Kering, a prominent luxury group based in Paris, has recently reached a noteworthy agreement to acquire a 30% stake in the prestigious fashion house, Valentino, for a substantial cash sum of €1.7 billion ($1.87 billion). This strategic move is part of Kering’s efforts to bolster its position in the high-end fashion market and diversify its portfolio.
The deal also includes an option for Kering to potentially purchase the entire Valentino brand from Qatar’s Mayhoola by the year 2028, signifying a broader partnership between the two companies. The agreement opens up possibilities for Mayhoola to become a shareholder of Kering.
The acquisition comes amid mixed performance for Kering’s flagship brand, Gucci. While luxury companies like LVMH reported significant double-digit growth in sales, Gucci experienced lackluster growth during the second quarter, with only a 1% increase in sales on a comparable basis, falling short of analysts’ expectations.
In response to the challenges faced by Gucci, Kering initiated a management reshuffle, including the departure of veteran Gucci CEO Marco Bizzarri, in an effort to revitalize the brand’s sales performance. The company aims to secure board representation at Valentino, underscoring its commitment to the investment.
Qatar’s Mayhoola, which acquired Valentino in 2012, will still retain a majority of 70% share capital, continuing its successful strategy in elevating the brand. Kering’s move to acquire a stake in Valentino is seen as a strategic move to enhance its profitability and market presence.
Kering recently witnessed a decline in North American retail revenue, and the company’s CEO, Francois-Henri Pinault, expressed that the results fell short of their aspirations, particularly for Gucci. The acquisition of a significant stake in Valentino presents an opportunity for Kering to expand its reach and rejuvenate its premier brand’s performance.
The transaction is expected to be finalized before the end of the year. Valentino, as one of Italy’s most renowned fashion labels, boasts an impressive network of 211 directly operated stores and achieved a revenue of 1.4 billion euros in 2022.
The deal marks a significant milestone in Kering’s pursuit of growth and underscores the company’s commitment to staying competitive in the ever-evolving luxury fashion market. As the acquisition takes shape, industry experts and fashion enthusiasts eagerly anticipate the impact of this strategic partnership on both Kering and Valentino’s future endeavors.