Shares in Kering SA (EU:KER) fell more than 5% on Tuesday after the luxury goods group held a pre-results call with analysts ahead of its late-July earnings release. Investors reacted negatively to management’s cautious tone, reinforcing concerns about the company’s short-term trading outlook.
Following the briefing, Barclays said Kering’s full-year guidance now appears “increasingly unattainable,” sending the stock to its lowest level in three weeks.
Gucci recovery remains slower than expected
Barclays expects Gucci to report a 5% organic revenue decline in the second quarter, an improvement from the 8% fall recorded in the first quarter but still highlighting weak momentum at the group’s largest profit contributor.
The bank forecasts Gucci will generate €1.35 billion in second-quarter revenue, with Asia-Pacific sales expected to decline 11% and Europe down 10%. North America is projected to provide some support with estimated growth of 8%.
“We believe that 1H results are unlikely to demonstrate a clear path to turnaround, but slight sequential improvement in performance. We expect Gucci at -3% for FY-26,” Barclays analysts wrote in a note dated Tuesday.
Citi trims growth expectations
Citi also revised its outlook following the company’s pre-close call, lowering its forecast for Gucci’s full-year constant-currency revenue growth by 90 basis points to -1.2%.
The bank attributed the downgrade to a difficult macroeconomic backdrop and softer sales trends in the Middle East, which contributes around 5% of Kering’s total revenue. Citi also reduced its price target on Kering to €266 from €268, based on approximately 24 times estimated FY27 earnings.
“Given the still-gradual Gucci turnaround, a challenging macro and geopolitical backdrop and lower FX headwinds, we reduce FY26E cFX growth assumptions by 40bp and 90bp to +2.5% and -1.2% for Kering and Gucci, respectively,” Citi analysts wrote.
Cost controls support margins despite weaker sales
Although revenue expectations remain subdued, both Barclays and Citi noted that cost-cutting measures are helping to protect profitability.
Barclays forecasts Gucci’s EBIT margin will improve by 30 basis points year-on-year to 16.3% during the first half of 2026, while the group’s overall EBIT margin is expected to ease to 12%, down 36 basis points from a year earlier.
The modest margin improvement prompted Barclays to raise its FY26-FY28 earnings-per-share forecasts by between 2% and 3%, despite maintaining a cautious revenue outlook.
Investors await July earnings update
During the pre-results call, Kering reiterated its gradual recovery strategy, including plans to close more than 100 stores on a net basis and keep operating expenses flat at constant currency.
However, investors remain unconvinced. When Kering released its first-quarter 2026 results on 14 April, revenue of US$4.21 billion exceeded market expectations by 1.45%, yet the shares still fell 4.7% as uncertainty surrounding Gucci’s recovery continued to overshadow the earnings beat.
Attention now turns to Kering’s first-half 2026 results, due after the market closes on 28 July, when investors will closely examine Gucci’s organic sales trend, group margins and any revised guidance on the timing of a broader recovery across the company’s brands.
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