Kering: Lowering Our Fair Value Estimate on More Prolonged Gucci Recovery

Morningstar’s Metrics for Kering

• Fair Value Estimate: EUR 380
• Morningstar Rating: ★★★★★
• Morningstar Economic Moat Rating: Narrow
• Morningstar Uncertainty Rating: Medium

We are lowering our fair value estimate for Kering to EUR 380 per share from EUR 445 to reflect our assumptions for a slower return to growth for its main brand, Gucci. We now expect 2025 to be another depressed year for the brand, with a 15% decline in revenue. We anticipate low-single-digit revenue growth in 2026 and a double-digit rebound thereafter.

The basis for our tempered expectations begins with the appointment of Demna as creative director of Gucci. It typically takes five to six quarters after appointments to see if consumers accept a new creative director’s collections, so the results of this appointment will unlikely be seen before 2026. Second, we believe it is reasonable to expect that 2025 will be another difficult year for luxury, given geopolitical instability and market turmoil. Brands with weaker momentum tend to underperform in downturns, and most brands in Kering’s portfolio have higher exposure to aspirational consumers, who are hit harder by the economic conditions than competitors like Hermès.