Kering’s sales improved in Q3, only declining 5% on a comparable basis, beating market expectations. Shares rose 10% on Oct. 23. Gucci saw a 14% decline in sales, an improvement from the previous quarter. Other fashion houses also contributed positively, with Yves Saint Laurent declining only 4% and Bottega Veneta rising 3%.

Despite the sales improvement, Kering is undergoing structural changes, including leadership transitions and restructuring initiatives. The company has a long way to go to return to healthy growth in Gucci. New collections are set to launch next year, and cost reductions need time to materialize. Gucci remains a strong brand with global appeal and controlled distribution.

Maintaining a fair value estimate of EUR 360 for Kering, Morningstar believes the shares are fairly valued after a 45% gain this year. Gucci has faced underperformance and slow management response but is now in a better position to deliver sales growth and capitalize on recovering consumer sentiment.

Read more at Morningstar: Kering Earnings: Substantial Improvement in Sales, Though Still Negative