French luxury goods company Kering is struggling with sales at its flagship brand Gucci. In a bid to strengthen its market position, Kering has acquired a 30% stake in prestigious Italian fashion brand Valentino from Qatari investment fund Mayhoola for €1.7bn in cash. In addition, Kering has secured an option for a potential takeover of the entire Italian fashion house over the next five years.

In the midst of a booming fashion industry that has made French company LVMH the most valuable company in Europe, the owner of Gucci is struggling to keep up with its competitors. Kering released its financial results for the first half of 2023, which fell short of analysts' expectations. Interestingly, Gucci accounts for half of the company's total revenue, which rose 2% to €10.1 billion, but operating profit was down 3% to €2.7 billion compared to the same period last year.

Based in France, Kering oversees the growth and management of a prestigious portfolio of fashion, leather goods and jewellery brands. Its major brands include Gucci, Saint Laurent, Bottega Veneta, Balenciaga, Alexander McQueen, Brioni, Boucheron, Pomellato, DoDo, Qeelin as well as Kering Eyewear and Kering Beauté. In 2022, Kering boasted more than 47,000 employees and achieved sales of €20.4 billion. Italian company Valentino was founded in 1960 and later acquired by Qatari investment fund Mayhoola for €700 million in 2012. The brand has been showing good sales, which reached €1.4 billion last year and EBITDA of €350 million. Valentino has a global presence and operates 211 stores in more than 25 countries.

Last month, Kering also bought the prestigious French perfume brand Creed. This was Kering's first step in building its position in perfume with potential future expansion into cosmetics and skincare. The value of the transaction is estimated at EUR 1 to 2 billion.