The future is bright(er) — Upgrade to Market Weight

Research evidence excerpt

The future is bright(er) — Upgrade to Market Weight

FICC Research

Credit Research

30 July 2026

KERING (KERFP)

The future is bright(er) — Upgrade

to Market Weight

We upgrade our rating on KERFP to MW from UW reflecting Karine Elias

our greater confidence in the stabilisation of the model +971 43 621017

karine.elias@barclays.com

following H1 26 results as well as progress towards reducing Barclays Bank, DIFC

leverage. In this note we also downgrade the European High Melissa McCallum, CFA

Grade Retailers sector from UW from MW. + 44 (0) 20 7773 3573 melissa.mccallum@barclays.com

Barclays, UK

Good news comes in threes

Hitting the ground running. Kering's CEO, Luca De Meo, officially began his tenure on 15

September 2025 after having stated on 9 September 2025 (at Kering's AGM) that he was

determined to make tough decisions to slash debt and cut costs at Kering without delay. De Meo

has proven a man of his word, delivering on two key objectives within days:

1. Reducing issuance risks... The next day (10 September 2025), Kering and Mayhoola jointly

postponed the latter's put option on its 70% stake in Valentino from 2026-27 to 2028-29, and

Kering's call option was delayed from 2028 to 2029. We argue that the additional time to

acquire Valentino reduces the financial pressure on Kering, thus allowing management to

focus on debt reduction and the Gucci turnaround.

2. ...and debt levels: On 19 October 2025, Kering announced the sale of Kering Beauté, whose

predominant asset is the House of Creed (c.93% of Kering Beauté's assets according

to Barclays Equity Research estimates. As expected, €4bn in cash was paid to Kering in H1 26

(included in the H1 26 accounts) after which L'Oreal is to pay royalties for the use of its

licensed brands for a period of 50 years.