The stock performance of Hermès and Kering has diverged dramatically in 2026, with Kering's shares plummeting by 20% while Hermès has seen a robust 20% gain. This significant spread highlights the contrasting investor sentiment towards the two luxury giants, especially as both prepare to release their second-quarter results.
Kering, which reports on July 28, is grappling with ongoing concerns about its turnaround strategy for Gucci, its largest brand. Despite a slower sales decline for Gucci in the second quarter (down 3% compared to a 14% drop in the previous quarter), analysts remain cautious. Deutsche Bank notes that an improvement in Gucci's sales growth excluding currency effects in 2026 seems less optimistic due to limited improvement in the US and significant year-over-year declines in China. UBS anticipates that Kering's second-quarter results may not fully alleviate concerns for its 2026 outlook, which faces increasing doubts from Barclays regarding its attainability. Overall, Kering's net profit for the first half of 2026 plunged by over 60% to $189 million, and while second-quarter sales saw a 2% comparable growth, the company did not provide specific financial forecasts for the full year, citing an uncertain geopolitical and macroeconomic environment.
Conversely, Hermès, reporting on July 29, has maintained a strong market position despite some challenges. Jefferies, while cutting its price target for Hermès to $2,000 from $2,400 due to mixed trends in China and a weaker-than-expected first quarter, reiterated a "Buy" rating. This reflects the broader confidence in Hermès' long-term growth driven by affluent consumers, particularly in Asia and the United States. Although first-quarter organic sales growth surprised investors at 5.6% due to wholesale weakness and soft Chinese demand, the Americas posted strong 17.2% growth. Jefferies expects second-quarter organic revenue growth of 6.9%, driven by an 11% increase in leather goods and 3.5% in non-leather categories. The brokerage also highlighted encouraging signs such as a recovery in Chinese quota spending for handbags, improved Birkin auction premiums, and a 50% year-over-year surge in US Google search interest for the brand in Q2.
Both companies' results are anticipated in the last week of July, with LVMH reporting on July 27, Kering on July 28, and Hermès on July 29. The wider luxury sector has experienced a slowdown, partially attributed to the Middle East conflict, with LVMH's shares down 28.4%, Hermès down 22.6%, and Kering down 19.12% in the first part of 2026. Analysts generally do not expect an "sparkling" earning season, with HSBC projecting a deceleration in comparable growth to 4.3% in Q2 for the sector. However, UBS is more optimistic, forecasting 6% comparable growth in Q2 for the sector, up from 4% in Q1, hoping that an acceleration in revenue growth coupled with current valuations will help restore market confidence.
