Kering surges 11% as Gucci sales beat shows turnaround traction

Kering SA shares surged 11% on Wednesday after Gucci's second-quarter sales of €1.4 billion beat analyst estimates.

"The better-than-feared sales at Gucci, as well as a strong focus on cost control, will likely be well received by the market today," J.P. Morgan analysts said in a note.

Gucci's organic revenue fell 2% from a year earlier, compared with the 4% decline analysts had expected, according to Visible Alpha. The result marked the brand's 12th straight quarterly sales drop but a sharp improvement from the 8% decline in the first quarter. Kering's group-wide organic sales rose 2%, just above the 1.7% growth consensus.

Metric	Actual	Consensus	Beat/Miss
Gucci organic sales	-2%	-4%	+2pp
Kering group organic sales	+2%	+1.7%	+0.3pp

The Gucci beat gives investors confidence that Chief Executive Officer Luca de Meo's turnaround strategy is gaining traction. Kering's US-listed shares closed 15% higher on Tuesday, their biggest daily gain on record, and European shares extended the rally on Wednesday.

The performance contrasts with rival LVMH, whose quarterly sales failed to excite investors on Tuesday as lingering questions about the luxury industry's recovery from a prolonged downturn persisted. Hermes, by contrast, posted a 7% rise in second-quarter sales excluding currency swings, the Birkin-bag maker said Wednesday.

Gucci will need a notable positive inflection in the second half to meet its goal of returning to full-year growth, RBC analysts said in a note. "We would expect consensus estimates to modestly increase," they said, adding that the first-half beat and growing belief in Kering's ability to achieve its targets are not yet fully reflected in the stock.

The guidance raise suggests management expects the turnaround to accelerate. Investors will watch Kering's next quarterly update for further evidence of Gucci's recovery trajectory.

This article is for informational purposes only and does not constitute investment advice.