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Kering has reached an agreement to sell its beauty arm to French cosmetics leader L'Oréal for €4 billion ($4.7 billion), marking a pivotal strategic shift for the luxury group and its new chief executive, Luca de Meo.
The sale transfers ownership of high-end fragrance house Creed and long-term beauty and perfume licenses for fashion powerhouses Gucci, Balenciaga, and Bottega Veneta. L'Oréal will hold exclusive development rights for 50 years, with the deal set to take effect once Gucci's current licensing arrangement with Coty expires in 2028.
For L'Oréal, this acquisition represents its largest deal to date, surpassing its $2.5 billion purchase of Australian skincare label Aesop in 2023. The move expands its luxury fragrance portfolio and reinforces its dominance in the global beauty industry.
The divestment follows through on De Meo's early promise to streamline Kering's operations and address its €9.5 billion net debt, which has raised investor concern. Including lease obligations, the company's liabilities exceed €15 billion, adding urgency to a financial reset.
De Meo, who assumed leadership in September, is reversing several of his predecessor François-Henri Pinault's diversification bets. After acquiring Creed in 2023 for €3.5 billion to boost Kering Beauté, the division struggled to gain traction, posting a €60 million operating loss in the first half of 2025.
Analysts say returning to a licensing model may be pragmatic. Bernstein called the sale "a tough but necessary correction," while RBC noted that outsourcing beauty operations will make the business less capital-intensive and free funds for Kering's core fashion houses.
The group has also postponed plans to take full ownership of Valentino and intends to raise cash by selling portions of its real estate portfolio.
For L'Oréal, already producing blockbusters like Yves Saint Laurent perfumes under earlier Kering-linked deals, the purchase deepens ties between two of France's most prominent luxury names. The transaction is expected to close in the first half of 2026, signaling a new era for both conglomerates.
