Kering SA: Luxury goods group with iconic fashion and jewelry houses

Brief summary for investors: Kering is a leading global luxury goods group with a portfolio of high-quality brands such as Gucci, Saint Laurent, and Bottega Veneta. The company operates in the cyclical consumer goods sector and is therefore highly dependent on the global economy and consumer confidence.

Development The share price performed strongly from 2020 to mid-2021, driven by the post-pandemic recovery and robust demand in the luxury segment. Since peaking in August 2021 (approximately EUR 778), a sustained downward trend followed, accelerating significantly in 2024 (currently approximately EUR 238). This development correlates with weakening operating performance: Sales declined from over €20 billion (2022) to €19.6 billion (2023), and net income fell from €3.6 billion to €3.0 billion in the same period. The latest quarterly figures (Q4 2024) show a further deterioration, with a significant drop in EBIT and net income despite stable sales, indicating significant margin pressures.

Opportunities: The portfolio of diversified, iconic brands offers resilience. The strong exposure to Asia-Pacific offers long-term growth potential once the regional economy recovers. The high free cash flow (€3.6 billion in the last quarter) provides financial flexibility for investments and acquisitions.

Risks: The company's high dependence on the flagship brand Gucci makes it vulnerable to its performance. The current economic uncertainty, particularly in China, is significantly impacting cyclical luxury demand. A high debt-to-equity ratio (debt-to-equity of 1.76) and declining profitability metrics (ROE of 1.6%) are worrying.

Additional Notes: The data show a significant discrepancy between a very high free cash flow per share and a sharp decline in EPS in the latest report, which could indicate extraordinary expenses or depreciation. Employee productivity (sales/employee) is declining.

Conclusion: Kering's fundamental performance has weakened noticeably, which is reflected in the significant share price decline. While the strong brand portfolio and cash generation are long-term strengths, the short-term risks from the economic slowdown in the luxury segment and internal margin problems outweigh these. An investment currently appears attractive only for risk-conscious investors with a long-term investment horizon.

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