European Luxury Extends Losses After Kering Warning on Lower Profit
By Adria Calatayud
Shares in most European luxury groups extended losses logged earlier in the week after Gucci owner Kering warned it expects profit to keep falling in the second half amid a tough environment for the industry.
At 0850 GMT on Thursday, shares in Kering dropped 7.1% to EUR279.25, taking the stock's fall in the year to date to 30%. Shares in Cartier parent Richemont were down 2.4% and Hermes International--which reports later on Thursday--shed 1.7%. Smaller peers Brunello Cucinelli and Burberry Group lost around 2%.
The falls came after broad-based losses in luxury stocks on Wednesday when sector heavyweight LVMH Moet Hennessy Louis Vuitton reported first-half results that were weaker than expected and stoked investors' concerns about a downturn in China.
Shares in LVMH were down 0.5% on Thursday following a 4.7% fall on Wednesday.
Kering said late Wednesday that it expects profit to keep falling in the second half, a move analysts see as a sign its flagship brand could be headed for a prolonged turnaround.
The company forecast that its recurring operating profit for the second half could fall by around 30% compared with the same period last year. It also reported revenue and profit for the first half that missed analysts' expectations.
This dashed hopes that the first half would mark the bottom for Kering in terms of profitability as it pursues a Gucci revamp, analysts at Jefferies wrote in a note to clients. The brand's turnaround seems to be delayed by weakness in foot traffic, a phenomenon that could affect other luxury companies, Jefferies said.
Write to Adria Calatayud at adria.calatayud@wsj.com
(END) Dow Jones Newswires
July 25, 2024 05:13 ET (09:13 GMT)
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