Kering stock drops over 8% after poor results, reduced fair value estimate

From Morningstar: 2024-07-25 09:25:00

Kering shares dropped over 8% after the luxury group released a negative outlook for the second half of the year. The Economic Moat is rated as Narrow and the Morningstar Uncertainty Rating is Medium. Fair value estimate for Kering stock has been reduced to EUR448 due to weak brand momentum and industry downturn.

In the first half, Kering reported poor results with a sales decline of 11% in the second quarter. Gucci sales were down 19%, while Bottega Veneta saw a 4% increase. Gucci’s recovery is crucial, with only 25% of new designer collections in the assortment, impacting margins. Operating profit dropped by 42%.

For the second half, Kering guides a 30% drop in operating profit with no margin improvement expected. Gucci’s new product launches will be supported by marketing investments, while other spending is being approached cautiously. Margins across other brands came under pressure, with performance below industry peers amid tough market conditions.



Read more at Morningstar: Kering Fair Value Reduced; Earnings Under Pressure