Kering acquires 30% of Valentino as Gucci sales decline.
Kering acquires 30% of Valentino as Gucci sales decline.
Kering Bolsters Luxury Portfolio with Valentino Stake Acquisition
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Paris, July 27 – French luxury conglomerate Kering has announced a strategic investment in the esteemed Italian fashion label, Valentino. As part of the deal, Kering will acquire a 30% stake in Valentino, purchasing it from the Qatari investment fund Mayhoola for a staggering 1.7 billion euros ($1.87 billion) in cash. The agreement also includes an option for Kering to acquire the entire share capital of Valentino by 2028.
Kering’s decision to invest in Valentino is part of a broader partnership with Mayhoola, which may result in Mayhoola becoming a shareholder in Kering. This move comes at a crucial time for Kering, as the company has been grappling with sluggish sales at its flagship brand, Gucci. The luxury group recently reported a modest 3% growth in sales for the second quarter, falling short of market expectations. In comparison, other luxury giants like LVMH experienced double-digit growth, with a 21% increase in sales in their fashion and leather goods division.
Acknowledging the underperformance of Gucci, Kering’s CEO, Francois-Henri Pinault, expressed his disappointment, stating that the results were “short of our ambitions and potential.” In response, Kering initiated a significant management reshuffle, which included the departure of Gucci’s longtime CEO, Marco Bizzarri. The company hopes that these changes will pave the way for the revival of Gucci’s sales.
Despite the challenges faced by Gucci, Kering remains optimistic about its future prospects. The acquisition of a stake in Valentino further strengthens Kering’s luxury portfolio and aligns with the company’s objective of expanding its brands’ market presence. As part of the agreement, Kering will have representation on Valentino’s board.
Valentino, renowned as one of Italy’s most prestigious fashion labels, boasts 211 directly operated stores and achieved a revenue of 1.4 billion euros in 2022. Mayhoola, the majority shareholder, will retain a 70% stake in the company and continue executing its successful brand elevation strategy.
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While Kering’s North American retail revenue declined by 23% in the second quarter, CFO Jean-Marc Duplaix attributed this to the complexities of the luxury market in the region. Nonetheless, Kering remains committed to navigating these challenges and revitalizing its brands.
The acquisition of the Valentino stake is expected to be finalized before the end of the year, further bolstering Kering’s position within the luxury industry. Through this strategic move, Kering aims to revitalize Gucci’s performance while expanding its brand portfolio with the addition of Valentino.
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