That’s dashing hopes of another resilient year for the sector, which in 2022 defied gloomy headlines to grow by as much as 20% in some locations, according to Rachid Mohamed Rachid, chairman of fashion house Valentino.“We came into 2023 with a prediction that luxury will probably grow 10%,” Rachid said in an interview with Bloomberg TV. “We have seen very strong signs that it will be much worse.”

The gloomier picture is fueling more talk of consolidation after Kering SA agreed to buy a 30% stake in Valentino in July for €1.7 billion. Tapestry Inc., owner of brands including Coach and Kate Spade, also agreed to acquire Michael Kors parent Capri Holdings Ltd. in an $8.5 billion deal last month, and Cosmetics firm Estée Lauder Cos. has taken over Tom Ford in an $2.8 billion transaction. Before the Kering deal, which has yet to close, Valentino was planning for an initial public offering to create a more “institutional arrangement” and attract better talent, said Rachid, who is also chief executive officer of Qatar’s Mayhoola, the investment fund that owns Valentino and French fashion house Balmain. Kering’s investment, however, helps with both those goals.While Kering will probably take a bigger stake in Valentino over the next five years — potentially even with a full takeover — it’s also possible that Mayhoola will become a Kering shareholder, according to Rachid. “The intention really is to get more integrated together,” he said. “But at the same time, to expand the horizon of the luxury investment.”