Kering Streamlines Portfolio with $4.7 Billion L’Oréal Beauty Deal
Paris — In a strategic shift aimed at refocusing its luxury portfolio, French fashion group Kering has agreed to sell its beauty division to L’Oréal for €4 billion ($4.7 billion).
The move marks a significant milestone for newly appointed CEO Luca de Meo, signaling a renewed emphasis on Kering’s core fashion business while working to reduce its growing debt.
The landmark deal — L’Oréal’s largest acquisition to date — will see the world’s leading cosmetics maker acquire Creed, Kering’s flagship fragrance brand, along with long-term exclusive licenses to develop beauty and fragrance products for Gucci, Bottega Veneta, and Balenciaga.
The 50-year licensing arrangement will take effect once existing contracts, such as Gucci’s current deal with Coty expiring in 2028, conclude.
A Strategic Refocus for Kering
The divestment follows a challenging period for Kering, which had ventured into the beauty sector in 2023 through its €3.5 billion purchase of Creed.
The group’s beauty arm, Kering Beauté, had been created to diversify revenue streams and reduce reliance on Gucci, which continues to account for a major share of profits. However, the division reported a €60 million operating loss in the first half of 2025.
By offloading its beauty unit at a valuation close to its initial investment, Kering is now focusing on financial discipline and stabilizing growth.
The company’s net debt stood at €9.5 billion at the end of June, with an additional €6 billion in lease obligations — figures that prompted analysts to call for decisive action.
“This transaction reflects a pragmatic approach by Kering’s management,” said analysts at Bernstein. “While it may be difficult to part with an ambitious venture, it is a necessary step to restore balance and protect long-term shareholder value.”
Since taking the helm in September, Luca de Meo has emphasized the importance of “hard choices” to strengthen Kering’s financial foundation.
The sale of Kering Beauté represents the first major move under his leadership, complementing ongoing measures such as the postponement of the Valentino acquisition and plans to sell stakes in real estate assets.
De Meo’s approach underscores a return to Kering’s core expertise in soft luxury — fashion, leather goods, and accessories — sectors where the group has historically excelled.
Analysts at RBC described the transition back to a licensing model as “less capital intensive, more stable, and potentially higher margin,” aligning with industry trends and investor expectations.
A Power Move for L’Oréal
For L’Oréal, the acquisition consolidates its dominance in the high-end beauty market. The deal gives the company access to a portfolio of prestigious luxury brands, expanding its reach beyond existing partnerships such as Yves Saint Laurent Beauté, which it acquired from Kering in 2008.
“L’Oréal’s Luxe division is thriving, and the addition of these brands represents a natural evolution,” said Bruno-Roland Bernard, a Paris-based consultant and professor at Institut Français de la Mode.
“With limited competition for assets of this scale, L’Oréal has seized an ideal opportunity to strengthen its leadership.”
The acquisition is expected to close in the first half of 2026, pending regulatory approvals. Industry observers see it as a calculated step for both sides: Kering gains breathing room to refocus on fashion excellence, while L’Oréal deepens its footprint in luxury fragrance and cosmetics.
A Win-Win Transaction
The transaction not only streamlines Kering’s balance sheet but also reinforces cooperation between two of France’s most iconic global companies. The two groups are also establishing a joint venture to develop premium services and experiences for luxury clients — signaling continued collaboration beyond the sale.
As De Meo steers Kering into a new era of strategic focus, the sale of Kering Beauté stands out as a move that balances financial prudence with long-term ambition.
Meanwhile, L’Oréal’s bold expansion further cements its position as the world’s beauty leader, setting the stage for a new chapter in Europe’s luxury landscape.
