(News Bulletin 247) – Citigroup downgraded its advice to “neutral” on the parent company of Gucci this Monday, judging that the slowdown in Chinese demand this summer will weigh on the group’s performance.
Citigroup on Monday lowered its recommendation to “neutral” from “buy” on French luxury goods maker Kering, with the operator citing a weakening of demand in Asia excluding Japan during the summer, while anticipating a slowness in the resumption of sales of the Gucci and Saint Laurent brands next year.
French luxury giant LVMH recorded a 3% drop in organic sales last week, disappointing expectations and sending a worrying signal to investors about the prospects for the luxury sector.
“A weakening of demand” in China
Citigroup acknowledges that Kering has been “relatively successful” in turning around several key brands over the past 20 years, particularly Gucci and YSL (Yves Saint Laurent), but adds that the execution of luxury brand turnaround plans is becoming increasingly more complex, lengthy and less suited to companies listed on the stock exchange.
The operator, which also lowers its price target by 25%, to 264 euros, says it is revising its forecasts ahead of the publication of Kering’s third quarter results, “in order to reflect the weakening of demand during the summer in Asia outside Japan, particularly in China.
Citigroup is also lowering its sales forecasts for Kering for fiscal years 2024, 2025 and 2026 by 4%, 8% and 10% respectively.
In Paris, Kering shares fell 1.2% to 235.25 euros, while the CAC 40 lost 0.4% at the same time.
(With Reuters)
I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.
