Kering (NR/A-) 1H (to June) Earnings Call

Given it nailed 1H guidance (-40-45% vs. actual -42%) we wouldn't ignore its only guidance which is "EBIT could be down -30% in 2H". Our view from 1Q to price the curve to BBB+ ratings is unch BUT there were some positive remarks in earnings call around leasebacks to alleviate leverage - this was talked about in 1Q as well and flagged by S&P as a potential positive (that it dose not account for right now). Regardless S&P saw better 2H on headline - which co is no longer guiding to. Even if we factor another 100bp EBIT margin contraction, we see HSD yoy falls - enough for S&P to move to neg. outlook.

• It kept it light on colour around 2H EBIT guidance adding it was "based on a gradual improvement in revenue trends at group level, mostly back-end-loaded, especially at Gucci, as novelties will start to hit the shelves from September.". It also disclosed it no longer expects 2H revenue and 2H EBIT margins to improve vs. the 1H.
• Regarding RE acquisitions (S&P was already accounting for) it played down any continuation; "we have taken advantage, as you know, of changing market conditions to secure prime locations, but as we already said, we are not aiming at becoming a landlord."
• Some positive (and unch from 1Q) comments on BS: "we are working to set up vehicles to co-invest with financial partners in this real estate assets, so that it will lead to a deleverage. We are working on, and hopefully by the end of the year, we will be able to give you some more news on that front."
• Continues to flag Gucci's exposure to the aspirational customer as hurting it acutely.