French luxury group Kering jumped as much as 14% in Paris trading, the biggest intraday move in almost six years, after better-than-expected fourth-quarter sales at its Gucci unit. The UBS Luxury basket (UBXELUX) rose nearly 2%, driven largely by hopes of a turnaround at the luxury house.

Fourth quarter sales showed revenue fell about 10%, slightly better than the Bloomberg Consensus estimate of a 10.4% decline. It was Kering's smallest decline in two years, reinforcing Wall Street analysts' view that trends are stabilizing and the pathway to recovery may be near. This matters because Gucci still accounts for about 60% of Kering's profits, so even a marginal improvement carries outsized weight.

RBC analyst Piral Dadhania told clients results "confirmed modest further improvements," and the focus now shifts to "the extent to which Kering can engineer a return to growth in a still fairly challenging luxury environment."

At UBS, analyst Justinus Steinhorst told clients that Kering's results "boosted hopes of a turnaround," lifting the UBXELUX basket.

The UBS Luxury basket {UBXELUX} is up 1.9% on Kering results after Q4 sales fell less than anticipated, boosting hopes of a turnaround. Positioning exacerbating the move, Kering scored as a 2 sigma crowded short. The Luxury basket scores as a 0.5 sigma crowded short down from neutral at the start of the year.

Jefferies analyst James Grzinic said the results were likely "fractionally" better than the buy side expected. He added the latest numbers "confirm gradually reducing pressures at a time of more supportive industry conditions."

Deutsche Bank analyst Adam Cochrane said the earnings should be enough to remind investors of the "direction of travel," citing a decent sequential improvement from Q3 to Q4.

Cochrane highlighted management's expectation of returning to growth and improving margins, though there was no explicit commentary on the 2026 outlook. He added that valuation already prices in sales and margin recovery, but still leaves some potential upside in the stock.

Here's the earnings snapshot of the fourth quarter (courtesy of Bloomberg):

Comparable revenue -3%, estimate -4.77% (Bloomberg Consensus)

Source: ZeroHedge News