Luxury group Kering will sell its beauty division to L’Oréal for €4 billion (about £3.5 billion), marking new CEO Luca de Meo’s first major move since pledging ‘to get the group back to the place it should be’ when appointed in September.
At the heart of the agreement, which was announced last night, L’Oréal will acquire Kering’s historic Creed fragrance brand, and secure a 50-year exclusive licence to create beauty and fragrance products for Kering’s fashion houses, including Bottega Veneta, Alexander McQueen and Balenciaga. The transaction is expected to be paid in cash at closing, expected in the first half of 2026.
The deal also strengthens L’Oréal’s existing Kering portfolio, which includes the Yves Saint Laurent beauty licence (which the group has held since 2008), and gives it the opportunity to take over the Gucci licence once its current agreement with Coty expires in 2028.
[See also: Can Francesca Bellettini restore Gucci’s exclusivity?]
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‘This strategic alliance marks a decisive step for Kering,’ said de Meo, commenting on the sale.
The move comes as the company faces significant financial pressures: as of June, 2025, Kering’s net debt amounted to €9.5 billion, on top of €6 billion in long-term lease liabilities.
This was one of the main points de Meo made when he became CEO, noting that fixing the group’s debt will require ‘clear and strong’ decisions. He also said at the time, ‘We must continue to reduce our debt, reduce our costs. And where necessary, rationalise, reorganise, reposition some of our brands,’ adding: ‘These decisions won’t always be easy.’
The markets reacted positively to the move, sending Kering’s share price up by more than five per cent this morning.
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This announcement not only marks de Meo’s first big move at the head of the company but also represents a significant shift in strategy for Kering, which is now focusing on fashion by handing over its cosmetics and fragrances divisions.
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The move aligns with his priority to revitalise key brands, especially Gucci, which accounted for 44 per cent of Kering’s revenue in 2024 and has faced challenges regaining momentum since the departure of its star designer in late 2022.
‘Joining forces with the global leader in beauty, we will accelerate the development of fragrance and cosmetics for our major Houses, allowing them to achieve scale in this category and unlock their immense long-term potential, as did Yves Saint Laurent Beauté under L’Oréal’s stewardship,’ de Meo said in a statement yesterday.
The Italian executive takes charge at a tough time for the luxury industry. The Chinese market is still weak due to the property crisis, and in the United States, trade tensions under President Donald Trump are hurting consumer confidence and squeezing the profits of Europe’s major luxury brands.
