Kering acquires a 30% stake in Valentino for 1.7 billion euros

Valentino has become part of Kering. The french luxury group has acquired a 30% stake in Valentino for 1.7 billion euros from Mayhoola for investments. Kering, led by François-Henri Pinault, has the option to acquire all of Valentino’s shares by 2028. This deal is a part of the strategic partnership between Kering and Mayhoola, which may result in the Qatar fund becoming a shareholder in Kering. Founded in Rome in 1960 by Valentino Garavani, the maison is one of Italy’s most globally recognized luxury brands. This maison de couture possesses a rich heritage, an upscale luxury positioning anchored in haute couture, and a collection of iconic pieces. Currently, it operates 211 directly owned boutiques in over 25 countries, reporting 1.4 billion euros in sales and 350 million in ebtda for 2022. This strategic partnership will advance the plan to elevate the brand implemented by Valentino ceo Jacopo Venturini, during Mayhoola’s ownership. This ownership has elevated the brand into becoming one of the most esteemed luxury fashion houses in the world.

«I am impressed with the evolution of Valentino under Mayhoola ownership and very delighted that Mayhoola has chosen Kering as its partner for the development of Valentino, a unique Italian house that is synonymous with beauty and elegance», president and ceo Pinault commented. «I am very pleased of this first step in our collaboration with Mayhoola to develop Valentino and pursue the very strong strategic journey of brand elevation that Jacopo Venturini will continue to lead». Kering will become a major shareholder and have representation on the board of directors. Mayhoola will remain the majority shareholder with 70% of the share capital and will continue to pursue its strategy of elevating the brand. “As part of the broader partnership, Kering and Mayhoola will explore potential joint opportunities in line with their respective development strategies,” the French Group specified in a note. Subject to the approval of the relevant competition authorities, the transaction is expected to be completed by the end of 2023.

«Valentino is one of the ultimate Italian luxury authorities and we are very happy to welcome Kering as a strategic partner for the future development of the maison de couture» Rachid Mohamed Rachid, ceo of Mayhoola and chairman of Valentino, added. «Under our stewardship, Valentino has strengthened its foundations as a highly desirable luxury brand and we will keep reinforcing the brand in the next chapter with Kering. We look forward to our partnership with Kering in Valentino and also in other potential opportunities to explore investments together”. In the transaction, Mayhoola for investments was advised by Rothschild & Co while Gianni & Origoni was Kering’s legal advisor.

Kering’s sales increased by 2% to 10.1 billion euros in the first half of fiscal year 2023, with a 2% sales increase in the second quarter. Kering showed good performance in Asia Pacific and Japan, with solid growth in Western Europe, though they faced a decline in sales in North America. Kering’s recurring operating profit was almost 2.74 billion euros for the six months, with a recurring operating margin of 27%. The half-year net income attributable to the Group was 1.78 billion euros. In the first half, the free cash flow from operations, excluding acquisitions and property disposals, remained high at 2.1 billion euros, which is an increase of 4%. «In the first half, we pursued our investments in our houses’ desirability and exclusivity. While engaging in critical forward-looking initiatives, we maintained a high level of profitability,” François-Henri Pinault pointed out. “We also took some decisive steps to expand our footprint in the luxury universe, notably with the acquisition of the famed Creed fragrance house to accelerate the liftoff of Kering beauté (see MFF of June 26). Together with the major organizational changes we announced last week to enhance stewardship of our Houses (see MFF of July 18), as well as the many projects we have already launched over the past few months, the developments of the first half strengthen my confidence in Kering’s future prospects».

Gucci generated revenues of 5.1 billion euros (-1%) during the first half of the year. Directly operated retail sales grew 1% on a comparable basis. However, wholesale revenues decreased by 3%. On the other hand, revenues from the Group’s main brand increased by 1% on a comparable basis during the second quarter. Sales from directly operated stores also increased by 1% due to strong sales of the most exclusive products, and the leather, travel, and women’s collections. Gucci’s recurring operating profit was 1.8 billion euros in the first half of the year, resulting in a recurring operating margin of 35.3%. These figures reflect investments made to advance the fashion house’s strategic initiatives.

Yves Saint Laurent’s sales in the first half were 1.6 billion euros, a 6% increase from the previous year. Direct sales increased by 11% on comparable basis, whereas wholesale revenues decreased by 10%, which is in line with the strategy of streamlining this channel. In the second quarter, sales surged by 7% on comparable basis, propelled by direct retail’s strong performance (+8%), chiefly due to ready-to-wear and leather goods. The parisian fashion house achieved a recurring operating profit of 481 million euros with a recurring operating margin of 30.5% in the first half.

In the first half of the year, Bottega Veneta reported 833 million euros in sales, remaining unchanged on a reported basis and experiencing a 2% increase on a comparable basis. Directly operated retail sales showed a 6% increase and wholesale sales fell 13% on a comparable basis. In the second quarter, house sales grew 3% on a comparable basis with a 7% increase in directly operated retail being the main contributor. Bottega Veneta recorded a half-year operating profit of 169 million euros, resulting in an operating margin of 20.3%. Other fashion houses contributed 1.9 billion euros (-5%) with a marked improvement in their performance from the first to the second quarterly period. All brands contributed to a 9% increase in retail sales in the second quarter. The Asia-Pacific region particularly drove Balenciaga’s recovery. Alexander McQueen’s ready-to-wear line performed well, and Brioni made significant progress. Boucheron, Pomellato, and Qeelin jewelry houses maintained a strong growth trajectory, each recording growth in double digits. The remaining houses earned 224 million euros in operating profit with an operating margin of 12.1% in the first half of the year.

During the last six months, Kering eyewear achieved a record performance. The revenue from the eyewear division reached a record high of 869 million euros, up 51% year-on-year, mainly due to the significant contribution of Maui Jim. Compared to the previous period, the division’s revenue was up 16%. In the second quarter, sales growth remained robust, representing a 21% increase compared to the previous period, attributable to the successful development of the brand portfolio. Kering eyewear’s recurring operating profit for the first half of the year has significantly increased to 186 million euros. Considering the corporate costs of 123 million euros in this period, the operating profit for the Kering Eyewear and Corporate segment was 63 million euros. (All rights reserved)