(Boursier.com) — Kering ended the week down 1% to 591 euros, while the end of the 2022 financial year proved more difficult than expected. In the fourth quarter, the luxury group saw its sales fall by 7% like-for-like, the health restrictions in China linked to Covid-19 having weighed heavily on its flagship brand Gucci. The latter thus recorded a 14% drop in revenues (like-for-like) over the period, the temporary store closures due to Beijing’s “zero-COVID” policy having weighed heavily on the network of own stores. The market was expecting a drop limited to 9.92% at Gucci and 1.47% for the group as a whole…
Gucci, the company’s main profit center, saw its sales increase by only 1% like-for-like over the whole of 2022, against double-digit increases for other brands such as Yves Saint Laurent (+ 23%) and Bottega Veneta (+11%). Its current operating profit increased by only 0.5% to 3.73 billion euros while that of Yves Saint Laurent jumped by 43% to exceed 1 MdE and that of Bottega Veneta climbed by 28% to 366 ME .
Analysts adjust the shot
Among the latest brokers’ opinions, Deutsche Bank revalued the stock from 520 to 560 euros (‘hold’), RBC raised its target from 625 to 700 euros (‘outperform’), Credit Suisse raised its target from 670 to 770 euros (‘outperform’), Invest Securities raised the cursor from 524 to 569 euros (‘neutral’), Stifel revalued the stock from 600 to 635 euros (‘buy’), finally, Oddo BHF revised its target from 522 to 568 euros while remaining ‘neutral’.
For 2023, the group expects a “profitable growth trajectory” despite the persistence of short-term economic and geopolitical uncertainties. It is aiming for high cash flow generation and high return on capital employed.
Kering’s growth in the fourth quarter was weaker than expected, but the focus will be more on the turnaround potential of key brand Gucci, RBC Capital said. According to the broker, the market could therefore continue “to look beyond a Q4 marked by headwinds linked to the pandemic and towards a new artistic direction at Gucci, which last month appointed a new chief designer”. ..
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