Company insiders are some of the most informed participants in the market. If they’re buying company stock, it’s often a sign that business performance is strong and that the outlook for the stock is favorable.
In this report, we are going to highlight some interesting insider activity at Kering SA (KER:FP). Kering is a French luxury group that owns a large portfolio of fashion brands. Its brands include Saint Laurent, Gucci, Alexander McQueen, Boucheron, Brioni, and Ulysse Nardin. The company is listed on the Euronext Paris stock exchange and currently has a market capitalization of €84 billion.
Kering: Insider Buying
Our records show that on 23 April, Kering’s Founder, Chairman, and CEO Francois-Henri Pinault bought 15,000 shares at a price of €648.79 per share. This purchase cost the insider approximately €9.7 million. Then, on 27 April, Pinault sold 50,000 put options on the stock. Investors sell put options on a stock when they are bullish on the outlook for that stock.
A Top-Level Insider
Pinault is the definition of a top-level insider. In 2000, he was appointed Deputy CEO of PPR (which later became Kering), responsible for the group’s digital strategy. Three years later, he was named Chairman of Artemis, Kering's controlling shareholder. Then, in 2005, he was appointed Chairman and CEO of Kering. Given this company experience, he is likely to have a very good read on the group’s operations, performance, and future prospects.
Sharp Revenue Rebound in Q1
Kering recently posted a very encouraging first-quarter update. For the quarter, group consolidated revenue was up 25.8% year on year with growth well balanced across the business. Meanwhile, comparable revenue generated by the Luxury Houses’ directly operated networks climbed by 31.8% from the first quarter of 2020 and by 6.3% versus the first quarter of 2019, against a backdrop of store closures in part of the retail network. The company advised that the increase in sales was largely driven by “outstanding momentum” in the Asia-Pacific (up 83%) and North America (up 46%).
During the quarter, Kering enjoyed strong growth in its e-commerce channel, with online sales rising 108%. This drove the penetration of e-commerce to 14% of retail sales. To help boost growth in this channel, the group has built a new global logistics hub in Trecate, in the Piemonte region of Northern Italy which is scheduled to become operational by the end of the second quarter of 2021. This features state-of-the-art automation technology and will help meet demand from e-commerce customers worldwide.
In light of this post-Covid-19 recovery and the strength of the group’s e-commerce division, we see the insider buying here as bullish.