Retail Therapy: EU Consumer Sector Specialist Commentary

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Retail Therapy: EU Consumer Sector Specialist Commentary

go back to growth algo in H2. The

Q2 previews (see Celine's note here) was taken as somewhat soft, with group numbers looking alright, but the moving parts still

not where the market would like to be to get more bullish. Most of the conversations I had on the name this week were skewed to

the negative side, with investors seeing the recent re-rating as unwarranted and potentially offering a good entry point for a new

short.

#7. Kering. I do have a bullet on previews further below, but Kering deserves a bullet all to itself: shares -7% this week post

previews (see Chiara's here) as investors were expecting improving top line momentum to drive upgrades to EBIT. What we saw,

however, was a "re-calibration" of margins through H1 and H2, but high SG&A investments in the turnaround meant limited

changes to FY cons expectations. We are now back to debates on whether or not there is further downside to expectations, and if

KER should be a short again.

#8. Essilux. Can anyone make sense of EL share moves? We've spent a good amount of time at the trading desk in the last few

weeks trying to square directional as well as intraday moves, and could not find plausible explanations aside from small snippets

of news, which - to be honest - all felt like the tail wagging the dog. The amount of questions from investors who are equally

puzzled does make me think we are not missing anything. While the drivers behind the continued weakness remain a mystery (at

least to me), I am happy to see this is not at all going unnoticed. Increasing incomings on the name and investors are more and

more trying to understand how de-risked H1 expectations are, especially for margins (see all thoughts from Chiara in her preview

here).