CONSUMER CYCLICALS: Kering; equities slide
(NR/BBB+ Stable)
Equities are -48% YTD while high-grade €31s are +45bps. Macro is not a excuse; Prada is +25% and local issuers Richemont and Birkenstock are flat. These are not rating comp's for Kering but if we broaden out we can find similar examples - like Pandora +15% and giving +40bps.
KERFP levels look more-in line with ratings now, but we still don't see it compensating for FY25 uncertainty. Consensus isn't expecting fireworks; FY25 adj. EBIT estimate at €2.85b which would be +14% on FY24 guidance. For reference that estimate started the year at €5.7b and compares to FY22 EBIT of €5.6b. For those not willing to wait and/or bullish on a recovery, the £32s continue to screen widest.
Final aside - one of the few brands still doing well for Kering is Bottega Veneta. The ex. creative director of that brand, 38yr old Daniel Lee, will be under pressure on Thursday when Burberry investors look to him to repeat the success he had there.