Kering SA

Kalkine’s Global Tariff Report provides fully independent analysis and data-driven analysis of major global sectors affected by tariff changes, evaluating the implications these shifts may have on equity valuations across those industries. The report concentrates on trade-sensitive sectors that typically experience heightened investor scrutiny during periods of tariff uncertainty. It also identifies defensive and countercyclical segments that demonstrate relative resilience or may even outperform, amid disruptions to global trade flows.

As illustrated in the table below, several key sectors in different countries are directly impacted by the recent tariff announcement from President Trump.

• Extension of Tariff Deadline to August 1, 2025: On July 7, 2025, President Donald Trump signed an executive order extending the deadline for imposing "reciprocal" tariffs from July 9, 2025, to August 1, 2025, for most countries, except China. This extension was intended to provide additional time for trade negotiations with multiple nations, including Japan, South Korea, and Vietnam, following a period of intense market uncertainty caused by earlier tariff threats. The decision was based on recommendations from senior officials and aimed to stabilize negotiations while maintaining pressure on trading partners to address trade imbalances.
• Tariff Letters Sent to 14 Countries, Including Japan, South Korea, and Others:
  • On July 7, 2025, Trump announced new tariff rates through letters sent to 14 countries, specifying rates effective from August 1, 2025. Key details include:
  • Japan and South Korea: Both nations, critical U.S. allies in East Asia, face a 25% tariff on all goods exported to the U.S., separate from sector-specific tariffs (e.g., on automobiles and steel). Trump emphasized that these tariffs address "non-reciprocal" trade relationships due to significant U.S. trade deficits with both countries. Additionally, goods transshipped through these countries to evade higher tariffs (e.g., from China) will face the higher tariff rate.
  • Vietnam: A trade deal was announced with Vietnam, setting a 20% tariff on its imports to the U.S., lower than the 46% initially threatened in April 2025. Additionally, a 40% tariff was imposed on goods transshipped through Vietnam to evade higher tariffs. The U.S. secured tariff-free access to Vietnam’s markets, though details of the agreement remain sparse, and Vietnamese negotiators are still finalizing terms.
  • Other Countries: Other nations receiving tariff letters include Malaysia and Kazakhstan (25% tariffs), Myanmar and Laos (40%), South Africa (30%), Thailand and Cambodia (36%), Serbia and Bangladesh (35%), Indonesia (32%), and Tunisia and Bosnia and Herzegovina (30%). These tariffs aim to correct trade deficits and discourage transshipping practices.
• Trade Negotiations and Strategic Developments:
  • Japan: Negotiations with Japan have hit an impasse, with Trump expressing frustration, stating Japan has been "very tough" and "spoiled" in trade talks. Japan’s Prime Minister Shigeru Ishiba expressed regret over the tariff hikes and formed a cabinet task force to pursue a bilateral trade deal that benefits both nations. Japan previously offered to buy more U.S. energy products and defense equipment, but no agreement has been finalized.
  • South Korea: South Korea’s finance ministry vowed to monitor market fluctuations and take “bold action” if necessary, while Acting President Han Duck-soo (prior to the election of President Lee Jae-myung) emphasized negotiations to mitigate the impact of the 25% tariffs, particularly on automobiles and electronics. South Korea proposed manufacturing partnerships and tariff reductions on key exports like autos and steel. A snap presidential election on June 3, 2025, following the impeachment of former President Yoon Suk Yeol, has delayed firm commitments, with new President Lee Jae-myung prioritizing the U.S.-South Korea alliance while advocating pragmatic relations with China.
  • Vietnam: Vietnam’s trade deal with the U.S. was a significant step, with the country offering to drop tariffs on U.S. goods to zero, including on LNG, cars, and ethanol, and approving Starlink’s operations to reduce its trade surplus. This move was seen as a strategic effort to avoid the steeper 46% tariff and position Vietnam favorably in U.S. trade relations. Diplomats were sent to Mar-a-Lago to finalize the deal, indicating Vietnam’s proactive approach.

In May 2025, the US economy exhibited a persistent trade deficit of USD72.00 billion, driven by total imports of USD351.00 billion outpacing total exports of USD279.00 billion, reflecting ongoing challenges in balancing trade amid global economic pressures and recent tariff policies, including a 10% baseline duty and higher tariffs on countries like China (30%) and Vietnam (20%). Goods exports, at USD179.23 billion, underscored strength in manufacturing sectors, while service exports reached USD171.77 billion, highlighting robust demand for US services such as technology and finance. The trade deficit, consistent with prior months, suggests that tariff-driven price increases (e.g., apparel prices projected to rise 27% long-term) may be dampening export competitiveness, particularly for goods facing retaliatory tariffs. However, the service sector’s strong performance mitigates some concerns, supporting economic resilience. The US must navigate these trade dynamics carefully, leveraging domestic production incentives and trade agreements to address the deficit while sustaining export growth in a tariff-heavy environment.

The U.S. economy is currently grappling with significant challenges, including high inflation, supply chain disruptions, and the effects of aggressive monetary policy from the Federal Reserve. Key sectors such as manufacturing, agriculture, and technology are feeling strain, particularly due to their dependence on global supply chains and export markets, with trade policies like tariffs on steel, aluminum, and electronics driving up costs for businesses and consumers alike. Despite these pressures, there’s cautious optimism in some quarters about market stabilization within the next year, though this is tempered by ongoing issues like labor shortages, energy price volatility, and political divisions. The Federal Reserve’s interest rate hikes aimed at curbing inflation—still above target levels—have slowed economic growth, raising recession risks, while strategic efforts such as trade agreements and supply chain diversification remain critical to fostering stability and mitigating prolonged uncertainty across these vital sectors.

Amid elevated Market Volatility and Tariff pressures, Kering SA (OTC: PPRUF) stands out as our defensive pick within the Apparel & Retail Industry, supported by rigorous fundamental and technical research

Kalkine’s Global Tariff Report covers the Investment Highlights, Key Financial Metrics, Risks, Technical Analysis along with the Valuation, Target Price, and Recommendation on the Kering SA (OTC: PPRUF). 

Section 1: Company Overview and Fundamental Insights

1.1 Company Overview:

Kering SA (OTC: PPRUF) is a France-based company that mainly active in fashion group on luxurious branded products. The Group manages the development of a series of renowned Houses in Fashion, Leather Goods and Jewelry: Gucci, Saint Laurent, Bottega Veneta, Balenciaga, Alexander McQueen, Brioni, Boucheron, Pomellato, DoDo, Ginori 1735, as well as Kering Eyewear and Kering Beaute.

1.2 The Key Positives, Negatives, Investment Highlights and Risks

1.3 Top 10 Shareholders:

The top 10 shareholders together form ~56.08% of the total shareholding, indicating concentrated holding. Pinault Family and Causeway Capital Management LLC. hold a maximum stake in the company at ~­­­42.34% and ~2.45%, respectively.

1.4 Key Metrics:

Kering (PPRUF) exhibited a mixed financial trajectory from 2020 to 2024, with revenue from business activities growing at a 4-year CAGR of 5.59%, rising from EUR13,100.2 million in 2020 to a peak of EUR20,351 million in 2022, before declining to EUR17,194 million in 2024, reflecting macroeconomic challenges and reduced luxury demand, particularly in Asia-Pacific. Gross profit followed a similar trend, increasing at a 4-year CAGR of 5.92% from EUR9,509.6 million in 2020 to EUR15,198 million in 2022, but falling to EUR12,681 million in 2024 due to a 14% revenue drop in Q1 FY2025 and ongoing pressures on Gucci’s performance (24% YOY decline). The gross margin improved from 72.59% in 2020 to a high of 76.29% in 2023, driven by premium brand positioning and operational efficiencies, before slightly declining to 73.75% in 2024, impacted by product mix shifts and lower sales volumes. Strategic initiatives, including EUR1.187 billion in real estate divestitures in Q1 FY2025 and leadership changes like Luca de Meo’s appointment as CEO, bolster Kering’s financial flexibility and long-term growth potential, though persistent regional weaknesses and a 55.98% drop in return on equity from its 10-year average highlight risks to profitability amidst a cyclical luxury market downturn.

Section 2: Business Updates and Financial Highlights

2.1 Recent Updates: The below picture gives an overview of the company’s recent activities, such as an announcement regarding dividend distribution.

2.2 Insights into FY2024 Financial Performance:

Section 3: Key Risks, Company Outlook:

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

• PPRUF has generated a return of approx. 24.36% in past three months. On the other hand, a correction of approx. 2.99% in past six months.
• The stock is around the lower end of its 52-week range of USD379.89 and 52-week low price of USD 174.62. Post the announcement of Q1FY25 revenue results the stock has given a return of almost 22.33%, with the current price broken above an important resistance of USD 200- USD 220.
• The price is currently trading between its long-term (200-day) SMA and its short-term (50-day) SMA, with the current RSI of 57.93.

4.2 Fundamental Valuation

Valuation Methodology: Price/ Earnings Per Share Multiple Based Relative Valuation (Illustrative)

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels as on July 07, 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Dividend Yield may vary as per the stock price movement. 

Note 5: Kalkine reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 25-30 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavorable movement in the stock prices.