Kering: Jefferies is going to buy – 06/15/2022 at 12:16 PM

(AOF) — Jefferies raised his recommendation for Kering from Hold to Buy, but lowered his price target from $695 to $605. The broker notes that the title has decreased significantly in value compared to the 2018/2019 financial years with a 30% decrease in the Ebit multiple alone. In this context, the design agency begins to discover an opportunity to create value. The short-term outlook is mixed, but Gucci offers medium-term opportunities and Saint-Laurent even more so. Given an enterprise value representing 9 times the Ebit, the broker proceeds to the purchase.


– Luxury group born in 1963, owner of the brands Bottega Veneta, Gucci and Yves-Saint-Laurent;

– Revenue of €17.6 billion achieved 44% in Asia-Pacific, 26% in North America and 23% in Europe%;

– Luxurious “pure player” business model, based on growth beyond that of the markets, on the creative autonomy of the Houses, the bundling of support functions and cross-functional expertise and the digital transformation at the service of distribution and customer;

– Capital controlled at 41.74% (58.44% of the voting rights) by the Aremis holding company of the founding family, with François-Henri Pinault being Chairman and Chief Executive Officer of the 13-member Board of Directors and Jean-François Palus Director Deputy General;

– Healthy balance sheet, with net debt of €168 million compared to €13.7 billion in equity, which was strengthened in January by the sale of the watchmaking business.


– Innovation strategy on 3 pillars: new business models, new materials and supporting functions / investment in companies with innovative business models, such as Cloakroom Collective, MIL laboratories for sustainable alternatives in jewelery and textiles, appeal to counterfeit blockchain, etc. / robust logistics infrastructure at the service of the customer experience: Luce application on product availability, virtual offer based on data, internalization of sites, etc. / growth in e-commerce (15% of turnover in 2021);

– Environmental strategy 2025 “Care for the planet”, reported in an environmental income statement: using resources in accordance with “planetary limits” and reducing the group’s CO2 emissions by 50% / working on the environmental impact of the chain (CO2 emissions, water consumption, air and water pollution, waste production and land use) / creating a “Supplier Sustainability Index” and increasing the traceability of welfare animals by using chemicals / promoting “sustainable design” / creating Materials Innovation Lab (MIL) dedicated to watches and jewelry after that of fabrics and textiles / completion of the offsetting of CO2 emissions) for biodiversity.


– Strong reliance on Gucci, the number one contributor to revenue and the most profitable brand;

– Acceleration of YSL and Bottega Venetta growth and Gucci resistance to incarceration in China;

– Impact of the war between Russia and Ukraine: very low, with the closure of 2 stores and 4 corners;

– 2021 dividend of €12 with payment.

Downtown shops: a worrying drop in visitor numbers

Between 2013 and 2021, the number of visitors to shops in city centers fell by almost 40%. In the same period, this decrease was 29.4% for shopping centers. Procos emphasizes that this movement is mainly due to the multiplication of the offer and the development of e-commerce. Small town centers and mega-malls are the most resilient. The former respond to local needs and the latter are attractive on a regional scale. With the Assises du commerce in December 2021, the government launched three weeks of reflection to outline a vision for 2030 and support the investments needed for digital and environmental transitions.

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