Investment Strategist
Kering beats low expectations, and the market rewards signs of stabilisation, not perfection.
Luxury is still a confidence business: brand heat and pricing discipline matter more than cost cuts alone.
Ferrari’s upbeat outlook helps sentiment, but it may say more about the very top end than the whole sector.
Luxury has felt like the party after the music stops. The lights are still on, but fewer people are dancing, and everyone checks the bill.
That matters because luxury has also been one of Saxo’s weaker themes. When a laggard jumps, investors naturally ask the dangerous question: is the worst behind us, or is this just a relief rally in a still-tough market?
Kering’s numbers are not “back to glory”. They are “less bad than feared”. That difference is often worth a lot when a stock has spent months being treated like a turnaround project.
In the fourth quarter, Kering reports sales of about 3.9 billion EUR, down 3% year on year on a comparable basis, beating Bloomberg forecasts for a 5% fall. Gucci sales fall 10%, still the tenth straight quarterly decline, but better than the expected 12% drop.
The more important part is the narrative shift. Chief executive officer (CEO) Luca de Meo calls the recovery “early” and “fragile”, but says momentum improves quarter by quarter and he targets growth and margin improvement in 2026.
The graph below compares actual results versus Bloomberg consensus for revenue and operating margins, division by division. The key visual is whether “Gucci drags everything down” starts to become “Gucci drags less, while other brands hold up”.
Kering also shows it takes the balance sheet seriously. Net debt falls to about 8 billion EUR after last year’s sale of its beauty business and some licences to L’Oréal for 4 billion EUR.
Luxury is not just about wealth. It is also about mood, timing, and how “desirable” a brand feels right now. That makes the sector look predictable in hindsight and messy in real time.
Here are three mechanics that explain why the fashion part of luxury can swing harder than people expect.
First, price rises work until they do not. Kering itself says a burst of price hikes alienates some shoppers, especially the “aspirational” buyer who wants one big purchase a year. When that buyer steps back, volumes drop and the brand needs time to rebuild trust.
Second, “brand heat” is a real economic variable. Gucci’s recent style era fades, the replacement does not land, and sales and margins fall fast. A new creative direction can help, but it rarely fixes things in one quarter. Think of it like turning a big ship: the wheel moves first, the ship follows later.
Third, the margin maths bites during a reset. Stores, staff, marketing, and product development cost money today. If sales are flat or falling, operating margins compress. Kering’s 2025 operating income is 1.63 billion EUR, and the group operating margin is about 11%, far below where it sits a few years ago.
The chart below puts the market’s frustration in one glance. It shows Kering’s 1-year share performance versus the Saxo Bank Luxury theme basket. Even after sharp rebounds, the sector can still be “down from the roof” rather than “back on the roof”.
Ferrari also reported earnings on 10 February 2026, and the market liked what it heard. The share price reaction is strong: Ferrari traded at 308 EUR, up more than 9% from the prior close of 281.60 EUR.
Ferrari guides for 2026 earnings before interest, taxes, depreciation and amortisation (EBITDA) of over 2.93 billion EUR, versus 2.77 billion EUR in 2025.
It is tempting to read that as “luxury is back”. The safer takeaway is narrower: the very top-end of luxury demand looks resilient when supply stays tight and pricing power stays credible. Ferrari’s order book visibility stretches into late 2027, which is a different world from fashion, where trends change faster and discounting is always one bad season away.
So, is the worst behind for luxury companies? It is still an open question. Kering and Ferrari point in a better direction, but they also highlight how split the sector can be: ultra-high-end scarcity versus fashion cycles and brand rebuilds.
The first risk is creative execution. If new collections do not reignite demand, the “early, fragile” phase can stay fragile for longer than markets tolerate.
The second risk is the consumer. If higher interest rates, weak confidence, or softer tourism continue, fashion-led luxury can face more promotions, which usually hurts margins before it helps volumes.
The third risk is balance-sheet patience. Kering has made progress on net debt, but turnarounds often cost money before they earn it back.
If the next quarters show sequential improvement at Gucci, treat it as evidence, not a one-off headline.
If margins stabilise while sales improve, that is a stronger signal than sales alone.
If discounting rises across the sector, assume the recovery takes longer and volatility stays high.
Keep luxury exposure sized for swings, and spread risk across business models, not just brand names.
Luxury is a strange market: it sells confidence, then gets valued on confidence, then loses confidence when confidence wobbles. Kering’s quarter does not prove the cycle is over. It does show something investors have missed: stabilisation can be investable long before a full recovery shows up in the numbers.
The share jump is less about celebration and more about relief. The bar has been low, and Kering clears it with a smaller sales decline, early signs of improvement at Gucci, and a balance-sheet move that buys time. Ferrari’s upbeat outlook adds a little calm at the very top-end. The key question stays the same: can “fragile” turn into durable?
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