Ermenegildo Zegna N.V. (ZGN): A Bull Case Theory

We came across a bullish thesis on Ermenegildo Zegna N.V. on Lux Opes Research’s Substack. In this article, we will summarize the bulls’ thesis on ZGN. Ermenegildo Zegna N.V.'s share was trading at $10.03 as of February 5th. ZGN’s trailing and forward P/E were 22.21 and 21.60 respectively according to Yahoo Finance.

Ermenegildo Zegna N.V., together with its subsidiaries, designs, manufactures, markets, and distributes luxury menswear and womenwear, children's clothing, footwear, leather goods, and other accessories worldwide. ZGN closed 2025 with a fourth quarter that highlighted improving brand momentum, led by its core Zegna label.

Group revenues for the year reached €1.92 billion, with Q4 sales of €591 million broadly in line with expectations. Organic growth at the Zegna brand accelerated to 7.4% in Q4, up from 5.6% in Q3 and 2.6% in the first half, driven by retail and direct-to-consumer sales, which grew over 10% in the quarter.

This reflects Zegna’s ongoing repositioning toward the high-end market, where demand has remained resilient. The US and Middle East continue to be the strongest regions, Europe is contributing more consistently, while Greater China remains a weakness with sales down roughly 5%, though trends improved sequentially. At the group level, momentum is more mixed. Tom Ford Fashion experienced a slowdown in retail growth, and wholesale remained a drag across all brands, with total wholesale sales down double digits in Q4, limiting group-wide organic growth to 4.6%.

Foreign exchange headwinds further constrained reported growth and pressured margins, despite improving operating trends. Looking into 2026, management expects wholesale to continue shrinking, particularly for Thom Browne and Tom Ford, while retail execution remains the focus. FX effects are expected to limit margin expansion even if volumes pick up.

Overall, the investment case rests on Zegna’s accelerating traction in the high-end segment, while Tom Ford and Thom Browne require further work. The group is delivering better top-line quality quarter after quarter, with profitability still lagging but likely to improve as brand repositioning and retail growth gain further traction, making current trends supportive of the long-term story.

Previously, we covered a bullish thesis on Ermenegildo Zegna N.V. (ZGN) by DB_Silver_Fox in November 2024, which highlighted the company’s vertically integrated model, iconic brands, strong margins, and attractive free cash flow yield as key drivers of long-term growth. ZGN’s stock price has appreciated by approximately 28% since our coverage. Lux Opes Research shares a similar thesis but emphasizes recent brand momentum and accelerating retail growth.

Ermenegildo Zegna N.V. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 17 hedge fund portfolios held ZGN at the end of the third quarter which was 12 in the previous quarter. While we acknowledge the risk and potential of ZGN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ZGN and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.