French fashion designer Kering SA slumped to a seven-year low on worries about demand in China, with the Gucci brand owner among the worst-hit stocks in the recent luxury-sector selloff.
Kering fell as much as 4.3 percent on Monday, the most in about seven weeks, as analysts at Barclays Plc cut their recommendation on the stock to underweight from ‘equalweight.’
The latest decline came even as peers like LVMH and Hermes saw modest rebounds from last week’s rout, which was spurred by worries over demand, largely stemming from Asia.
“Gucci appears particularly hard hit by the Chinese slowdown,” Barclays analysts including Carole Madjo wrote in a note to clients. Consumers in China are being more selective in the current economic environment, focusing on brands with even higher levels of desirability or exclusivity, they said.
While consensus among analysts is for Gucci to report organic growth of 5 percent in fiscal 2025, Barclays sees a risk of Gucci still being in negative territory next year.
Kering’s stock has tumbled 43 percent this year, putting it on course for its worst annual return since the global financial crisis, as the company grapples to turn around the Gucci brand after appointing a new designer. The shares traded down 3.9 percent at €227.15 as of 1:45 PMin Paris, losing more than €1 billion in market value on Monday.
Analysts at RBC Capital also downgraded their rating on Kering on Monday, cutting the stock to sector perform from outperform. Just six analysts now have buy-equivalent ratings, down from a peak of 23 buys in 2022, according to data compiled by Bloomberg. A further 21 analysts currently have hold ratings, while five view Kering as a sell.
By Joe Easton
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