The analyst believes that the figures released last night come as no major surprise, with Q1 2024 sales reaching 4,504 ME or -10% in organic terms (Oddo BHF was expecting 4,490 ME/-10% and the Visible Alpha consensus was 4,514 ME/-9.6%).

Following this publication, Oddo BHF has lowered its target price from E384 to E345 and remains cautious on Gucci's outlook. Its Neutral rating remains unchanged.

Retail sales were down 11% (Q4: -2%), with declines of 11% in the Americas (Q4: -11%), 9% in Europe (Q4: -8%) and above all 19% in Asia Pacific (Q4: +8%). Japan, buoyed by Asian tourism, grew by 16% (Q4: +13%).

' In terms of brands, as previously announced, Gucci's decline was most marked at -18% y/y cc, with retail down -19%, reflecting a -28% decline in the Asia-Pacific region
. In fact, all brands suffered from poorly oriented traffic in China," points out Oddo BHF.

Saint Laurent's retail sales were rather weak at -4% (they were stable in Q4 2023), which, after
taking into account a sharp decline in wholesale, resulted in a 6% drop in total sales (we were expecting -3% with retail sales at -1%).

The Group is not overly optimistic for Q2. The start of the quarter does not show an improvement in the trend in Asia Pacific (China), and there is no reason at this stage to expect a clear improvement in the trend for Gucci in this quarter
. It also indicates that it does not expect a margin recovery in H2 on the back of an improved business trend of more than 100/150 bp compared with H1' adds Oddo BHF in its analysis of the day.

The research firm also lowers its EBIT forecast by almost 15% for 2024/2025/2026. We now expect Gucci to post a 16% decline in Q2 (-10% pre), with a very timid return to profitability in H2 (-2% Q3 +3% Q4). Our H1 margin forecast for this brand falls to 22% from 28% (H1 2023: 35.3%) and we expect a moderate recovery to 23.5% in H2, resulting in a 2024 margin of 22.8% (we were expecting 29.1% after 33.1% in 2023)'.

' For the Group as a whole, 2024 sales are expected to decline by 2.8% organically (-0.5% prec.) (Q2 at -8%, Q3 at +3%, Q4 at +6%) with an EBIT margin of 18.2% vs. 21.5% prec. (24.3% in 2023) ' adds the analyst.

For 2025 and 2026, we expect organic growth to reach +7.1% and +6.9% respectively, with group EBIT margin gradually rising to 19.5% (22.4% prev.) and then 20.6% (23.2% prev.).

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