PARIS, July 28 — French luxury group Kering announced yesterday it will take a stake in Italian fashion house Valentino as it released results that underperformed rivals thanks to stagnating sales at Gucci.

The deal to acquire a 30 per cent stake in Valentino from its owner Mayhoola opens the possibility of the Qatari investment fund becoming a shareholder in Kering even as the luxury group spoke about the need to invest in its fashion houses.

The deal for the 30 per cent stake for €1.7 billion (US$1.87 billion) in cash, which is expected to close by the end of the year, also includes an option to completely buy the Italian fashion house through 2028.

"The transaction is part of a broader strategic partnership between Kering and Mayhoola, which could lead to Mayhoola becoming a shareholder in Kering,” the companies said in a joint statement.

This strategic partnership "will further support the brand elevation strategy implemented by Valentino CEO Jacopo Venturini under the ownership of Mayhoola, which turned it into one of the most admired luxury houses in the world,” they added.

Meanwhile, Kering reported its net profits slid 10 per cent in the first half of the year to €1.79 billion.

While overall revenue rose by 2 per cent to €10.1 billion, they dipped by 1 per cent at Gucci.

Earlier this month Kering announced a shake-up at Gucci, replacing the long-time chief executive with a confident of Kering chief executive and owner Francois-Henri Pinault.

Kering has underperformed its rivals in recent years as the luxury industry has seen phenomenal growth.

LVMH, the world’s top luxury group, on Tuesday posted a 15-per cent increase in first-half sales while profits jumped by 30 per cent. — AFP