HSBC has moved Kering to a Hold rating from Buy and lowered its price target to 280 euros, down from 310 euros, arguing that while the French luxury house laid out a coherent recovery plan, the path to restoring performance is likely to stretch over several years.
The bank's note follows Kering's Capital Markets Day on April 16 in Florence, where management presented a multi-year roadmap. Executives set out ambitions that include outgrowing the broader luxury market over time and increasing the group's operating margin by more than twofold by 2030 versus 2025 levels. Management did not provide specific mid-term earnings guidance at the event.
In their Tuesday note, HSBC analysts Anne-Laure Bismuth and Akshay Gupta described management's plan as "sensible" but cautioned that it will not deliver immediate results. "2026 will be the year of the reset, 2028 the year of the rebuild, and 2030 the year of reclaimed brand desirability," they wrote, summarizing the timetable the bank expects for the recovery to progress.
The analysts pointed to mixed regional performance as a central challenge. While Gucci has held up relatively well in the United States, HSBC flagged that "brand desirability has been damaged in China and it is likely to take some time for management to fix it." The bank noted that Gucci's first-quarter sales came in below consensus expectations, underscoring near-term demand pressures for the group's largest brand.
HSBC highlighted the difficulty of achieving the growth targets management has set for the near term. The note explains that delivering even 1-2% organic sales growth for Gucci in 2026 would force the brand to produce an average organic growth rate of roughly 4-6% across the remaining three quarters of the year, after reporting an 8% decline in the first quarter.
Reflecting these dynamics, HSBC adjusted its forecasts for Gucci and the group. The bank now expects Gucci's organic sales to decline 3.6% in 2026, a downgrade from a prior projection of 2.1% growth. HSBC models a rebound for Gucci to 4% organic growth in 2027 and 5% in 2028. At the group level, the bank projects organic sales growth of 1.7% in 2026, improving to 4.2% in 2027 and 4.9% in 2028.
HSBC trimmed its EBIT estimates by an average of 7% across 2026-28, citing a slower-than-expected recovery at Gucci, which accounts for roughly 59% of group EBIT. The downgrade was not driven solely by operating profit revisions: valuation also played a role. The bank points out that Kering is trading at 26.8 times 2027 price-to-earnings, versus 22.8 times across HSBC's luxury coverage, a premium the analysts called "not particularly attractive."
When concluding the note, the HSBC team said there are "no short-term catalysts" to prompt a more bullish stance and emphasized that management "effectively needs to deliver for investors to build trust in this turnaround." Given the bank's revised forecasts, the adjusted target price and the absence of immediate triggers, the rating was cut to Hold.
Sectors impacted: luxury goods, consumer discretionary, equity markets tracking luxury valuations and investor sentiment.