A few days ago Equita, the independent Italian investment bank, disclosed an interesting analysis on Kering:

– Rating “buy”

– The stock trades at 16x times earnings vs the 24x times of the competitors for 2020

– Return on invested capital is higher than peers thanks to increasing profitability due to past years Gucci relaunch

– Gucci has entered a “normalization” phase that saw a slowdown in sales since the second quarter of 2018

– Gucci represents 80% operating profit of the Kering group

– Gucci will likely continue to grow but at + 8-10% year over year

– Gucci can rely on the recent upgrade of the business model and on still on some under exploited categories 

– Bottega Veneta relaunch seems to take quite a long time

– Growth potential for Saint Laurent and Balenciaga but they are also on the normalization curve

From the news it seems that Gucci hired from 900 to 1300 people.

Saint Laurent is fighting with Montblanc for a new location in the leather goods district around Florence.

Kering settled to pay an Italian Tax settlement of 1.25 million euro as well as moving the operations from Switzerland to Italy, which will have a cost.

Is Kering following the steps of Michael Kors/Capri?

Will the luxury group sustain the growth expected by the markets through acquisitions? There were many rumors about Valentino and Ferragamo.

Will the markets accept a revenues “normalization”?

Has the Gucci phenomenon set up unsustainable expectations? Has it drained most of the energies from other brands?

Are the Puma/Rihanna, Yoox joint venture, Richard Ginori among others represented precious and lost opportunities?

Could a joint venture with Richemont make sense? Very unlikely

Is the group going to launch an acquisition campaign in other categories of luxury?

What’s the future like when you cannot sustain forever a stellar growth nor rely so much on the success of your flagship company?

Is there already a plan B in development?

Ancient wisdom says that one should fix the roof when it’s sunny.

More to come?

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