Paris, October 20, 2025 — In a landmark deal shaking up the global luxury and beauty industries, French luxury conglomerate Kering, owner of brands such as Gucci, Saint Laurent, and Balenciaga, has agreed to sell its beauty division to cosmetics powerhouse L’Oréal for €4 billion ($4.7 billion). The strategic move marks the first major decision by Kering’s new CEO Luca de Meo, as he seeks to streamline the company’s operations and tackle its mounting debt.
Deal Overview
Under the terms of the agreement, L’Oréal will acquire Creed, the high-end fragrance house Kering purchased in 2023 for €3.5 billion, along with long-term (50-year) exclusive fragrance and beauty licenses for Kering’s fashion labels Bottega Veneta and Balenciaga.
Additionally, once Coty’s existing agreement with Gucci expires—expected in 2028—L’Oréal will also take over Gucci’s fragrance and beauty license, further expanding its already dominant position in the luxury cosmetics segment.
This acquisition is L’Oréal’s largest in its 116-year history, surpassing its $2.5 billion purchase of Aesop in 2023, underscoring the company’s aggressive expansion into the high-end beauty and fragrance market.
Strategic Shift Under Luca de Meo
The sale signals a dramatic strategic pivot for Kering under Luca de Meo, who took over as CEO in September 2025. De Meo’s decision to offload the beauty unit, only two years after its establishment, highlights a pragmatic approach to stabilizing Kering’s financial health and refocusing the group on its core fashion business.
At the end of June 2025, Kering reported €9.5 billion in net debt, alongside €6 billion in long-term lease liabilities, raising concerns among investors and credit analysts.
De Meo has openly committed to “rationalising and reorganising” Kering’s portfolio, even if it means reversing decisions made under his predecessor, François-Henri Pinault. The sale of the beauty division, therefore, represents a decisive move to reduce leverage, boost liquidity, and restore investor confidence.
Analysts at Bernstein commented,
“Selling Kering Beauté at roughly the same price it paid for Creed two years ago is bitter but necessary medicine.”
Kering’s Struggles in Beauty and Fashion
Kering’s foray into beauty was initially aimed at reducing reliance on Gucci, which contributes the majority of the group’s profits. However, the beauty division failed to gain momentum, reporting an operating loss of €60 million in the first half of 2025.
At the same time, Gucci’s revenue fell by 25% year-on-year due to slowing demand in the Chinese market, amplifying pressure on the group’s finances and stock performance.
Kering has also postponed plans to acquire Valentino and is exploring real estate divestments to further reduce its debt burden.
What’s in It for L’Oréal
For L’Oréal, this acquisition is a major strategic win. The world’s largest cosmetics company continues to dominate both mass-market and premium segments, but this deal significantly strengthens its luxury fragrance and beauty portfolio.
The inclusion of Creed, one of the most prestigious names in luxury perfumery, adds to its growing portfolio alongside Yves Saint Laurent Beauté, Lancôme, and Giorgio Armani Beauty.
Bruno-Roland Bernard, consultant and adjunct professor at the Institut Français de la Mode, noted:
“L’Oréal enjoys strong momentum in its Luxe division and must be looking forward to securing Kering’s underdeveloped but prestigious brands. This deal offers long-term growth potential with limited competitive pressure.”
According to Bernstein, fragrances accounted for about 14% of L’Oréal’s 2024 revenues, with double-digit growth in the second quarter of 2025—highlighting the brand’s sustained success in this category.
Financial and Market Impact
Following the announcement, Kering’s shares surged 4.7%, while L’Oréal’s stock rose 1.4%, reflecting investor optimism on both sides.
For Kering, the proceeds will help reduce debt and fund future restructuring, while L’Oréal gains access to some of the most coveted fashion house beauty licenses in the world—positions that can drive strong returns for decades.
Industry Implications
This transaction also reshapes the competitive landscape of the luxury beauty sector. L’Oréal not only cements its leadership but also edges closer to monopolizing luxury fragrance licenses from top-tier fashion houses.
Meanwhile, Kering’s exit from beauty underscores a renewed focus on revitalizing its fashion portfolio, addressing stagnation at Gucci, and investing in brand reinvention.
The deal is expected to close in the first half of 2026, pending regulatory approvals. Kering was advised by Evercore and Centerview Partners, while L’Oréal worked with Bank of America and Rothschild & Co.
Conclusion
The sale of Kering Beauté to L’Oréal marks a turning point for both companies:
- For Kering, it’s an act of financial discipline and strategic clarity under new leadership.
- For L’Oréal, it’s a bold expansion that strengthens its grip on the global luxury beauty market.
As De Meo reshapes Kering’s identity and priorities, and L’Oréal cements its dominance in high-end cosmetics, this deal will likely go down as one of the most defining transactions in the luxury industry of the decade.
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