand and wholesale.

Starting from wholesale: on DTC, all three brands are growing very well, and combined, we are growing more than the trend shown in Q4. On wholesale, we have said and reiterate that wholesale is not going to be a driving force and will continue to contract at different intensity by brand. For 2026, I would expect Zegna wholesale to decline by mid-teens, considering our intentional brand protection and some wholesale conversions. Tom Ford should be possibly negative single digit, mostly related to sell-in to wholesale partners in the Middle East region. Thom Browne will still be solid double-digit negative, although less than last year and much less in absolute terms. The wholesale business of Thom Browne is smaller now, so the reduction and therefore the absolute impact is becoming smaller and smaller. Regarding the FX, the two points I mentioned were related to revenues (top line). Of course how this translates into the bottom line is moderated by OpEx deflation, so the impact on margin is lower than two points but it is material at the top-line level. On gross margin drivers, channel mix is an important contributor to the step forward. The second driver is stepping up full-price sell-through — we are working heavily with Thom Browne and Tom Ford teams on that. The last question was on Middle East nationality mix?

Yes — on nationality, how many customers are not local in the Middle East?

We don't have a specific number. Empirically, an important part are people either traveling or temporarily resident there, and we expect to see some of them elsewhere. That is part of our safety net together with resilience because our clients move — especially those we have been serving in the Middle East.

Thank you. Any further questions?

The next question comes from Oliver Chen with TD Cowen.

Regarding Thom Browne and Tom Ford, how is profitability at both moving relative to your targets? What's realistic for modeling their profitability profiles this year and longer term? Second, consumer confidence and sentiment: we continue to see a robust environment in the Americas. Thoughts on China and the Americas — how do they differ?

I'll leave the first to Gianluca on profitability and the second on the U.S. to Gildo.

On profitability for Thom Browne and TOM FORD: qualitatively, both are enjoying growth on DTC, and it's not just from space but comp. There is success from new collections on TOM FORD and strategic initiatives. Initiatives such as merchandising drops and collaborations — for instance, the ASICS collaboration — are capturing new clients who didn't know the brand, which are leading indicators of improvement for both brands. For Thom Browne, we saw a tough second half in 2025 with wholesale streamlining and negative EBIT in H2. We do not expect a loss for Thom Browne going forward; we expect it to return to reasonable profitability while continuing to invest in talent. TOM FORD is expected to have better EBIT performance in '26 than in '25 with substantial improvement. Longer term, Thom Browne should return to double-digit EBIT margin. TOM FORD should also be in double digits, net of royalties paid to the IP owner of the brand. Both brands should progress toward a scale much higher than the current ~$300 million level and reach double-digit profitability.

And on consumer confidence in the U.S. and the U.S. market overall, I'll leave it to Gildo to comment.

Confidence remains pretty good across the United States. We don't see any negative signs. We plan another good year as we did last year for all three brands, in particular Zegna and Tom Ford, and we are building stronger retail networks for Thom Browne to help. We have a couple of openings for both Tom Ford and Zegna across the year that will materialize and give us a more homogeneous and stronger network distribution across the country. On Saks Global: since it's a strong wholesaler of ours, it seems they are moving according to plan. We have shipped spring/summer, and we decided to produce for winter. We keep our fingers crossed, but we believe Saks Global will remain an important partner and we were reassured by the validity of their plan. Another important market is Latin America — we are one of the leaders in luxury there because Zegna has been known for many years. We relaunched stores in the past few years and have a good network, particularly in Mexico and Brazil, with a similar level of service and product to what we have globally. That makes that customer more local, who previously bought while traveling. The growth percentage in Latin America in the past two years has been strong, and it will continue. So our attention will be not only in North America, but also in South America, particularly in those two countries.

In China, are you seeing encouraging traffic and conversion? How would you characterize trends?

I am traveling with Paola tomorrow, so I can't be more specific until after our trip. As I said before, we have seen some signs of improvement here and there. Particularly, Hong Kong and Macau have seen a more encouraging improvement compared to mainland China. Chinese New Year met our plan. I believe we touched the bottom and there will be a gradual recovery. However, we remain prudent for '26. If things improve, we will share it with you. For the time being, we remain cautious for '26 and plan accordingly.

Gianluca, a follow-up on SG&A: can that line grow lower than sales? Any nonrecurring items or forecasts on SG&A?

The step-up in profitability needs to come from SG&A leverage. Last year, the reduction in Thom Browne wholesale (roughly $50 million) did not come with a relevant drop in SG&A because SG&A is relatively light in that business. Going forward, since the absolute drop in Thom Browne wholesale will be smaller, that dragging factor should not be replicated. Our journey to improved profitability will definitely go through improved SG&A leverage. We also invested in the last 18–24 months in the structures for TOM FORD especially, and we are coming to an inflection point in growth. Those factors should help phase out deleverage on SG&A.

Can we check with the operator if there are follow-up or other questions?

Our next question comes from Natasha Bonnet with Morgan Stanley.

First, coming back to the Middle East: you said it was mid- to high-single-digit percentage of sales. Could you split it by country? Is the UAE the majority (over 50%)? And could you split spending between locals, expats and tourists? Also, at Villa Zegna last year you mentioned plans to open more stores in the region — can you let us know what those plans are for this year and next? Second, previously you guided to EBIT margin moving sideways in 2026. I see consensus has EUR 188 million with a 9.5% margin. Do you see that as feasible at this stage? Finally, a clarification on current trends: since the start of the conflict in March, you haven't seen changes in trends in the rest of the world — is everywhere else still on trend?

Okay. On Middle East incidence, I'll leave Gianluca to comment a bit more. You also asked about locals, expats and tourists — we don't provide that level of granularity.

The biggest impact is in the UAE because it's by far the largest market for the group there. When we talk about decline in the region, it's basically in Dubai and Abu Dhabi because those are the two big markets where we see revenues coming from. Regarding openings, we have one opening planned around the end of the year in Abu Dhabi. We have already disclosed the growth plans for TOM FORD, and we are not changing the plan. We are going forward with planned openings and continue the execution of those stores. On EBIT margin for 2026: we said the EBIT margin is expected to move sideways. If you take out the accrual of tax, we had roughly 9% this year. So the margin percentage is around that level. The absolute result becomes a variable depending on revenues. So far, we are seeing revenues in the range of around EUR 2 billion, but this is subject to the length and impact of disruptions in the Middle East in the coming months.

Hopefully. In terms of current trend, are we seeing any difference after the conflict apart from the Middle East?

We already commented that no, with the exception of the Middle East we are quite impressed by the resilience of the rest of the markets. We are doing the right things. The other two brands are also doing well. We finally have three good organizations. The new governance is working generally well. I am personally engaged and working hard. The new team is proceeding well in creating value and making sure Thom Browne and TOM FORD are well supported by the headquarter and by the leadership of Gianluca and the other CEOs. I'm glad we acted courageously last year because we are better placed now with this organization than before.

A follow-up, Natasha?

One small follow-up on the Middle East: what's the split between retail and wholesale, if you can share?

Zegna is basically entirely retail; we have already taken over Qatar. There is a small portion in Lebanon that is our most relevant wholesale business for Zegna. Tom Ford is actually 100% wholesale in the region, and Thom Browne is not really relevant there in terms of wholesale scale.

Next question, please.

The next question comes from Chris Gao with CLSA.

Chris Gao from CLSA. A couple of follow-ups. First, on Chinese demand: you reported above-expectation current trading in Q1 and a flattish full year guide. Is the current improvement in China more from new consumer recruitment or existing consumers? Which price points of Zegna core brand are seeing more acceleration since 4Q '25? Second, sales density in China compared with the global average for Zegna core brand — where are we now and how do you see midterm sales density recovery in China given store optimizations and product innovations? Third, a quick follow-up on Japan and South Korea: how is demand moving in Q1 '26 and what's the outlook?

Three long questions. Some details we might better discuss when we provide Q1 results at the end of April. On Chinese demand, is the improvement coming from new customers or existing ones?

It's pretty balanced. We are seeing both new clients coming in — also through the Triple Stitch, which was an untapped opportunity in China — and the execution of brand elevation bringing fresh orders. So we are working both sides of the customer spectrum.

We also increased personalization efforts; we opened Casa Salotto in China and the rest of Asia. These initiatives help recruit potential new customers who want privacy and slightly different products than in regular stores. We expect improvement this year in China, in particular driven by these initiatives.

On sales density in China, we'll provide more detail at the Q1 call at the end of April. On Japan and Korea, are you seeing improvements?

I confirm that Japan and Korea are growing well. APAC in general is growing well, specifically for Zegna and Thom Browne. TOM FORD is smaller in that area compared to Thom Browne, but both brands are performing well in current trading.

The recent opening of the Ginza Thom Browne shop has shown very good results, and the Ginza Zegna shop is also seeing good local traction. In recent years traffic there shifted from being heavily Chinese to more local. Korea appears to be coming back after a slowdown, and Southeast Asia is improving. We've strengthened our organization there and focused on growth opportunities for all three brands.

Next question.

Our final question from the phone lines today comes from Maria Meita with Bernstein.

Two questions. First, a follow-up on current trading: some peers mentioned weaker-than-expected tourist trends in Europe — are you seeing the same for this quarter? Second, on marketing: you've maintained marketing spend flat despite activations and brand turnarounds — how are you seeing marketing spend for 2026?

The first is current trend in Europe, and the second is marketing spend. I may ask for clarification if needed.

On Europe: Gianluca and I have been traveling across major European capitals and we see a good trend. We don't see any different trend compared to the second half of 2025. We see a good release locally and good foreign traffic so far. We have some new resort stores that did fairly well in winter. We resumed some events, taking advantage of our made-to-measure service. So far, no major worries. The thing to watch is the summer season, but so far the trend is acceptable.

Marketing?

Marketing: we are heading into 2026 with an incidence of around 6% of marketing spending on revenues. That's our rule of thumb; it could be slightly more or less, but 6% is our normal target.

We have initiatives moving also into culture and art. Initiatives with the art world — from the Biennale to Art Basel and Aspen — help nurture and entertain resilient customers, and they align with Zegna's values. Every time we do a show, we create an event, which we expect will generate additional resilient business.

If you don't have any follow-up questions, Maria? Thank you. We have no further questions on the phone line. So Paola, I will hand back to you. Thank you. So thank you to all of you for the many questions today. As usual, if you have a follow-up, Alice and I are here. We will join fairly soon because we have our call on April 30 for the first-quarter results and our silent period starts on April 1. I wish you in advance a happy Easter to you all. Thank you.

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