Kering: Gucci Performance to Drive Turnaround at Luxury Goods Giant

Jean Pierre Verster of Protea Capital Management presented his investment thesis on Kering (France: KER) at Best Ideas 2024.

Thesis summary:

Kering is one of the largest personal luxury goods groups in the world, with a market cap of EUR ~55 billion. The company’s brand houses include Gucci, Saint Lauren, Bottega Veneta, Balenciaga, and Creed.

Kering was founded in 1962 by François Pinault as a timber trading company, and subsequently pivoted to retail, ultimately becoming a pure-play luxury goods group a decade ago.

The Paris-listed shares of Kering returned more than 27% annually from the end of 2013 to mid-2021 but have trended lower since then.

The group’s turnaround hinges to a large extent on Gucci’s performance over the next few years, as well as on economic recovery in China. Gucci’s new creative director, Sabato De Sarno, has an important role to play in Kering’s turnaround. Luxury is timeless, and Jean Pierre believes that Kering will stand the test of time.

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About the instructor:

Jean Pierre Verster is the founder and CEO of Protea Capital Management, an investment management firm headquartered in Johannesburg, South Africa. The firm manages long-only equity portfolios as well as long/short equity hedge funds, investing globally. Jean Pierre serves as an independent non-executive director at Capitec Bank, the largest retail bank in South Africa by number of clients, where he was appointed chairman of the audit committee in 2015 for a 9-year term. Jean Pierre also serves on the Regulation Advisory Committee of the Johannesburg Stock Exchange. He is a regular contributor in South Africa’s financial media across print, radio and television.