(AOF) –
Dry
(+8.68% to 268.65 euros)
Luxury stocks shine this Friday in the wake of Burberry's results (+14.22% to 1,222.75 pence) in London. Kering flies over the flagship index of the Parisian market after Burberry reported a less significant drop than expected in its comparable sales in the third quarter. The stock's increase has exceeded 14% since January 1.
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Learn more about Kering
Key Points
– Luxury group born in 1963, owner of the Balanciaga, Bottega Veneta, Gucci and Yves-Saint-Laurent brands;
– Turnover of €19.6 billion achieved 35% in Asia-Pacific, 7% in Japan, 28% in Europe and 23% in North America;
– Luxury “pure player” business model, based on organic growth but superior to that of the markets via the creative autonomy of the Houses and strategic partnerships;
– Capital controlled at 42.2% (nearly 59% of voting rights) by the Artémis holding company of the founding family, François-Henri Pinault being chairman and CEO of the 13-member board of directors and Jean-François Palus director delegated general;
Challenges
– Agility of the business model:
– pooling of platforms and support functions to serve the Houses,
– increased integration of the components of the value chain,
– creation of cross-functional expertise -Kering Eyewear and Kering Beauté
-– control of distribution, via logistics, e-commerce and store networking with a focus on three activities: – YSL: doubling of sales and operating margin of + 33% before 2030; – Gucci: revenues of €35 billion and operating margin of +41%; – eyewear: revenues of €2 billion and operating margin of +15%; – responsiveness to the decline in sales – rationalization of the Wholesale network;
– 2025 environmental strategy “Care for the planet”:
– 50% reduction in the group's CO2 emissions,
– reduction of supply chain impacts (CO2 emissions, air and water pollution, waste production and land use, etc.),
– “Supplier Sustainable Development Index” and traceability of animal welfare and use of chemicals,
– Materials Innovation Lab (MIL) dedicated to watches and jewelry, fabrics and textiles,
– compensation for CO2 emissions through support for biodiversity and the climate fund for nature;
– 30% stake in the capital of the Italian Valentino, with full acquisition option in 2030;
– Healthy balance sheet: €16 billion in equity, €4.1 billion in cash and net debt of €8.5 billion.
Challenges
–
Strong dependence on Gucci, the leading contributor to results, hence investors' fears about the decline in sales, increased in 3
th
quarter, particularly in China and North America;
– Customer response to the collections of Gucci's new artistic director, Sabato de Sarno;
– Questions about the adequacy of the offer to the public – sales of permanent lines showing declines or stability (excluding Bottega Veneta, Boucheron or Pomelloto) – as well as about distribution, with own networks holding up better than “wholesales”;
– After a 12% decline in revenue at the end of September (-16% at 3
th
quarter), financial objective of a 30% decline in operating profit in 2
nd
half-year, representing an amount of $2.6 billion over the financial year;
– 2023 dividend of €14, after deposit of €4.5.
