Kering’s 3-Year Slump: Earnings Dive

The Fall and (Potential) Rise of Kering: A Luxury Empire on Shaky Ground
Parisian boulevards aren’t the only thing looking gloomy these days. Kering (EPA:KER), the luxury conglomerate behind Gucci and Saint Laurent, has been bleeding shareholder value like a bad noir flick—61.33% wiped out in three years, with dividends barely cushioning the -57% Total Shareholder Return. Sure, a recent €1.5 billion market cap bump gave folks whiplash, but let’s not pop champagne yet. This is a story of margin collapses, Gucci’s identity crisis, and investors playing hopscotch in a minefield.
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Market Meltdown: When Dividends Are Just a Band-Aid
Kering’s stock chart resembles a ski slope—downhill fast. Over three years, shareholders took a 57% TSR hit (including dividends), while the broader market gained 6.7%. Last year alone, they lost 30% as rivals like LVMH barely broke a sweat. The culprit? A perfect storm:
– Gucci’s Midlife Crisis: Once the cash cow, Gucci’s revenue growth stalled as creative director musical chairs (Alessandro Michele out, Sabato De Sarno in) left consumers cold. Q1 2024 saw Gucci’s sales drop 18%—like swapping a Ferrari for a moped.
– Saint Laurent’s Stumble: Even the reliably chic YSL saw growth halve to single digits, while Bottega Veneta’s 2% uptick was akin to rearranging deck chairs on the Titanic.
– Dividend Distractions: That €6/share dividend? Nice, but it’s like getting a free dessert while your house burns down.
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Financial Forensics: Margins in Freefall
Kering’s 2024 earnings report reads like a horror script:
– Revenue: €17.2 billion, down 12%. Net income? A gut-punch 62% plunge to €1.13 billion.
– Margin Massacre: Operating margins collapsed from 24.3% to 14.9%, with net profit margins at 6.6% (down from 15%). For context, Hermès operates at a 40% margin—Kering’s playing Little League.
– EPS Nosedive: Earnings per share cratered from €24.38 to €9.24. Even P/E ratios (still lofty at ~20x) suggest investors are betting on a Hail Mary rebound.
Why? Over-reliance on wholesale channels, inflation squeezing aspirational buyers, and—here’s the kicker—operational bloat. Rumor has it Kering’s supply chain moves slower than a Parisian bureaucracy.
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The Ownership Enigma: Who’s Still Holding the Bag?
Here’s the twist: 43% of Kering is held by private entities (hello, Pinault family). That’s either blind faith or a control play. Meanwhile, institutional ownership dipped to 35%—smart money’s hedging.
– Private Players: The Pinaults aren’t selling, but their €7 billion Artémis investment arm is diversifying (recently buying Creed fragrances). Coincidence?
– Retail Investors: Stuck holding the bag, lured by that sweet, sweet dividend yield (now ~4.5%).
– Short Sellers: Circling at 2.3% of float. Not Tesla-level panic, but enough to signal skepticism.
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The Road Ahead: Can Kering Pull a Phoenix?
CEO François-Henri Pinault’s playbook includes:

Analysts are split: Bernstein sees “value traps,” while Morgan Stanley whispers “buy the dip.”
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Case Closed? Not Yet
Kering’s saga is a masterclass in luxury’s fickleness. The numbers scream crisis: evaporating margins, brand fatigue, and a shareholder base nursing third-degree burns. That €1.5 billion rebound? A dead-cat bounce until Gucci’s revival proves real.
For investors, it’s a high-stakes gamble. The Pinaults aren’t folding, but the house edge looks shaky. As for the rest of us? Grab popcorn. This luxury showdown’s going the distance.