Key points
- Deal includes Creed and Gucci fragrance rights
- Move aims to cut Kering’s rising debt
- Beauty division struggled with heavy losses
PARIS: Kering, the owner of Gucci, has agreed to sell its beauty division to L’Oréal for €4 billion ($4.66 billion), marking a strategic shift under new CEO Luca de Meo. The move aims to cut the luxury group’s high debt and refocus on its core fashion operations.
Under the agreement, French cosmetics giant L’Oréal will acquire Kering’s fragrance brand Creed and obtain a 50-year exclusive licence to produce and market beauty and fragrance products for Gucci, Bottega Veneta and Balenciaga. Gucci’s current fragrance licence with Coty expires in 2028, after which L’Oréal will take over, according to Reuters.
The sale will help reduce Kering’s net debt, which stood at €9.5 billion in June plus €6 billion in lease liabilities, concerns that have weighed heavily on investors. It also represents a reversal of former CEO François-Henri Pinault’s diversification strategy, as De Meo streamlines operations after taking charge in September.
Returning to licensing model
Kering had launched its beauty arm in 2023 with the €3.5 billion acquisition of Creed, but the division has struggled, posting a €60 million operating loss in the first half of 2025. Analysts described the sale at roughly its purchase price as “bitter but necessary medicine,” noting that returning to a licensing model would be less capital-intensive and more profitable.
L’Oréal said the deal, expected to close in the first half of 2026, will be its largest to date, exceeding its 2023 purchase of Aesop. The two firms will also form a joint venture for luxury services.
Experts believe L’Oréal is seizing an opportune moment to expand its high-end portfolio while Kering focuses on stabilising its fashion brands.
