The French luxury group Kering has been trying to revitalize its main brand Gucci for years. The company will present its sales figures for the third quarter on Wednesday. It is the first financial release since Luca de Meo joined in September. He came as CEO to get the company back on track.
The publication comes 72 hours after the announcement of the sale of Kering’s beauty division to L’Oréal for four billion euros. The division was only founded two years ago. At that time, the luxury perfume brand Creed was taken over for 3.5 billion euros.
The agreement includes 50-year perfume licenses for the main brands Gucci, Bottega Veneta and Balenciaga. In addition, a partnership is planned “in the form of a 50/50 joint venture that will develop experiences and services,” explained Luca de Meo in an interview with Le Figaro on Tuesday.
The purchase price, to be paid in cash, is intended to help the group, which includes Gucci, Bottega Veneta, Saint Laurent and Balenciaga, reduce debt. These amount to 9.5 billion euros.
For Kering, this is “not a 180-degree turn, but an opportunity to accelerate the development of our brands in the beauty segment. It is good to do it alone, but it is better to do it together, especially with the market leader L’Oréal,” explained de Meo.
“If we put our brands in the hands of L’Oréal, things will really take off,” the CEO is convinced. L’Oréal will pay royalties to Kering for use of the brands. “L’Oréal invests more in media work for its perfumes than we do for our fashion brands. We will benefit from this clout,” he expects.
Kering wants to “lighten the ship” and revitalize the fashion division
Kering’s sales are currently expected to fall by twelve percent to 3.3 billion euros in the third quarter. This emerges from the consensus of Bloomberg analysts.
“There was an urgent need to focus on what we can do,” de Meo told Le Figaro. “The world is moving fast, we have to keep up.” He added: “I’ve always believed that speed is important and we need to catch up some speed.”
The contacts between L’Oréal and Kering began a year ago, long before de Meo joined. However, they intensified when the Italian met Nicolas Hieronimus, the head of L’Oréal, before he took office this summer.
“This transaction will help us lighten the ship and revitalize our fashion brands, especially Gucci,” emphasized de Meo. Implementation is planned for the first half of 2026.
Gucci is the main brand of the luxury group chaired by François-Henri Pinault. It alone generates 44 percent of sales and two thirds of operating profit. However, the brand is going through a difficult phase. In the first half of the year, sales fell by 26 percent to three billion euros.
The partnership with L’Oréal includes “the rights to enter into a fifty-year exclusive licensing agreement for the creation, development and distribution of Gucci perfume and beauty products.” This Agreement begins upon expiration of the current license with the US company Coty.
According to several financial analysts, this license expires in 2028.
“Yves Saint Laurent’s sales in the beauty sector correspond to those in fashion and leather goods,” de Meo emphasized to Le Figaro. In 2024 this was 2.9 billion euros. “It gives you an idea of Gucci’s potential.”
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