Gucci-Owner Kering Nears “Point Of Stabilization” After Brutal Luxury Downturn

Gucci-Owner Kering Nears "Point Of Stabilization" After Brutal Luxury Downturn

Gucci-Owner Kering Nears “Point Of Stabilization” After Brutal Luxury Downturn

Gucci owner Kering SA reported fourth-quarter earnings that showed a modest improvement following a prolonged downturn in the luxury market that rippled through Asia and the West in recent years. Some Wall Street analysts are asking if the worst is over. 

Kering reported a 12% drop in fourth-quarter revenues to 4.39 billion euros—just slightly above Bloomberg Consensus’s forecast of 4.24 billion euros. Analysts had expected revenues for the quarter to slide by around 13.3%. 

Gucci, which contributes about two-thirds of Kering’s profit, recorded a 24% drop in revenue on a comparable basis during the quarter, exceeding the 22% estimate. Sagging Chinese sales have hit the high-end fashion group.

Here’s a snapshot of Kering’s fourth-quarter earnings (courtesy of Bloomberg):

Comparable revenue -12%, estimate -13.3% (Bloomberg Consensus)

  • Gucci revenue on a comparable basis -24%, estimate -22%

  • Yves Saint Laurent revenue on a comparable basis -8%, estimate -10.2%

  • Bottega Veneta revenue on a comparable basis +12%, estimate +4.91%

  • Other Houses revenue on a comparable basis -4%, estimate -12%

  • Eyewear & corporate revenue on a comparable basis +10%, estimate +6.14% 

Revenue EU4.39 billion, -12% y/y, estimate EU4.24 billion

  • Gucci revenue EU1.92 billion, -24% y/y, estimate EU1.95 billion

  • Yves Saint Laurent revenue EU770 million, -7.8% y/y, estimate EU738.2 million

  • Bottega Veneta revenue EU480 million, +11% y/y, estimate EU452.1 million

  • Other Houses revenue EU818 million, -4.1% y/y, estimate EU786.3 million

  • Eyewear & corporate revenue EU434 million, +19% y/y, estimate EU405 million

Kering CEO Francois-Henri Pinault told investors the group had reached a “point of stabilization, from which we will gradually resume growth.”

“Gucci will come back. I have absolutely no doubts about this,” Pinault told analysts on an earnings call. 

RBC Capital Markets analyst Piral Dadhania told clients, “We believe the worst may be behind us, although the timing for a potential reset remains unclear at this stage.” 

Dadhania added that today’s earnings should reassure investors that “trends are modestly improving against low sentiment.”

Kering’s 2024 results are symptoms of a global luxury downturn:

Comparable revenue -12%, estimate -11.6%

Revenue EU17.19 billion, -12% y/y, estimate EU17.01 billion

Recurring operating income EU2.55 billion, -46% y/y, estimate EU2.48 billion 

  • Gucci recurring operating income EU1.61 billion, -51% y/y, estimate EU1.59 billion

  • Yves Saint Laurent recurring operating income EU593 million, -39% y/y, estimate EU599.5 million

  • Bottega Veneta recurring operating income EU255 million, -18% y/y, estimate EU244.3 million

  • Other Houses recurring operating loss EU9 million vs. profit EU212 million y/y, estimate loss EU49.2 million

Recurring operating margin 14.9% vs. 24.3% y/y, estimate 14.7%

Ebitda EU4.67 billion, -29% y/y, estimate EU4.16 billion

Ebitda margin 27.1% vs. 33.6% y/y, estimate 25.1% * Net income EU1.13 billion, -62% y/y, estimate EU1.31 billion

Dividend per share EU6, estimate EU6.53

Here are the key takeaways from the earnings results provided by other Wall Street analysts (courtesy of Bloomberg):

Morgan Stanley (equal-weight)

  • Kering saw a weak end to the year but at the top line, its performance was roughly in line, says analyst Edouard Aubin

  • Its operating income should come as a relief to the market given worries about the impact of operating deleverage on the group’s profitability

Jefferies (hold)

  • Momentum improved in the fourth quarter as expected, writes analyst James Grzinic, adding that “more positively minded souls” will focus on what Kering called a “highly encouraging” performance at Gucci’s new leather goods and iconic lines

  • Notes there is no explicit guidance for 2025 or reference to current trading

Morningstar (buy)

  • Analyst Jelena Sokolova notes that all brands in the group improved performance sequentially apart from Gucci, which remains the biggest problem

  • Lack of Gucci improvement doesn’t come as a big surprise, given the departure of designer Sabato De Sarno and weak brand momentum trends online

Bloomberg Intelligence

  • Kering’s 2024 results show signs of stabilization in terms of the pace of declines across its brands, including Gucci, writes analyst Deborah Aitken

Kering shares in Paris jumped as much as 6.7%. Shares are down 73% since peaking in mid-2021. 

Meanwhile, Kering rivals, including LVMH Moët Hennessy Louis Vuitton SE, the world’s largest luxury group, have also been hit by a broad luxury slowdown. However, Swiss luxury group Richemont reported possible green shoots last month

Bloomberg Markets Live reporters Kit Rees and Michael Msika asked last month if “luxury bulls jump the gun”?

We suspect so, but the sector has encouraging signs of stabilization—conditions that would attract the bottom-feeder investor. 

Tyler Durden
Tue, 02/11/2025 – 07:20

Ukraine’s Traumatized Troops Could Pose A Security Threat To All Of Europe

Ukraine's Traumatized Troops Could Pose A Security Threat To All Of Europe

Ukraine’s Traumatized Troops Could Pose A Security Threat To All Of Europe

Authored by Andrew Korybko via substack,

The EU would do well to indefinitely suspend Ukrainians’ visa-free access to the bloc after martial law ends.

Outgoing Polish President Andrzej Duda told the Financial Times that a crime wave could sweep across Europe after the Ukrainian Conflict ends if that country’s PTSD-afflicted troops spill into the bloc and engage in organized crime like their Soviet predecessors from the 1980s Afghan War did after 1991. The Ukrainian Foreign Ministry swiftly reacted by denying that they could pose any such threat, pointing to how they didn’t between 2014-2022, and claiming that they’re actually a security asset for Europe.

Their three points are superficial though since traumatized troops anywhere in the world are much more prone to deviant behavior, the latest phase of the conflict has objectively been much more traumatizing than the prior one, and this therefore makes its veterans a security liability for Europe at the very least. Compounding the aforementioned risks is the fact that the US failed to track billions of dollars’ worth of weapons sent to Ukraine according to Reuters so some of these likely ended up on the black market.

The threat that Duda just drew attention to is thus a very credible and urgent one that should be taken seriously by all European stakeholders. This doesn’t mean that they need to foot part of the bill for Ukraine’s security and development like he strongly implied in his interview, but just that they should at the minimum indefinitely suspend its citizens’ visa-free access to the bloc otherwise traumatized veterans armed with illegally obtained US weapons might turn his warning into a prophecy.

The floodgates will open if the US succeeds in brokering a ceasefire like it’s arguably aiming to do for the purpose of prompting Ukraine into lifting marital law and therefore legally setting the stage for the next elections. Military-age Ukrainian males will then be able to freely leave to the EU unless the bloc indefinitely suspends their visa-free access. The arguments in favor of these restrictions far outweigh those against them from the perspective of European and Ukrainian national interests.

Europe already received several million low-wage laborers so it doesn’t need to risk the credible security consequences of accepting traumatized Ukrainian veterans just to obtain some more, while Ukraine needs as many of its refugees to return as possible after the conflict ends in order to rebuild. It goes without saying that Ukraine also can’t afford another large-scale exodus and thus has an interest in requesting that the EU indefinitely suspends their visa-free access to the bloc if it won’t do so on its own.

Keeping the border open to them would be a recipe for mutual disaster. There’s also the possibility that Poland takes the lead in unilaterally refusing to admit military-aged Ukrainian males after their country’s martial law is lifted just like it unilaterally decided to suspend asylum rights for some migrants last year. 

That could trigger a legal crisis within the bloc, especially if others like Hungary and Slovakia follow suit, which would be a worst-case political scenario at the time when the EU would need unity on Ukraine.

Poland’s ruling liberal-globalists, who are closely aligned with EU-leader Germany, might not have the political will to do that though but Hungary might and it could justify this based on Duda’s warning. Even if no member state makes such a dramatic move, some of their citizens might angrily agitate for this if their compatriots fall victim to PTSD-afflicted Ukrainian veteran criminal gangs. The issue deserves to be closely monitored since it’s a credible security risk that could have outsized consequences for the bloc.

Tyler Durden
Mon, 02/10/2025 – 23:25

Fiat Alternatives Are A Thing…

Fiat Alternatives Are A Thing...

Fiat Alternatives Are A Thing…

Via Charts and Parts substack,

Before we dive in – the LBMA situation remains a critical event and is still unfolding. While this missive expands on #COTY (Call of the Year), the reality at the LBMA makes everything we’ve been discussing even more urgent. If you haven’t read our breakdown of the LBMA de facto default, you can find it here.

INTRO

The central bank trading of gold tells a story, one marked by four distinct phases since Nixon closed the gold window on August 15th, 1971. We’ve recently entered this fourth and most pivotal phase. It is the biggest, the fastest, and most importantly, it is here now. This is our time.

We got a little lucky with our 2024 #COTY (Call of the Year) which focused on fiat alternatives. The S&P500 and NASDAQ both had a great 2024, meanwhile, our fiat alternatives of gold, silver, and Bitcoin kept pace/outperformed, depending on who’s counting.

As much as we’d like to call for a repeat performance and a COTY 2.0 for 2025, we’ll instead share a new perspective. Pure fiat was born in earnest in 1971 when Nixon untethered the dollar from gold, leaving the global reserve asset trading on faith. Let’s take a step back and view this experiment from afar.

PHASE 1 – THE INVENTION OF FIAT

New systems start with curiosity. Central banks watched and handicapped, and they bought and sold small amounts of gold with no real pattern (see chart on page 1). They tinkered and digested the new rules of engagement.

This period was also marred with major swings in inflation. The CPI fluctuated wildly, spiking into the teens and then dropped to the low single digits several times before settling down in the mid-1980’s. This paved the way for a major decline in rates.

PHASE 2 – THE NEW GAME

A new paradigm was born. The 40-year cycle of rising rates appeared to be over. Rates steadily declined and lifted all boats, as most assets surged higher: bonds, stocks, oil, and real estate. This was a wake-up call for central banks. As asset prices climbed, central banks allocated out of gold, which was left behind on a performance basis.

Lower rates became the cornerstone to financialization — making money from money. Lower borrowing costs made it cheaper to borrow and easier to lever up. This was the new game and gold got left in the dust. After a parabolic spike high in the early 1980s, gold drifted sideways to down for 25 years.

Central banks seemed to have it all figured out, and they were net sellers of gold for over 20 years. This period also marked the start of global coordination and interconnectedness with central bank policies, rates, and markets beginning to work in unison. Through the lens of global central bank policy, the world was becoming smaller.

PHASE 3 – THE SHOT ACROSS THE BOW

The party had to end at some point. The Great Financial Crisis (GFC) in 2008 sent shock-waves around the world. The US housing market bust was felt globally, and the air came out of global markets.

But the bigger surprise was the central bank’s response to this breakage. This is when central bank “printing” and government bailouts took on a life of their own. Temporary bailout programs became permanent, the handouts grew in size and scope, and crazy concepts like negative yields were born.

Bailout nation was the new norm. The good news: the system was saved. The unfair news: those making these decisions and closest to the money spigot won the most. The reality: this was the very definition of inflation (creation of currency units), and central banks had just finished 20 years of selling their gold.

It was now time to flip the script. Goliath and the powers that be were happy to play along, but they also knew this was an inflationary game. With that, the global central banks started to buy their gold back. Since the “temporary” $700 billion GFC bailout, the US has gone through a myriad of additional bailouts, programs, twists and turns to keep the system afloat. Like any drug addict, each round of remedies required a bigger dose to have material impact.

PHASE 4 – OH SHIT

The QE experiment came with an “oh shit” moment. It became clear that the printer was the only tool in the kit. Every market hiccup and bank collapse came with the same response – more fiat currency poured into the system — moar inflation.

To make matters worse, The Fed ramped up buying its own bonds…with freshly minted currency. This circular operation repeated regularly, making it clear these guys were playing for keeps. The Fed’s buying of their own bonds kept a lid on rates, as debts and deficits climbed. The entire QE experiment has suppressed rates in an ever-expanding, debt-fueled world, creating an astonishing divergence (lower rates and higher debts) that defies every rule, concept, and shred of logic in financial markets.

The real kicker was the freezing and seizing of Russian sovereign reserves. This was the ultimate “oh shit” moment. Rates and market manipulation was bad enough, but this one had a different feel. It’s one thing to press limits with our printing press, but it’s an entirely new game to steal.

All bets are off. BRICS membership is growing, new competing currency ideas are emerging, and there’s no attempt to slow or manage the US spending, debts, or deficits. The global central bank buying of gold has gone into overdrive.

BITCOIN – A SHORTER STORY

Bitcoin was invented at the scene of the crime. It emerged during the GFC and has charted its own adoption curve. Early bitcoin adopters were fighting the bad actors. New rules, regulations, education, investments, and resources evolved in the public eye.

Institutional adoption has begun, and we are even seeing bitcoin embraced at the sovereign level (Bukele in El Salvador). More importantly, bitcoin witnessed the same “oh shit” moment, sparking a fresh rally. Since November 2022, bitcoin is up over 500%. Rest assured – the central banks are watching closely.

SILVER – THE BASTARD CHILD

Silver is one part industrial, one part currency/precious metals, and one part chaos. There’s little transparency in the silver markets, it is impressively small relative to gold and other major asset classes, thus easy to manipulate.

“WallStreetBets” initiated a silver squeeze in early 2021, fresh on the heels of the GME (Game Stop) battle they had vs. Goliath. The results were mixed. The price reaction was muted, but it was a wake-up call for the asset (silver) in general. At Charts & Parts, we view silver as ground zero for the paper vs. physical fight. We believe the silver market is fractionalized (not enough physical silver to go around), much like our US dollar currency system. This is the basis for our hypothesis in Silver Heist, summarized below:

A Silver Heist hypothesizes a scenario where manipulation and fraud in the precious metals market allow Goliath to seize control of physical silver, while paper silver futures settle in cash. We’ve already seen paper markets break down: in 2020 the oil market broke to the downside and oil futures plummeted to negative $30, and in 2022, nickel futures snapped to the upside and gained 250% in just two days, with exchanges stepping in to cancel trades – proving how far we have drifted from free and fair markets. The lack of transparency in the silver market, frequent and blatant paper smashes, and the extreme paper-to-physical leverage all signal that A Silver Heist is not just possible but increasingly likely.

CONCLUSION

The fiat alternative asset class is real, and it appears to be doing what it should. Gold, silver, and bitcoin are proving to be effective hedges against currency risks. The story makes sense, and the confirming action supports it. With a gnarly catalyst like a freeze and seize of sovereign reserves coupled with an inflation problem, this asset class just got a lot more interesting.

Currency systems do not change overnight, and one can argue that it is healthy to have competing currencies. We’ll watch the action and enjoy the ride, as we enter the “suddenly” part of the story.

Tyler Durden
Mon, 02/10/2025 – 17:40

Incoming Polar Blast Sends EU NatGas To Two-Year High As Stockpiles Dwindle

Incoming Polar Blast Sends EU NatGas To Two-Year High As Stockpiles Dwindle

Incoming Polar Blast Sends EU NatGas To Two-Year High As Stockpiles Dwindle

European natural gas prices surged to a two-year high as new weather models forecast an incoming cold snap across Northwest Europe this week, expected to linger through early next week. Another driver in the rally has been the bloc’s dwindling NatGas inventories, which remain well below critical seasonal averages, heightening supply concerns ahead of spring. 

The price of the Dutch TTF, the benchmark European NatGas, climbed as much as 5.4% on Monday to 58.75 euros a megawatt-hour – the highest level since February 2023. 

According to Bloomberg data, weather models forecast that average temperatures across Northwest Europe will begin sliding this week and reach a low of 29F by early next Tuesday. The average temperature for the region this time of year is around 40F.

The cold blast will increase NatGas demand and further drain stockpiles on the continent, which are already below 15-year averages. As of Saturday, EU NatGas storage facilities were about 49% full.

The risk of the European Union entering the spring with very low gas inventories has increased in the last couple of weeks,” said Arne Lohmann Rasmussen, chief analyst at Global Risk Management, who Bloomberg quoted. 

Lohmann noted, “Not only has the front month spiked, but we have also seen a rise in 2026–2027 calendar prices.”

Traders also watch the risks of a broadening tariff trade war between President Trump and Brussels. On Sunday, Trump said he would soon introduce a 25% tariff on all steel and aluminum imports into the US.

French Foreign Minister Jean-Noel Barrot responded to Trump’s tariff threat, indicating the bloc should not hesitate to defend its interests. 

“Of course… This is already what Donald Trump did in 2018, and we responded. We will again respond,” Barrot said. 

In recent months, Trump has told Brussels to purchase more US LNG… 

Trump could act as the LNG marketer-in-chief,” Anne-Sophie Corbeau, a global researcher at Columbia University’s Center on Global Energy Policy, said in a recent webinar. However, it remains to be seen how successful he will be in selling more LNG to Europe amid tariff wars. 

Since Russia invaded Ukraine in early 2022, Europe has been rejiggering its LNG supplies from Moscow to the US.

The EU may purchase more US LNG to satisfy Trump to resolve any trade disputes. 

Tyler Durden
Mon, 02/10/2025 – 07:20

Senate GOP Proposes Constitutional Amendment To Limit Size Of Supreme Court

Senate GOP Proposes Constitutional Amendment To Limit Size Of Supreme Court

Senate GOP Proposes Constitutional Amendment To Limit Size Of Supreme Court

Authored by Matthew Vadum via The Epoch Times,

Republicans in the U.S. Senate proposed a new constitutional amendment on Feb. 7 that would prevent federal lawmakers from increasing the number of justices—currently set at nine—on the U.S. Supreme Court.

The new joint congressional resolution, the Keep Nine Amendment, was introduced after Democrats in the previous Congress proposed a series of measures to boost the number of justices and enforce ethics standards at the nation’s highest court. Republicans at the time criticized the legislation.

Congressional Democrats have been demanding ethics reforms in recent years as reports of justices not publicly disclosing gifts have surfaced. They have also grown increasingly incensed by Supreme Court rulings they disagree with on issues such as abortion, gun rights, affirmative action, environmental policy, and the power of the administrative state. Republicans have countered that efforts to regulate the court are unconstitutional and motivated by partisan animus.

The current limit of nine justices was established by the federal Judiciary Act of 1869. The number has not changed since then. Supreme Court justices are nominated by the sitting president and confirmation requires a simple majority vote by the Senate.

Amending the U.S. Constitution is difficult. Article V of the Constitution provides that an amendment can move forward only if it is approved by a two-thirds vote of both houses of Congress or by two-thirds of states participating in a special constitutional convention. It must then be ratified by the Legislatures of three-fourths of the states to become part of the Constitution.

The resolution states that the amendment would become effective if it is ratified “within seven years after the date of its submission for ratification.”

The Democrats’ “court-packing scheme would erase the legitimacy of the Supreme Court and destroy historic precedent,” Sen. Chuck Grassley (R-Iowa), chairman of the Senate Judiciary Committee, said in a statement.

“The Court is a co-equal branch of government, and our Keep Nine Amendment will ensure that it remains independent from political pressure.”

Co-sponsor Sen. Ted Cruz (R-Texas), said the amendment is needed to check Democrats’ “efforts to undermine the integrity of the Court.”

He said lawmakers on the other side of the aisle want “to use the Court to advance policy goals they can’t accomplish electorally.”

Among other co-sponsors of the amendment are Sens. John Cornyn (R-Texas), Mike Lee (R-Utah), Bill Cassidy (R-La.), Jim Banks (R-Ind.), and Deb Fischer (R-Neb.).

Several bills have been introduced in Congress in recent years to expand the court beyond nine justices.

In September 2024, Sen. Ron Wyden (D-Ore.) unveiled legislation to add six justices to the Supreme Court, raising the total number of members to 15.

“The Supreme Court is in crisis and bold solutions are necessary to restore the public trust,” Wyden said.

In May 2023, Sen. Ed Markey (D-Mass.) introduced legislation to raise the cap on justices to 13.

“Our most fundamentally held freedoms are under attack from an illegitimate, far-right United States Supreme Court,” Markey said. “And if we fail to act, it will only get worse.”

The Epoch Times reached out for comment to the Democrat minority on the Senate Judiciary Committee. No reply was received by publication time.

Tyler Durden
Sun, 02/09/2025 – 22:45

WATCH: President Posts Super Bowl Videos of Crowd Cheering for Him, Booing Taylor Swift

WATCH: President Posts Super Bowl Videos of Crowd Cheering for Him, Booing Taylor Swift

Trump took to his Truth Social with video of the cheers he and Ivanka got alongside the boos pop star Taylor Swift suffered at the Super Bowl.

The post WATCH: President Posts Super Bowl Videos of Crowd Cheering for Him, Booing Taylor Swift appeared first on Breitbart.

Trump: DOGE To Analyze Pentagon Spending After 7th Failed Audit

Trump: DOGE To Analyze Pentagon Spending After 7th Failed Audit

Trump: DOGE To Analyze Pentagon Spending After 7th Failed Audit

President Donald Trump has directed Elon Musk and the Department of Government Efficiency (DOGE) to audit the Pentagon, after the Defense Department failed its seventh audit in a row.

During an interview with Fox News‘ Bret Baier set to air before the Super Bowl, Trump said he was directing DOGE to investigate both the Department of Education and the Pentagon.

“We’re going to find billions, hundreds of billions of dollars of fraud and abuse,” Trump said.

On Friday, Trump said during a press conference with Japanese Prime Minister Shigeru Ishiba that he was directing DOGE to investigate “Pentgon, education, just about everything,” adding that he thinks Musk will find “a lot” of waste, fraud and abuse.

“Sadly, you’ll find some things that are pretty bad, but I don’t think proportionally you’ll see anything like we just saw,” Trump said, referring to USAID – where the new administration has placed 97% of the staff on leave. Last week, Trump said that billions of dollars have been stolen by USAID.

Reviewing the Pentagon will be no small task for an agency which sees roughly $800 billion flow through it, and has never managed to pass its own financial audits with the exception of the Marine Corps.

The Pentagon employs nearly 3.3 million service members and civilians.

Musk, who has been appointed as a “special government employee,” is one of Trump’s key advisers, who has set a goal for DOGE to cut up to $2 trillion in federal expenses by July 2026.

Last week, DOGE claimed that it had managed to save over $1 billion by slashing contracts related to Diversity, Equity and Inclusion (DEI), through halting “the hiring of people into unnecessary positions, the deletion of DEI, and stopping improper payments to foreign organizations,” as The Burning Platform noted on Sunday.

On Saturday, Musk said that DOGE and the US Treasury Department have agreed to new anti-fraud measures aimed at preventing tens of billions of dollars in fraudulent government entitlement payments each year, including the following:

Require that all outgoing government payments have a payment categorization code, which is necessary in order to pass financial audits. This is frequently left blank, making audits almost impossible.

All payments must also include a rationale for the payment in the comment field, which is currently left blank. Importantly, we are not yet applying ANY judgment to this rationale, but simply requiring that SOME attempt be made to explain the payment more than NOTHING!

The DO-NOT-PAY list of entities known to be fraudulent or people who are dead or are probable fronts for terrorist organizations or do not match Congressional appropriations must actually be implemented and not ignored. Also, it can currently take up to a year to get on this list, which is far too long. This list should be updated at least weekly, if not daily.

The above super obvious and necessary changes are being implemented by existing, long-time career government employees, not anyone from @DOGE. It is ridiculous that these changes didn’t exist already!

Yesterday, I was told that there are currently over $100B/year of entitlements payments to individuals with no SSN or even a temporary ID number. If accurate, this is extremely suspicious.

When I asked if anyone at Treasury had a rough guess for what percentage of that number is unequivocal and obvious fraud, the consensus in the room was about half, so $50B/year or $1B/week!!

This is utterly insane and must be addressed immediately.

Treasury Secretary Scott Bessent recently defended DOGE’s actions at Treasury – telling Bloomberg in an interview with Bloomberg that the DOGE team is made up of highly trained professionals and “not some roving band running around doing things,” possibly in reference to claims by critics that DOGE has embraced and is applying the adage “move fast and break things,” which is part of the Silicon Valley start-up culture of being innovative, nimble, and disruptive.

 

Tyler Durden
Sun, 02/09/2025 – 16:55