On Sunday, Kering announced in a press release that it was selling its beauty subsidiary, created in 2023, to French giant L'Oréal for €4 billion. The transaction, carried out under the new leadership of Luca de Meo, is expected to be finalized in the first half of 2026 and could alleviate the financial difficulties Kering has been experiencing for several years.
This strategic partnership includes the sale of the Creed fragrance brand, as well as an “exclusive 50-year licensing agreement” for Kering's iconic brands, such as Gucci and Bottega Veneta Beauté, allowing L'Oréal to exclusively manage the creation and distribution of these products. The French beauty giant has already held the license for Yves Saint Laurent fragrances for more than 15 years.
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These brands will now be joined by beauty products and fragrances from Balenciaga and Bottega Veneta. According to analysts, the licensing agreement for Gucci will begin after the current contract with Coty expires in approximately three years.
“The addition of these extraordinary brands perfectly complements our existing portfolio and significantly expands our reach into new, dynamic segments of luxury beauty.” commented Nicolas Hieronimus, CEO of L'Oréal, who is pleased to be able to strengthen his position in luxury beauty.
For his part, Luca de Meo, who recently took up his position as CEO at Kering, explained the reasons that led the group to take this step: "This partnership allows us to focus on what defines us best: the creative power and desirability of our Houses.” However, De Meo wants to refocus on fashion, and until now he had been in the running for a potential buyout of Armani shares. Does this decision herald a new strategic shift, leaving the door open to LVMH? Or, on the contrary, is it a means of financing the Armani buyout? For now, he is simply emphasizing in this press release the urgent need for a debt reduction strategy for Kering, which is suffering from €9.5 billion in debt
He believes that a reorganization of the group is essential, which will streamline brand management to make them more profitable, following the announcement this summer of a staggering 46% drop in profits in the first half of 2025. The figures for the second half of the year will be published on Wednesday, October 22.
While the situation remains gloomy for Kering, it is quite different for L'Oréal, which posted sales of €22.47 billion in the first half of the year, up 1.6% on the previous year. The company's luxury division alone generated €7.65 billion in sales.
The group will publish its third-quarter 2025 results tomorrow after the Paris Stock Exchange closes.
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