Short Sellers Surge Against Kering Amid CEO Transition, Sales Declines

Short sellers have increased their bets against Kering to the highest levels in over a decade, intensifying pressure on incoming CEO Luca de Meo as he seeks to turn around the French luxury group. Following de Meo's appointment, which initially boosted Kering's shares by 33%, short positions peaked at 10.7% of the company's free float before easing to around 8%, still significantly higher than competitors like LVMH and Hermès, whose short positions remain below 1%. Kering faces challenges including double-digit sales declines at its major brands Gucci and Saint Laurent, as well as a high net debt of €10.5 billion, which contrasts with the generally cash-rich luxury sector. Additionally, Kering's credit default swaps surged to levels three times higher than its rivals, signaling market concerns over its debt risk. Despite planned measures such as store closures and asset sales, investors remain cautious, awaiting de Meo's strategic vision and tangible improvements to regain confidence. The situation underscores the broader risks posed by shifting consumer trends and heavy borrowing in the luxury market.