Key facts
- Kering shares rose 16.9% on better-than-expected quarterly sales from its Gucci brand.
- Gucci's sales drop of 2% organically in the second quarter beat analyst expectations.
- Hermes shares fell 11% after reporting only a slight acceleration in organic sales.
- HSBC analysts upgraded Kering to 'buy' from 'hold', citing focus on right priorities.
- Kering plans to close 100 stores by year-end and reduce inventories by €1 billion within 12 months.
Kering shares experienced a significant surge of 16.9%, reaching €292.85, its largest daily jump in nearly 24 years, driven by better-than-expected quarterly sales from its flagship brand, Gucci. This performance offers a glimmer of hope for CEO Luca de Meo's turnaround strategy, which includes closing 100 stores by year-end and reducing inventories by €1 billion within 12 months.
Gucci's second-quarter revenue saw a 2% organic dip, marking its 12th consecutive quarterly sales decline. However, this result surpassed analyst forecasts and represented an improvement from the prior quarter. De Meo aims to return Gucci to full-year growth this year, though he cautioned that growth might not be linear, with the third quarter potentially being flat.
In contrast, rival Hermes reported only a slight acceleration in organic sales, leading to an 11% drop in its shares as investors reassessed its valuation. Bellwether LVMH also saw its shares close down 0.5% after a volatile session, indicating continued investor caution in the broader luxury sector despite spending from affluent consumers.
Analysts at HSBC upgraded Kering to 'buy' from 'hold', citing the group's focus on the right priorities to regain momentum, particularly with aspirational customers for the Gucci brand. RBC analysts noted that Gucci would need a strong second-half performance to achieve its full-year growth target.