From Morningstar:

Kering will release its full-year earnings on February 8, before the market opens. Questions surrounding Kering’s earnings concern its flagship brand, Gucci, which has experienced poor sales over the past few quarters, lagging behind other luxury peers.

Fair Value Estimate for Kering shares is €600, with the current price at €391.55. Morningstar rating is ★★★★★, with Narrow Moat economic moat rating and Medium uncertainty rating.

Expect Q4 revenue decline of 4.6% on a like-for-like basis to €4.81 billion, and Gucci revenue decline of 2.8% on a like-for-like basis to €2.46 billion. Full-year revenue is expected to fall to €19.54 billion.

Analysts expect Gucci’s sales recovery to result in a mid-single-digit organic decline in sales during the first half of 2024, and a mid-to-high single-digit growth during the second half of the year. Overall, markets envisage low single-digit organic growth for Kering.

Current fair value estimate factors in long-term sales growth of 5.2% per annum for Gucci. Sokolova, equity analyst at Morningstar, expects mid-single digit revenue decline in 2023 and marginal growth in 2024 considering the repositioning of the brand. Other brands in the group should record more solid growth going forward: 4.5% for Bottega Veneta, 4.3% for Yves Saint Laurent, and 5.2% per annum for other luxury brands. Sokolova noted that the current weakness could represent a buying opportunity, and the stock is currently trading in 5-star territory.



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