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1. Company Snapshot

1.a. Company Description

Kering SA develops, designs, manufactures, markets, and sells apparel and accessories.The company offers shoes; leather goods, including handbags and wallets, purses, and other leather products; eyewear, textile accessories, etc.; and jewelry and watches, as well as ready-to-wear products for men and women.It also provides perfumes and cosmetics.


The company provides Gucci, Saint Laurent, Bottega Veneta, Alexander McQueen, Balenciaga, Brioni, Boucheron, Pomellato, DoDo, Qeelin, Girard-Perregaux, Ulysse Nardin, and Kering Eyewear branded products.It sells its products through stores and e-commerce sites.As of December 31, 2021, it operated 1,565 stores.


Kering SA sells its products in the Asia-Pacific, Western Europe, North America, Japan, and internationally.The company was formerly known as PPR SA and changed its name to Kering SA in June 2013.Kering SA was founded in 1963 and is based in Paris, France.

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1.b. Last Insights on KER

Kering's recent performance has been negatively impacted by a 10% revenue decline in 2025, driven by a challenging luxury market. However, the company's 2025 results showed sequential improvement, with a 9% decline in fourth-quarter revenue, indicating a gradual recovery. The company's strategic roadmap, presented by CEO Luca de Meo, focuses on enhancing brand desirability, cost savings, and store closures to drive future growth. A capital markets day is planned for April to outline the company's plan to build a leaner, faster group. Kering's balance sheet has been strengthened, providing strategic flexibility.

1.c. Company Highlights

2. Kering's H1 Earnings: A Challenging Period with Strategic Adjustments

Kering reported a revenue of EUR7.6 billion for the first half, with a recurring operating income of EUR969 million, translating to a 12.8% margin. The company's EPS came in at EUR3.67, beating estimates of EUR3.49. The revenue was down 16% reported and 15% comparable, with a 1-point negative FX impact. The gross margin was under pressure, reflecting different dynamics across brands. As Armelle Poulou noted, "OpEx efforts initiated over a year ago are bearing fruit, with EBIT margin at 12.8%."

Publication Date: Jul -31

📋 Highlights
  • Revenue Performance:: First-half revenue was EUR7.6 billion, down 16% reported and 15% comparable, with a 1-point negative FX impact.
  • Margin and Profitability:: Recurring operating income was EUR969 million, a 12.8% margin, with a year-on-year margin dilution of 470 basis points.
  • Gucci's Decline:: Gucci's H1 revenue was EUR3 billion, down 25% comparable, while Bottega Veneta grew 2% and Saint Laurent declined 10%.
  • Operating Expenses:: Group OpEx was down 11% reported, with a mid- to high single-digit decline anticipated for the full year.
  • Net Financial Debt:: Net financial debt was EUR9.5 billion, a EUR1 billion reduction from year-end, with a net debt-to-EBITDA ratio of 2.3x.

Brand Performance

Gucci's H1 revenue was EUR3 billion, down 25% comparable, while Saint Laurent's revenue was nearly EUR1.3 billion, down 10% comparable. Bottega Veneta's revenue was EUR846 million, up 2% comparable. The varying performances across brands contributed to the overall revenue decline. Other Houses had a challenging first half, with revenue down 14% comparable.

Operational Efficiency and Cost Management

The company is working on OpEx discipline, with a reported decline of 11% in group OpEx. For the full year, group OpEx is anticipated to be down mid- to high single digits. The cost containment achieved in '24 and planned for '25 is material, with a sense of emergency driving decision-making. Structural actions are being taken, including reengineering processes and mutualization.

Cash Flow and Debt

Free cash flow from operations was EUR2.4 billion after EUR431 million in CapEx. Net financial debt was EUR9.5 billion, EUR1 billion lower than at year-end. The company is working to protect and enhance free cash flow generation, with a focus on deleveraging.

Valuation Metrics

With a P/E Ratio of 23.43 and an EV/EBITDA of 9.25, the market is pricing in a certain level of growth and profitability. The Net Debt / EBITDA ratio stands at 3.56, indicating a manageable debt burden. The ROE (%) is 7.6, and ROIC (%) is 4.41, suggesting room for improvement in returns.

Outlook and Guidance

H2 EBIT margins are expected to decline year-on-year, but less than H1. The company is managing tariffs through price adjustments and is working on real estate disposals. The expected improvement in gross margin is due to regional mix, but APAC is still declining, so H2 gross margin is expected to be similar to H1.

3. NewsRoom

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Hermès Stays Ahead of the Pack as Q4 Sales Rise 9.8%

Feb -12

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Hermès Sees Luxury Growth Increasingly Driven by the Stock Market, as Q4 Sales Gain 9.8%

Feb -12

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Kering revenue falls in 2025, recovery targeted for 2026

Feb -11

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Optimism is Building Around a Gucci ‘Comeback’

Feb -11

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Optimism Is Building Around a Gucci ‘Comeback’

Feb -11

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Assessing Kering (ENXTPA:KER) Valuation After 2025 Revenue Decline And Early Gucci Turnaround Signs

Feb -11

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Dow Rises, on Course for Third Straight Record

Feb -10

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Kering Jumps as Gucci Slide Eases

Feb -10

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.18%)

6. Segments

Gucci

Expected Growth: 2.5%

Gucci's 2.5% growth is driven by strong demand for luxury goods, expanding presence in Asia, and successful brand revamp under creative director Alessandro Michele. The brand's digital transformation and strategic investments in e-commerce and social media have also contributed to its growth, attracting younger consumers and increasing brand visibility.

Other Houses

Expected Growth: 1.8%

The growth of Other Houses from Kering SA is driven by strong demand for luxury goods, particularly in Asia. The segment's 1.8% growth is attributed to iconic brands like Alexander McQueen and Bottega Veneta, which have successfully expanded their product lines and distribution channels, attracting new customers while maintaining brand loyalty.

Yves Saint Laurent

Expected Growth: 2.2%

Yves Saint Laurent's growth of 2.2% is driven by strong demand for its high-end fashion and beauty products, strategic retail expansion, and effective digital marketing efforts. The brand's popularity among younger generations and successful collaborations have also contributed to its growth, outpacing the overall luxury market.

Bottega Veneta

Expected Growth: 2.0%

Bottega Veneta's 2.0% growth is driven by strong sales in Asia, particularly in China, and a successful turnaround strategy under creative director Matthieu Blazy. The brand's iconic intrecciato woven leather goods and appealing product assortment have resonated with consumers, while investments in digital marketing and e-commerce have also contributed to growth.

Kering Eyewear and Corporate

Expected Growth: 1.5%

Kering Eyewear's 1.5 growth is driven by strong demand for luxury eyewear, particularly in Asia. Kering SA's diversified portfolio and strategic investments in brands like Gucci and Yves Saint Laurent also contribute to growth. Corporate synergies and operational efficiency improvements further support the segment's expansion.

Eliminations

Expected Growth: 0.5%

Kering SA's eliminations growth of 0.5 is driven by strategic brand portfolio optimization, efficiency in supply chain management, and elimination of underperforming assets, allowing the company to focus on high-growth brands like Gucci and Yves Saint Laurent, leading to improved profitability and resource allocation.

7. Detailed Products

Gucci Handbags

Luxury handbags designed by Gucci's creative directors, offering a range of styles, materials, and colors.

Yves Saint Laurent Ready-to-Wear

High-end clothing and accessories designed by Yves Saint Laurent's creative directors, offering a range of styles, fabrics, and colors.

Bottega Veneta Leather Goods

Luxury leather goods, including handbags, wallets, and accessories, designed by Bottega Veneta's creative directors, known for their signature intrecciato woven leather.

Alexander McQueen Women's Shoes

High-end women's shoes designed by Alexander McQueen's creative directors, offering a range of styles, materials, and colors.

Pomellato Jewelry

High-end jewelry designed by Pomellato's creative directors, offering a range of styles, materials, and colors.

Qeelin Fine Jewelry

High-end fine jewelry designed by Qeelin's creative directors, offering a range of styles, materials, and colors.

Christopher Kane Ready-to-Wear

High-end clothing and accessories designed by Christopher Kane's creative directors, offering a range of styles, fabrics, and colors.

Tomas Maier Accessories

Luxury accessories, including handbags, wallets, and small leather goods, designed by Tomas Maier's creative directors.

Boucheron High Jewelry

High-end high jewelry designed by Boucheron's creative directors, offering a range of styles, materials, and colors.

Dodo Jewelry

Fashion jewelry designed by Dodo's creative directors, offering a range of styles, materials, and colors.

8. Kering SA's Porter Forces

Forces Ranking

Threat Of Substitutes

Kering SA operates in the luxury goods industry, where there are few substitutes for high-end fashion products. However, the rise of fast fashion and second-hand luxury goods may pose a moderate threat.

Bargaining Power Of Customers

Kering SA's customers are mostly high-end consumers who value exclusivity and craftsmanship. They have limited bargaining power due to the unique nature of luxury goods.

Bargaining Power Of Suppliers

Kering SA relies on a network of suppliers for raw materials, manufacturing, and logistics. While suppliers have some bargaining power, Kering's scale and reputation help maintain a balance of power.

Threat Of New Entrants

The luxury goods industry has high barriers to entry, including significant capital requirements, brand recognition, and distribution networks. New entrants are unlikely to pose a significant threat to Kering SA.

Intensity Of Rivalry

The luxury goods industry is highly competitive, with established players like LVMH, Richemont, and Capri Holdings vying for market share. Kering SA faces intense rivalry in terms of product offerings, pricing, and brand reputation.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 57.47%
Debt Cost 4.25%
Equity Weight 42.53%
Equity Cost 8.94%
WACC 6.25%
Leverage 135.14%

11. Quality Control: Kering SA passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Dior

A-Score: 5.2/10

Value: 5.5

Growth: 6.1

Quality: 5.9

Yield: 3.8

Momentum: 5.0

Volatility: 5.0

1-Year Total Return ->

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Stock-Card
Inditex

A-Score: 5.2/10

Value: 1.6

Growth: 6.2

Quality: 8.1

Yield: 5.0

Momentum: 3.0

Volatility: 7.3

1-Year Total Return ->

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Stock-Card
Hermès

A-Score: 5.1/10

Value: 0.5

Growth: 8.4

Quality: 9.4

Yield: 1.2

Momentum: 4.0

Volatility: 7.0

1-Year Total Return ->

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Stock-Card
LVMH

A-Score: 4.7/10

Value: 2.0

Growth: 6.2

Quality: 7.0

Yield: 3.1

Momentum: 5.0

Volatility: 5.0

1-Year Total Return ->

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Stock-Card
Richemont

A-Score: 4.7/10

Value: 1.1

Growth: 5.6

Quality: 6.9

Yield: 1.9

Momentum: 7.5

Volatility: 5.3

1-Year Total Return ->

View Full Report
Stock-Card
Kering

A-Score: 4.0/10

Value: 2.3

Growth: 4.2

Quality: 3.8

Yield: 3.8

Momentum: 7.5

Volatility: 2.7

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

275.7$

Current Price

275.7$

Potential

-0.00%

Expected Cash-Flows