Kering: warning severely punished on the stock market
March 20, 2024 at 05:06 am EDT
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Kering warned last night that its sales would fall sharply in the first quarter, weighed down by the underperformance of its Gucci brand, a warning that sent its share price down nearly 15% and dragged the entire luxury goods sector in its wake.
Citing a "difficult" economic climate, the group indicated that its first-quarter sales would be down by around 10% on a like-for-like basis compared with last year.
By way of comparison, the market consensus was - until now - anticipating only a 3% decline in activity over the first three months of the year.
In its press release, the company justifies its caution by the difficulties encountered by Gucci, its flagship brand, particularly in the Asia-Pacific region.
In the first quarter, sales of the Italian label are thus expected to fall by almost 20% on a comparable basis, whereas analysts were expecting a much less marked decline of around 4%.
In a reaction note, analysts at Oddo BHF said they remained "rather circumspect" about the brand's turnaround, a transition which they saw as "arduous".
Remaining 'neutral' on the stock, they have consequently lowered their target price from €412 to €384.
Invest Securities' analysts talk of 'half a bad surprise', given that the group's management had warned that the brand's recovery would take time to materialize.
This view is shared by RBC, the Canadian broker pointing out that Gucci is only at the very beginning of its turnaround, and that with the ramp-up of the new range over the coming months, more time will be needed to gauge consumer reaction.
Nonetheless, yesterday's warning is likely to weigh on the market's annual earnings estimates, which were already highlighting low expectations.
'At first sight, we believe that the market consensus on Ebit 2024 should be revised downwards by 5% to 10%', warned analysts at Stifel this morning.
Following these comments, Kering's share price fell by 14.7% after one hour's trading on Wednesday, by far the biggest drop on the CAC 40 index.
Richemont (-3.1%), LVMH (-3.9%) and Burberry (-5%) were all down in its wake.
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A global Luxury group, Kering manages the development of a series of renowned Houses in Fashion, Leather Goods, and Jewelry: Gucci, Saint Laurent, Bottega Veneta, Balenciaga, Alexander McQueen, Brioni, Boucheron, Pomellato, Dodo, Qeelin, Ginori 1735, as well as Kering Eyewear and Kering Beauté.
By placing creativity at the heart of its strategy, Kering enables its Houses to set new limits in terms of their creative expression while crafting tomorrow's Luxury in a sustainable and responsible way. It captures these beliefs in its signature: Empowering Imagination.
In 2023, Kering had 48,964 employees and restated revenue of EUR 19.6 billion.
At the end of 2023, the Group had a network of 1,771 stores under its own management, located primarily in Western Europe (367), North America (316), Japan (238), and in emerging countries (698).
Net sales are distributed geographically as follows: Western Europe (27.6%), Japan (7.2%), Asia/Pacific (35%), North America (23%) and other (7.2%).
KERING 
