Kering announced a 10 percent decline in third-quarter revenue on Wednesday. This is the first financial release since Luca de Meo took office in September as the new general manager, tasked with getting the luxury group back on track.
Sales fell to 3.4 billion euros – a decline that was less severe than in previous quarters. However, according to de Meo, Kering “continues to perform below the market average,” which strengthens its “determination to act at all levels of the company,” he said in a press release.
This publication comes just a few days after the announcement of the sale of the beauty division to L’Oréal on the night of Sunday to Monday for four billion euros. This division was created just two years ago after Kering took over the luxury perfume brand Creed for 3.5 billion euros.
The deal includes fifty-year perfume licenses for core brands Gucci, Bottega Veneta and Balenciaga, as well as a 50/50 joint venture partnership aimed at developing new “experiences and services”.
The sale is intended to help the group, which owns Gucci, Bottega Veneta, Saint Laurent and Balenciaga, reduce its current debt of 9.5 billion euros.
For Kering, said Luca de Meo in an interview with Le Figaro, “this is not a one hundred and eighty degree U-turn, but a path of development [seiner] “It’s good to do this alone, but better to do it together – especially with the market leader L’Oréal,” he explained.
“If we put our brands in the hands of L’Oréal, it will take off,” continued de Meo. L’Oréal will pay Kering royalties for the use of the brands. “L’Oréal invests more in the media presence of its perfumes than we do for our fashion brands. We will benefit from this clout,” he added.
“Lighten the boat” and revitalize the fashion business
“It was urgent to focus on what we can really do,” said Luca de Meo in Figaro. “The world is moving fast – we have to keep up.” He added that he was “always convinced that the speed of the game is crucial and we need to pick up the pace a bit.”
The first contacts between L’Oréal and Kering began a year ago, before de Meo took office, but accelerated after the Italian manager met L’Oréal boss Nicolas Hieronimus in the summer before his official start.
“This transaction will help us lighten the boat and revitalize our fashion brands – especially Gucci,” emphasized de Meo. The deal is scheduled to close in the first half of 2026.
Gucci, the most important brand of the luxury group chaired by François-Henri Pinault, accounts for 44 percent of group sales and two thirds of operating results. But the brand is still in a difficult phase.
In the third quarter, sales fell 18 percent to 1.3 billion euros – an improvement on the first and second quarters, in which sales fell by 24 percent and 27 percent, respectively.
The partnership with L’Oréal includes the right to enter into an exclusive fifty-year licensing agreement for the development, manufacture and distribution of Gucci-branded perfume and beauty products. This comes into force after the current license with the US company Coty expires.
According to several financial analysts, this license expires in 2028.
“Yves Saint Laurent’s sales in the beauty sector are now comparable to those in the fashion and leather goods segment, i.e. 2.9 billion euros in 2024,” Luca de Meo told Le Figaro. “It gives you an idea of the potential that lies within Gucci.”