PARIS (Reuters) – Kering fell on the Paris stock exchange on Monday morning, under pressure from two downgrades citing the difficult positioning of its Gucci brand.

At 07:55 GMT, Kering was down 2.3% while the CAC 40 was up 0.54% at the same time.

RBC downgraded its recommendation on the stock to “in line perform” from “outperform.”

“We believe the luxury environment is gradually slowing, which is likely to have a significant impact on Gucci as the brand grapples with a changing product offering,” RBC analysts wrote.

“Therefore, our estimates predict that Gucci will not return to positive revenue growth until at least the second half of 2025,” the bank added.

Sales at Gucci, the Italian fashion house that accounts for two-thirds of Kering’s profit, fell 19% in the second quarter, and the brand’s outlook is a key focus for investors.

Barclays also believes that Kering’s recovery could take longer than expected because Gucci’s sales are suffering more than those of other groups in the sector from weak Chinese demand.

The broker therefore lowers its recommendation on Kering to “underweight”, against “in line weighting”.

“We believe that Gucci’s recovery could be delayed over time, while the other brands (Saint Laurent, Bottega Veneta, Balanciaga) may not really compensate for the weakness in Gucci’s activity,” warn Barclays analysts, who mention the risk of further declines in profits.

In the same note, Barclays also lowered its recommendation on Burberry to “underweight” due to the weakness of Chinese demand, contributing to the British group’s share price falling by 2.7%, to its lowest in 14 years.

(Written by Corentin Chappron, edited by Blandine Hénault)

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