Gucci owner Kering, the luxury group, has agreed to sell its beauty division to L’Oréal for 4 billion euros ($4.66 billion), the biggest deal in L’Oreal history and a major strategic shift for Kering under new CEO Luca de Meo.
Under the agreement, L’Oréal will acquire Kering Beauté, which includes the luxury fragrance line Creed, and will receive an exclusive long-term license to manufacture beauty and fragrance products from Gucci, Bottega Veneta and Balenciaga. The 50-year license agreement will come into effect once existing agreements, including Gucci’s current partnership with Coty, expire around 2028, News.Az reported, citing Reuters.
The sale is DeMeo’s first major step in addressing Kering’s mounting debt, which stood at 9.5 billion euros as of June, along with 6 billion euros in lease debt. As sales of its main brand, Gucci, slumped, investors became increasingly concerned about the company’s balance sheet.
Kering launched a beauty division in 2023 after acquiring Creed for 3.5 billion euros in a bid to diversify beyond fashion. However, the division reported an operating loss of 60 million euros in the first half of 2025, prompting De Meo to reverse one of former CEO François-Henri Pinault’s signature strategies.
Bernstein analysts called the sale a “bitter but necessary pill,” while RBC said a return to a licensing model would be “less capital intensive and more profitable,” freeing up cash for Kering’s core fashion and leather goods business.
Since taking over in September, DeMeo has promised to make “difficult decisions” to streamline operations and reduce debt. Kering has already postponed plans to take full ownership of Valentino and is reportedly selling real estate assets to shore up liquidity.
For L’Oréal, the acquisition represents a significant expansion of the company’s luxury fragrance portfolio, surpassing its $2.5 billion acquisition of Aesop in 2023. The transaction is expected to close in the first half of 2026.
L’Oréal already produces blockbuster perfumes under the Yves Saint Laurent brand, which it acquired from Kering in 2008 for 1.15 billion euros. As part of the new agreement, the companies will also establish a joint venture that will provide exclusive luxury services and experiences for high-end customers.
“L’Oréal is building on its strength in luxury beauty, while Kering is refocusing on fashion,” said Bruno Roland Bernard, a corporate finance and luxury goods management expert at Institut Français de la Mode. “With Kering under pressure, L’Oréal was likely in a better negotiating position.”
News.AZ
