Kering Sheds Beauty Arm in Landmark $4.7 Billion L’Oréal Deal to Refocus on Fashion Core

Strategic Realignment in Luxury Sector

In a transformative move that reshapes the luxury beauty landscape, French beauty giant L’Oréal has agreed to acquire Kering Beauté in a monumental $4.7 billion transaction. The deal represents L’Oréal’s largest acquisition to date and establishes a 50-year strategic partnership between the two French luxury powerhouses. This arrangement will see L’Oréal developing beauty and wellness products for Kering’s prestigious fashion houses, including Gucci, Bottega Veneta, and Balenciaga., according to industry developments

Mutual Benefits in Challenging Times

The transaction arrives at a critical juncture for Kering, which has faced significant financial headwinds. The company reported a 12% revenue decline in 2024 to $20 billion, with first-half 2025 results showing a further 16% drop from $10.5 billion to $8.8 billion. For Kering, the sale provides crucial financial breathing room, with proceeds expected to address the company’s substantial $11 billion debt burden carried at the end of June.

L’Oréal CEO Nicolas Hieronimus emphasized the strategic importance, stating this partnership will “further solidify our position as the world’s #1 luxury beauty company and allow us to explore new avenues in wellness together.” The acquisition significantly bolsters L’Oréal’s luxury portfolio following its $2.5 billion purchase of Aesop in 2023., as our earlier report

Leadership and Strategic Shifts

The deal marks one of the first major strategic decisions by newly appointed Kering CEO Luca de Meo, who joined the company just over a month ago after resigning as CEO of Renault. De Meo, known for his turnaround expertise, had signaled his readiness to make “difficult decisions” to address the company’s financial challenges.

Analysts at Bernstein described the move as “a bitter but necessary medicine,” noting that selling Kering Beauté at approximately the same price Kering paid for Creed two years earlier represents a strategic retreat from beauty category ambitions. This contrasts sharply with competitor LVMH’s approach of developing beauty businesses in-house, recently launching Louis Vuitton lipsticks at premium $160 price points.

Portfolio Transformation

The acquisition delivers several prized assets to L’Oréal’s portfolio, most notably the Creed fragrance brand, which Kering acquired in mid-2023 for an estimated $3.8 billion. According to industry reports, Creed generated over $300 million in the year preceding its sale to Kering and represents one of the largest high-end fragrance brands after Estée Lauder’s Jo Malone.

L’Oréal also gains exclusive licensing rights to Kering’s other brands in fragrances and beauty, though Gucci’s license remains with Coty until 2028. The transaction includes establishing a 50/50 joint venture to explore additional business opportunities combining luxury, wellness, and longevity sectors.

Market Dynamics and Future Outlook

The deal highlights the growing importance of fragrance in the luxury beauty sector, which was L’Oréal’s fastest-growing product category last year with 14% growth to $6.9 billion. Kering’s beauty sales had risen 9% in the first half of this year, demonstrating the segment’s potential despite the parent company’s broader challenges.

As outlined in the official announcement, the all-cash transaction remains contingent on French regulatory approvals and is expected to finalize in the first half of 2026. The partnership builds on L’Oréal’s existing successful collaboration with Kering’s Yves Saint Laurent brand, providing a proven framework for future brand development.

Industry consultant Bruno-Roland Bernard characterized the arrangement as a win-win, noting that “L’Oréal enjoys strong momentum in the Luxe division and they must be looking forward to getting hold of the perfume and beauty licenses associated with Kering’s prestigious yet relatively underdeveloped brands.” The deal allows Kering to concentrate resources on revitalizing its core fashion business, particularly the flagship Gucci brand, which saw revenues decline 26% to $3.5 billion in the first half of 2025.

This landmark transaction demonstrates how luxury conglomerates are reevaluating their business models in response to market pressures, with Kering opting to partner with category experts rather than maintain non-core operations. The move signals a strategic pivot toward focusing on fashion fundamentals while leveraging L’Oréal’s established beauty expertise to maximize value from its brand portfolio.

References & Further Reading

This article draws from multiple authoritative sources. For more information, please consult:

• https://www.kering.com/en/news/kering-and-l-oreal-forge-an-alliance-in-beauty-and-wellness/
• https://cosmeticsbusiness.com/kering-reportedly-paid-3-8-billion-for-fragrance-brand-creed-210023
• https://www.kering.com/en/finance/
• https://www.globenewswire.com/news-release/2025/06/16/3100070/0/en/Kering-announces-the-appointment-of-Luca-de-Meo-as-Chief-Executive-Officer.html
• https://www.msn.com/en-us/money/economy/kering-to-sell-beauty-unit-to-l-oreal-for-4-66-billion-to-cut-debt-refocus-on-fashion/ar-AA1ONtxY
• https://www.voguebusiness.com/story/companies/kering-sells-its-beauty-business-to-loreal

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