Analysts lift Kering EPS; rerating offsets tempered Gucci growth
Bottom Line Impact
Elevated earnings visibility and a valuation rerating improve margin resilience and financing flexibility, positioning Kering to defend market share while rebuilding Gucci's brand equity through disciplined, ROI-positive reinvestment.
Key Facts
5- Barclays raised EPS forecasts by +18% for FY2025 and +10% for FY2026; rating remains underweight
- Citi lifted target price to €313 from €263 and kept neutral, citing YSL Beaute royalties near €3b 2024 revenue per L'Oréal and sector multiple rerating
- 2025 adjusted EBIT expected to meet consensus at €1.7b following Q3 beat
- Sales estimates trimmed by -5% for 2026 and -4% for 2027 as Gucci 2025 growth cut to +4% from +7%; 2026 EBIT unchanged, 2027 EBIT -2%; EPS +4% (2026) and +1% (2027) on lower leverage and charges
- Share price up 77% since June CEO announcement; last close €302.7 (-0.62% d/d)
Time Horizons
Key Roles Affected
Executive Summary
A broad analyst reset lifts 2025–2026 EPS and target prices for Kering, signaling confidence that the downgrade cycle has ended despite lower Gucci growth assumptions. The rerating, underpinned by robust YSL Beaute royalties and eyewear multiples, strengthens valuation resilience and capital market optionality while brand reinvestment proceeds.
Actionable Insights
Immediate Actions (Next 30-90 days)
Codify a 12-month Gucci turnaround scorecard with quarterly gates on product cadence, full-price sell-through, and clienteling KPIs tied to leadership incentives.
Rationale: Analyst confidence has improved; transparent execution milestones will sustain the rerating and de-risk the growth reset.
Role affected:CEO
Urgency level:immediate
Reallocate +150–200 bps of A&P toward Gucci hero franchises and high-ROI clienteling in the US and EMEA; cap China promo and prioritize experiential activations.
Rationale: Maximizes full-price sell-through and protects margins while China demand remains uneven.
Role affected:CMO
Urgency level:immediate
Short-term Actions (6-12 months)
Lock in lower WACC by terming out debt and evaluate a royalty-backed financing tranche using YSL Beaute cash flows; set a conditional buyback trigger near €285–€295.
Rationale: Stronger EPS outlook and stable royalties support optimized capital structure and opportunistic buybacks without crowding out brand investment.
Role affected:CFO
Urgency level:short-term
Tighten buys by -10% on lower-velocity Gucci SKUs, raise DTC mix targets by +300 bps for 2025, and implement weekly replenishment for top 50 SKUs.
Rationale: Inventory precision and DTC mix expansion are critical to margin resilience during brand reset.
Role affected:Chief Merchandising/COO
Urgency level:short-term
Risks & Opportunities
Primary Risks
- Gucci growth underperforms the revised +4% 2025 trajectory, pressuring mix and margins
- China recovery lags, increasing reliance on US and EMEA to deliver group targets
- FX and input cost volatility erode expected gross margin recovery
Primary Opportunities
- Monetize or securitize a portion of YSL Beaute royalty stream to fund brand reinvestment at attractive rates
- Accelerate Kering Eyewear distribution and licensing wins to lift mix and margin
- Strengthen Saint Laurent global expansion to provide a second growth engine while Gucci resets