Kering Shares Soar on Better-Than-Expected Sales and CEO's Bold Moves

Shares in Kering, the luxury conglomerate that owns brands like Gucci, experienced a significant surge in early Paris stock market trade on Thursday, climbing by as much as 9%. This robust performance followed the company's recent trading update, which revealed a sales decline in the last quarter that was less severe than analysts had anticipated. The positive market reaction further extended a rally initiated by the appointment of Luca de Meo as CEO, tasked with restructuring the group.

The trading update, released late on Wednesday, marked the first under the leadership of CEO Luca de Meo, who assumed his role in September. It reported an overall sales decline of 5%. Since the announcement in June by Kering's chairman and controlling shareholder, Francois-Henri Pinault, that de Meo would take the helm, Kering's shares have nearly doubled, reflecting strong investor confidence in the new chief executive's ability to revitalize the luxury giant.

Industry analysts have largely reacted positively to Kering's recent developments. Deutsche Bank analysts expressed considerable optimism, stating, "There is a lot to like in the Kering story and in these results." They specifically highlighted positive indicators from Gucci, noting the successful reception of new handbag models. Citi analysts also pointed to a "noticeable lack of earnings downgrades for the first time in over three years," signaling a potential shift in the company's financial trajectory. However, Citi advised caution, suggesting they "would not chase" what they described as a FOMO (fear of missing out) rally until the full-year results and the company's new strategic plan, expected early next year, are officially announced.

Luca de Meo, a former auto executive with no prior experience in the luxury sector, has made it clear that he intends to act swiftly, emphasizing that he will not wait for the strategic plan to be publicly unveiled before making crucial decisions. This proactive approach was underscored by a significant announcement over the weekend: Kering struck a substantial $4.7 billion deal to divest its cosmetic and fragrance brands to beauty giant L'Oréal, signaling a focused shift in its brand portfolio and strategic direction.