Analysts at Bernstein have lowered their expectations for luxury group Kering, warning that the turnaround at its flagship brand Gucci is taking longer than previously thought. In a recent note, the bank revised its forecasts and now expects Gucci's sales to return to growth only by the end of 2026, later than earlier estimates.
What's changed at Gucci?
Bernstein cut its forecast for Gucci's retail sales growth in the second quarter of 2026 by three percentage points, now expecting a 4% decline at constant currency. While that marks an improvement from the prior quarter's 9% drop, the bank says the pace is still too slow to signal a true revival. It also expects an additional one percentage point hit from the Middle East conflict, dragging full-year 2026 Gucci sales to a 2.9% decline.
Because Gucci is Kering's biggest profit driver, a slower rebound directly affects the group's bottom line. Bernstein lowered its 2026 earnings per share forecast to €6.13 from €6.66, and its 2027 forecast to €9.86 from €10.04. The bank now sees growth returning by the end of 2026, pushing the timeline for a meaningful earnings recovery into 2027.
Why the delay matters for investors
For investors, the key takeaway is that Kering's valuation now depends more heavily on a late-2026 pickup at Gucci translating into a strong 2027. Bernstein kept its price target on Kering at €220, but with lower earnings forecasts, the implied valuation multiple has shifted. At €220, the stock would trade at about 36 times 2026 earnings and about 22 times 2027 earnings. That puts more pressure on the company to deliver a convincing rebound next year.
The next big reality check comes on July 28th, when Kering reports first-half results. That report will give investors fresh data on whether sales and margins are improving fast enough to match Bernstein's revised timetable. If the sequential improvement story stays on track, it could support the stock. If not, the current price target may come under scrutiny.
Broader context for luxury stocks
Kering is not alone in facing headwinds. The luxury sector has been under pressure from slowing demand in China, a key market for high-end brands, and geopolitical tensions that affect consumer sentiment and travel patterns. Gucci, in particular, has been navigating a brand refresh under creative director Sabato De Sarno, but the transition has taken longer than many expected.
For everyday investors, the lesson is that even iconic brands can face prolonged slumps. When a company's biggest profit driver struggles, the entire group feels the impact. Watching earnings reports and analyst revisions can help investors gauge whether a turnaround is on track or if more patience is needed.
For more on how analyst moves can signal shifts in expectations, see our coverage of Bernstein boosting Ryanair's target and BofA's forecast for Straumann.
What to watch next
Beyond the July 28th results, investors will be watching for any updates on Gucci's product pipeline and marketing strategy. The brand's ability to regain momentum in key markets like China and the US will be critical. Bernstein's revised forecasts suggest that the road to recovery is longer than hoped, but the sequential improvement in sales trends offers a glimmer of hope.
For those invested in Kering or considering it, the key question is whether the company can deliver on its late-2026 growth target. Until then, the stock's valuation will likely remain tied to expectations for 2027 earnings. As always, it pays to stay informed and watch for the next data point.
