Valentino CEO predicts a bleak future for the luxury industry

The luxury goods industry’s woes are mounting: US department stores are struggling, and China is failing to live up to expectations as an engine of growth in the post-pandemic world.

According to Rasheed Mohamed Rasheed, president of fashion house Valentino, in 2022 the sector defied gloomy headlines and grew by up to 20% in some places.

“We entered 2023 with the expectation that luxury would probably grow by 10%,” Rasheed said in an interview with Bloomberg TV. “We have seen very strong signs that the situation will be much worse,” he added.

The bleak outlook is fueling more merger rumors after Kering SA agreed to buy a 30% stake in Valentino in July for €1.7 billion. Tapestry Inc, which owns brands such as Coach and Kate Spade, also agreed to acquire Capri Holdings Ltd, the parent company of Michael Kors, in an $8.5 billion deal last month, and cosmetics company Estée Lauder Cos. It acquired Tom Ford in a deal worth $2.8 billion.

Rasheed, who is also CEO of Qatari investment fund Mayhola, which owns Valentino, said that before the deal with Kering, which has not yet closed, Valentino was planning an initial public offering to create a “more institutional deal” and attract better talent. And the French fashion house Balmain. However, Kering’s investment contributes to both goals.

While Kering is likely to increase its stake in Valentino over the next five years, even with a full takeover, it is also possible that Mayhoola could become a shareholder in Kering, according to Rasheed.

“The goal is more integration,” he said. “But at the same time, broadening the horizon of investing in luxury,” he commented.

Copyright FashionNetwork.com with Bloomberg