Kering Buys 30% Stake in Valentino

Kering Buys 30% Stake in Valentino

Kering and Mayhoola have recently forged a momentous strategic partnership, with Kering emerging as a significant shareholder of the esteemed fashion brand, Valentino. This deal marks a notable expansion of Kering’s fashion operations, accentuating the conglomerate’s return to engaging in substantial transactions within the luxury industry. An option to acquire the entirety of Valentino’s capital by 2028 further underlines Kering’s assertive stance in the collaboration.

The announcement of this agreement comes shortly after a substantial management reshuffle and the revelation of an activist investor’s involvement in Kering. Demonstrating their conviction, Kering has made a bold move by securing a 30 percent stake in Valentino for an impressive 1.7 billion euros, reinforcing their commitment to the luxury market. This development effectively resolves the longstanding speculations surrounding the future of Valentino, the iconic fashion house founded in Rome by Valentino Garavani in 1960. With 211 directly operated stores spanning over 25 countries and boasting remarkable sales of 1.4 billion euros, with a recurring EBITDA of 350 million euros in 2022, Valentino represents a valuable asset for Kering’s portfolio.

In this newfound collaboration, Kering will assume a significant role as a shareholder, securing board representation within the company. Concurrently, Mayhoola, the majority shareholder with 70 percent ownership, will persist in executing its brand elevation strategy, thereby fostering an environment of mutual growth and development.

While Kering’s financial performance reported a 10 percent decrease in net profit during the first half compared to the previous year, notably offset by substantial growth in Asia, the alliance with Valentino is a calculated step towards bolstering the group’s position in the global luxury market. Kering’s renowned cash cow brand, Gucci, experienced moderate organic sales growth as the brand navigates a transitional period, following key leadership departures. Notwithstanding, Kering’s overall group revenues demonstrated resilience, increasing by 2 percent year-over-year to 10.14 billion euros.

In light of the industry’s competitive landscape, Kering’s organic sales growth rate at Gucci pales in comparison to its rival, LVMH Moët Hennessy Louis Vuitton, whose key fashion and leather goods division experienced an impressive 21 percent year-over-year increase in the second quarter. Nonetheless, Kering remains steadfast in its strategic vision and continues to assert its presence through renowned brands like Saint Laurent, Bottega Veneta, and Balenciaga.

François-Henri Pinault, the Chairman and CEO of Kering, expresses deep admiration for Valentino’s remarkable transformation under Mayhoola’s ownership and warmly welcomes this partnership as a platform to further develop the quintessential Italian luxury house. The Chairman emphasizes the brand’s profound association with beauty and elegance, underscoring the collaborative effort led by Jacopo Venturini to continue the strategic journey of elevating Valentino to new heights.

Equally enthusiastic about the alliance, Rachid Mohamed Rachid, CEO of Mayhoola and Chairman of Valentino, acknowledges Valentino’s status as an ultimate authority in Italian luxury and warmly welcomes Kering as a strategic partner in the Maison de Couture’s future development. Rachid lauds Mayhoola’s successful endeavors in fortifying Valentino’s desirability as a luxury brand and anticipates the continued reinforcement of the brand through this next chapter of collaboration with Kering. Rachid expresses eagerness for a fruitful partnership with Kering, not just within Valentino, but also in exploring potential opportunities for joint investments.

In conclusion, the partnership between Kering and Valentino signifies a strategic alignment of two prominent forces within the luxury industry. Kering’s confident acquisition of a substantial stake in Valentino and its option to acquire full ownership by 2028 demonstrate the conglomerate’s bold aspirations for growth and expansion. As both parties move forward with their shared vision, the collaboration is poised to reshape and invigorate the landscape of the luxury fashion market.