French luxury group Kering, which is struggling to revive sales at its star brand Gucci, said on Thursday it was buying a 30 percent stake in Italian fashion label Valentino from Qatari investment fund Mayhoola for 1.7 billion euros ($1.87 billion) in cash.

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The agreement includes an option for Kering to purchase the whole of Valentino's share capital no later than 2028.

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

The French luxury group missed market forecasts for second-quarter sales, eking out growth of just 3 percent and continuing to lag rivals as it seeks to turn around business at Gucci, including by recently overhauling its management.

Overall sales came in at 4.96 billion euros ($5.45 billion), at constant rates, falling below analyst expectations for a 6 percent increase, according to a Visible Alpha consensus, with Gucci sales up by 1 percent over the period.

This compares with double-digit growth from other luxury companies, including larger rival LVMH, which reported a 21 percent rise in sales of its fashion and leather goods division, home to Dior and Louis Vuitton earlier this week.

Kering's North American retail revenue fell 23 percent in the second quarter, chief financial officer Jean-Marc Duplaix said, adding that it remains "a more complicated market for luxury”.

Kering boss Francois-Henri Pinault said the results were "short of our ambitions and potential, notably at Gucci". The group last week announced a significant management reshuffle, including the exit of veteran Gucci CEO Marco Bizzarri, aimed at reviving the brand's sales.

Kering said it will have board representation at Valentino. Mayhoola, which bought Valentino in 2012, "will remain the majority shareholder with 70 percent of the share capital and will continue to execute on the successful brand elevation strategy”.

The 30 percent stake purchase is expected to be completed before the end of the year, Kering said. Valentino, one of Italy's most famous fashion labels, has 211 directly operated stores and booked revenue of 1.4 billion euros in 2022.

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(Edited by : Vivek Dubey)