Ermenegildo Zegna shares jump as US strength boosts Q4 revenues

Investing.com -- Ermenegildo Zegna NV (NYSE:ZGN) shares jumped more than 5% Monday after the Italian luxury group reported a 2.9% increase in organic revenues during the final quarter of the year, driven by strong double-digit growth in the Americas, which offset an 11% decline in sales in China, the company announced on Monday.

"We expect 2025 to play out differently across various geographies," Chairman and CEO Ermenegildo Zegna said in a statement.

He added that while the company has experienced a "solid performance" in the Americas and the Europe, Middle East and Africa region in early January, "we also believe that there will be ongoing volatility with respect to consumer demand in China."

The Zegna brand saw its direct-to-consumer (DTC) sales accelerate sequentially by 5 percentage points, in line with the performance of Italian luxury apparel peer Brunello Cucinelli.

“This in our view should be taken positively and confirms the polarised trends at the brand, with strong demand among western clusters while Chinese remains in decline,” UBS analysts led by Chris Huang said in a note.

Bank of America (NYSE:BAC) analysts shared similar comments.

“We view this as a result of hard work done across the portfolio coupled with improving trends in global luxury demand,” they wrote.

The bank recently upgraded Zegna stock to Buy as it believes “that the consensus downgrade cycle for Zegna is coming to an end as trends improve and reinvestment is well-flagged.”

Following the results, BofA lifted its Zegna estimates and raised the price target to $10.40 from $8.90.

For the full year, revenues at the group, which owns brands like Tom Ford (NYSE:F), Thom Browne, and ZEGNA, declined 1.9% on an organic basis to 1.95 billion euros ($2.05 billion). This result exceeded the company-provided revenue consensus of 1.91 billion euros. Growth was driven by the flagship ZEGNA brand, while sales at Thom Browne declined.

Elsewhere in the luxury sector, Burberry (LON:BRBY) recently reported a 4% drop in quarterly comparable store sales, which was better than expected. Meanwhile, Richemont (LON:0QMU) (SIX:CFR) posted a 10% increase in sales for the fourth quarter, reaching 6.2 billion euros, significantly ahead of analysts’ projections for a 1% rise.