Shares of Kering popped as Gucci saw sharp sequential improvement

Gucci owns shares dry It jumped more than 9% on Thursday, hitting a 1-year high after the company reported a decline in sales and quarterly earnings estimates.

The French luxury giant – whose brands include Gucci, Saint Laurent and Balenciaga – reported sales of 3.42 billion euros ($3.97 billion) in the third quarter, down 5% from the same period a year ago. That showed an improvement from the second quarter, when comparable sales fell 15% year-over-year.

Gucci, the firm’s biggest brand, fell 14% year-on-year to 1.34 billion euros, with improvements at some of its smaller houses hitting Kering hard.

The company noted that the decline in Gucci still represents a sharp sequential improvement over the previous quarter, when the brand’s Sales fell 25%. A consensus compiled by FactSet expected group sales to come in at 3.31 billion euros for the quarter, with Gucci sales – which typically account for half of Kering’s total revenue – expected to come in at 1.32 billion euros.

Kering noted in its third-quarter performance presentation that currency fluctuations remained a “significant headwind” with sales declining with a negative currency impact of 5%.

Kering remains committed to transforming the company’s performance, CEO Luca Di Meo said in a statement accompanying the results. He added that the luxury giant’s “third quarter performance, while showing a clear sequential improvement, was well below the market.”

“This reinforces my determination to work across all dimensions of the business to give our homes and the group the position they deserve. Following our recent decisions we are working tirelessly on our turn.”

Earlier this week, Kering announced The company has agreed to sell its beauty unit to L’Oréal for $4.7 billion as Di Meo seeks to reduce the company’s debt and focus on its core fashion businesses.

On Thursday morning, Deutsche Bank upgraded its price target for Kering by 3.4% to 300 euros. Shares last traded at around 340.45 euros.

“Importantly, there was good sales performance across all major brands and a good reduction in EBIT estimates as gross margin and opex guidance held,” Deutsche’s Adam Cochrane said in a note.

“Looking at Gucci, the improvement was particularly supported by leather goods where the handbag range was refreshed over the past 18 months while the Demna-inspired RTW launch in 1H 26 should see support from carryover lines.”

Meanwhile, analysts at UBS said Kering’s report “confirmed an overall improving sector context but also initial success of management’s actions to turn the business around.”

“Given that the net, equity story is focused on the Gucci turnaround, bears could argue that Gucci has actually improved at the pace of other brands, thus suggesting limited evidence that its momentum is outperforming the group,” it added.

Shares in Kering have gained about 33% so far this year amid a boom in the luxury sector. however, Steady sales, price increasesAnd Renewed trade tensions Questions have been raised about the outlook for high-end goods.

Last week, European luxury stocks including Kering a A surprising return to growth from LVMH. The French conglomerate is seen as a bellwether for the wider luxury sector.

Kering has faced its own unique challengesWith weak demand for its key brands and changes in leadership. Investors were scared According to the company’s second quarter earnings, which saw a 25% drop in Gucci sales.