The French luxury goods group Kering, which has been in trouble for several years, is selling its beauty division to its domestic competitor L’Oréal. The selling price is four billion euros. The proceeds are expected to enable the company to reduce its debt and continue its turnaround.
The business medium Wall Street Journal had already reported on the possible sale on Saturday. Kering is handing over its beauty division, founded in 2023, to L’Oréal, the global market leader in cosmetics. The division also includes the luxury perfume brand Creed, which was acquired in 2023 for $3.5 billion (3.2 billion euros).
The transaction is scheduled to close in the first half of 2026.
The agreement, which both parties confirmed in a statement on Sunday evening, also includes “50-year licenses for Kering’s unique brands.” These include Gucci, Bottega Veneta and Balenciaga. L’Oréal has owned the license for Yves Saint Laurent since 2008.
The partnership includes, among other things, “the rights to conclude an exclusive license agreement with a term of fifty years,” according to the statement. It includes the development and distribution of Gucci perfume and beauty products. The new partnership begins after the expiry of the current license agreement with Coty and takes into account the Kering Group’s obligations under the existing license agreement. According to a statement from analysts at HSBC, the license with the American company Coty expires in 2028.
Part of the agreement is also an “exclusive partnership in the form of a 50/50 joint venture”. This joint venture aims to develop experiences and services that “combine L’Oréal’s innovation with Kering’s deep knowledge of luxury customers.”
“The acquisition of these exceptional brands perfectly complements our existing portfolio,” said Nicolas Hieronimus, CEO of L’Oréal, in the statement. “It significantly expands our presence in new, dynamic segments in luxury beauty. Gucci, Bottega Veneta and Balenciaga are all outstanding couture brands with enormous growth potential.”
“A decisive step for Kering”
“This strategic alliance is a decisive step for Kering,” emphasized CEO Luca de Meo in the statement. “The partnership gives us the opportunity to concentrate on what makes us special: our creative strengths and the appeal of our properties.”
The announcement comes just a month after Luca de Meo took office. His task is to restructure the company, which has been suffering from the difficulties of its leading brand Gucci for several years. Gucci alone generates 44 percent of sales and two thirds of operating profit, but is still in a difficult phase.
“The current situation strengthens our determination to act immediately,” de Meo said on the day of his appointment on September 9th. “We need to continue deleveraging and, where necessary, rationalize, reorganize and reposition some of our brands.”
In July, Kering reported a 46 percent decline in net profit for the first half of the year to 474 million euros. Sales fell by 16 percent to 7.6 billion euros, and debt amounted to 9.5 billion euros.
The sale of the beauty division to L’Oréal is intended to help the group reduce its debt. The four billion euros are “payable in cash upon completion of the transaction planned for the first half of 2026,” according to the statement. L’Oréal will also pay Kering royalties for use of the brands.
The cosmetics group also owns the beauty license for the Valentino fashion house. Kering acquired a 30 percent stake in Valentino in 2023, with an option to fully acquire it in 2028.
L’Oréal, in turn, published half-year sales in July that rose by 1.6 percent to 22.5 billion euros. The luxury division’s half-yearly sales increased by one percent to over 7.65 billion euros.
The cosmetics company was also mentioned in Giorgio Armani’s will in September. In it, he called on his heirs to sell his empire in the medium term to a giant such as LVMH, L’Oréal or EssilorLuxottica. L’Oréal has held the Armani license for perfumes and cosmetics since 1988.
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