(Boursier.com) — Kering stabilizes at 385 euros this Friday, while the owner of Gucci suffered this week from the comparison with Hermes and to a lesser extent with LVMH… The group recorded a turnover of 4.5 billion euros in Q3, down 13% in published data and -9% on a comparable basis. Gucci achieved revenues of €2.2 billion, or -7% on a comparable basis, where the consensus was expecting a decline of 6.2%.
Kering’s performances are therefore still lagging behind those of its competitors, while the group controlled by the Pinault family faces management and creative changes at Gucci… The brand, which generates around 2/3 of Kering’s operating profit, replaced its CEO and artistic director last year. Among Kering’s other brands, Yves Saint Laurent’s comparable sales fell 12%, while those of the other houses – whose biggest brand is Balenciaga – fell 15%, both missing analysts’ estimates.
Beyond worsening macroeconomic conditions, the company’s performance reflects Kering’s decision to internalize distribution by reducing wholesale to limit promotions and move its brands upmarket, Jean-Marc said. Duplaix, deputy general manager. The executive noted that Gucci’s operating margin would likely contract by around 200 basis points in 2023. And the company said investors “should not expect any improvement” in margin for 2024 either. .
Cautious brokers
Among the latest broker opinions, Kepler Cheuvreux retains Kering with a target price which increases from 470 to 440 euros and Stifel is buying but reduces its target from 560 to 530 euros. Citi also remains a buy on the file with an adjusted target of 559 euros and has revised its expectations downwards, while the first signs of the “renaissance” of Gucci could be delayed given the macro and geopolitical environments of more more uncertain… Nevertheless, Kering has “demonstrated the ability to execute various brand turnarounds” and “elevate relatively unknown creative talents.”
Jefferies says third-quarter sales were as difficult as feared, suggesting the rate of market share loss is likely unchanged. While Gucci’s annual margin will decline by around 200 basis points, the “pressure is greater” elsewhere…
The SG had also downgraded the title to ‘keep’ by targeting 430 euros, while Bryan Garnier maintains his ‘buy’ opinion with a target of 650 euros. With a ‘miss’ in sales for 3 out of 4 Kering brands, this marks another disappointing quarter for Kering, as the group struggles to cope with the normalization of luxury demand. The broker remains mainly ‘buy’ on the stock due to an attractive valuation, even if it favors LVMH and Hermès…
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