Kering: Citi stays Purchase – 06.09.2022 at 13:32

(AOF) – Citi has confirmed its Buy recommendation and its € 740 price target for Kering following an investor presentation to Yves Saint Laurent. The broker believes that brands other than Gucci will become increasingly important in the Kering investment case, as evidenced by the remarkable transformation of Saint Laurent over the past decade. The management presented a detailed and convincing long-term plan, which, according to the consultancy, should make it a mega-label.


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

– Turnover of EUR 17.6 billion was 44% in Asia Pacific, 26% in North America and 23% in Europe.

– A luxury “pure player” business model based on growth that transcends market growth, creative home autonomy, pooling of support functions and inter-functional expertise, and digital transformation in distribution and client services;

– capital controlled at 41.74% (58.44% of voting rights) by the Aremis founding holding company, with François-Henri Pinault as chairman and chief executive officer of the 13-member board of directors and Jean-François Palus as deputy general manager;

– A sound balance sheet with a net debt of EUR 168 million, compared to EUR 13.7 billion in equity, which was strengthened in January by the sale of watch activities.


– 3-pillar innovation strategy: new business models, new materials and supporting functions / investments in companies with innovative business models such as Vestiaire Collective, MIL laboratories for sustainable alternatives in jewelery and textiles, blockchain blocking for counterfeiting, etc. / robust logistics infrastructure serving the customer experience: Luce application for product availability, virtual data-based offering, site internalization, etc. / growth in e-commerce (15% of sales in 2021);

– Environmental strategy for 2025 “Caring for the planet”, reported in the environmental profit and loss account: use resources in line with “planetary limits” and reduce the group’s CO2 emissions by 50% / work on the environmental impacts of the chain (CO2 emissions, water consumption, air and water pollution, waste production and land use) / creation of a “Supplier Sustainability Index” and increased traceability of animal welfare through chemicals / promotion of “sustainable design” / creation of a Materials Innovation Lab (MIL) for watches and jewelery on fabrics and textiles / completion of CO2 offsets) for biodiversity.


– Strong dependence on Gucci, the first contributor to sales and the most profitable brand;

– Accelerating the growth of YSL and Bottega Venetta and Gucci’s resilience to prisons in China;

– Impact of the Russo-Ukrainian War: very low, with the closure of 2 shops and 4 corners;

– a dividend of EUR 1221 with a deposit of.

Shops in the city center: a worrying decline in the number of steps

Between 2013 and 2021, the number of shops in city centers fell by almost 40%. This decrease reached 29.4% in shopping centers over the same period. Procos emphasizes that this movement is mainly due to the multiplication of supply and the development of e-commerce. Small town centers and mega-shopping malls are the most durable. The former respond to local needs and the latter are attractive on a regional scale. At the Assises du Commerce conference in December 2021, the government began three weeks of reflection to outline a vision for 2030 and support the investment needed for digital and environmental transitions.

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