PARIS — French luxury group Kering announced it will sell its beauty division to L’Oréal for €4 billion (about $4.6 billion), in what both companies described as a landmark partnership between two of France’s global leaders in luxury and beauty.
Under the agreement, L’Oréal will acquire Kering’s House of Creed, one of the world’s most prestigious fragrance brands, and obtain 50-year exclusive licenses to develop and distribute beauty and fragrance products for Gucci, Bottega Veneta, and Balenciaga, once Kering’s current deal with Coty expires in 2028.
The transaction, expected to close in the first half of 2026, represents L’Oréal’s largest-ever acquisition and a strategic shift for Kering as new CEO Luca de Meo aims to refocus the group on its fashion and jewelry divisions amid a slowing global luxury market.
“This strategic alliance makes a decisive step for Kering,” said de Meo. “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. Together, we will also venture into new frontiers of wellness, combining the unrivalled expertise of L’Oréal with our unique luxury reach. This partnership allows us to focus on what defines us best: the creative power and desirability of our Houses.”
De Meo, who took over as chief executive earlier this year after a successful turnaround at Renault, said the deal is the first of several major steps he plans to take to strengthen the group’s core fashion business. “The urgency is to focus on the things where we have a critical size and skills,” he told the Financial Times. “That will help me lighten the boat and be able to focus on the relaunch of fashion brands. As soon as I saw that I had this opportunity, I tried with Nicolas [Hieronimus, CEO of L’Oréal] to work so that we could conclude the deal as quickly as possible. And you’ll see others.”
The partnership will also establish a strategic committee to coordinate development across Kering’s fashion brands and L’Oréal’s beauty expertise, as well as jointly explore the wellness and longevity sector — an area both companies describe as having “enormous untapped potential.”
Nicolas Hieronimus, chief executive of L’Oréal Groupe, said the alliance strengthens L’Oréal’s status as the global leader in luxury beauty. “Creed is one of the fastest-growing players in the niche fragrance market,” he said. “Gucci, Bottega Veneta and Balenciaga are exceptional couture brands with enormous potential for growth. The addition of these extraordinary brands will perfectly complement our existing portfolio and significantly expand our reach into new, dynamic segments of luxury beauty.”
Hieronimus added that Creed will be positioned within L’Oréal Luxe, focusing on craftsmanship and heritage. “Through Creed, we will establish ourselves as one of the leading players in the fast-growing niche fragrance market,” he said. “We see opportunities to almost triple Creed’s annual revenues to €1 billion fairly quickly.”
Industry analysts said the transaction is mutually beneficial. For Kering, the sale will help reduce its net debt, which was €9.5 billion ($11 billion) in June, while providing it with room to revive Gucci, whose sales have declined sharply since 2023 due to a slowdown in China and changing consumer tastes. For L’Oréal, the move secures long-term access to some of the most recognizable names in luxury fashion, strengthening its dominance in high-end beauty.
“Obviously, having the opportunity, when it is legally possible, to recover the Gucci brand was one of our motivations,” said Hieronimus. “When you look at the positioning of Gucci in this segment, there is room for improvement. The potential to grow its beauty revenues in line with its fashion success is immense.”
UBS analyst Zuzanna Pusz said the sale could reduce Kering’s debt ratio from 3.1 times EBITDA to roughly twice that figure, calling it “a financially sound move that may outweigh impairments from Kering’s recent beauty acquisitions.”
Kering acquired Creed in 2023 for about €3.5 billion, meaning the deal will also allow it to recoup and build on that investment. “I’ve always believed that speed is important in modern business,” de Meo said. “This partnership gives us a foundation to move faster, be more focused and invest where it truly matters for Kering’s future.”
For L’Oréal, the acquisition adds another jewel to its growing luxury portfolio, which already includes Yves Saint Laurent Beauté, Lancôme, and Aesop, acquired in 2023. Hieronimus noted that Yves Saint Laurent Beauté generates about €3 billion annually in beauty revenue — slightly surpassing YSL’s fashion sales — a model he believes can be duplicated with Gucci.
The two companies stated they plan to keep exploring new ventures in luxury wellness, merging L’Oréal’s research strength with Kering’s knowledge of wealthy consumers.
“This partnership is not just about beauty,” de Meo said. “It’s about shaping the future of luxury.”
