Luxury Shake-Up: Kering Sells Beauty Division to L’Oréal for $4.7 Billion
- Jomanda Heng
- 2 days ago
- 4 min read
In one of the most high-profile luxury mergers of 2025, French luxury conglomerate Kering, the parent company of Gucci, Balenciaga, and Bottega Veneta, has agreed to sell its entire beauty unit to L’Oréal for approximately €4 billion (US $4.7 billion).
The landmark deal reflects Kering’s major business pivot under new CEO Luca de Meo, who aims to reduce debt and refocus the company on its core fashion and accessories portfolio. For L’Oréal, this move expands its already formidable footprint in the luxury beauty and fragrance market, adding prestigious brand licences and high-growth opportunities to its global portfolio.
Kering Is Selling Its Beauty Business
When Kering launched its in-house beauty division in 2023, the move was seen as an ambitious attempt to rival LVMH’s vertical integration. The group even acquired The House of Creed, a niche fragrance brand, for €3.5 billion. However, the venture failed to deliver the expected returns.
In the first half of 2025, Kering Beauté reportedly posted an operating loss of €60 million, weighed down by marketing and integration costs.
The company’s net debt reached nearly €9.5 billion, prompting urgent measures to streamline its portfolio.
With Gucci’s sales slowing, particularly in China, Kering’s leadership decided to refocus on its fashion powerhouses rather than compete directly in a crowded beauty market.
“Beauty operates on entirely different dynamics than fashion,” analysts observed. “This sale marks a strategic course correction for Kering, one that prioritizes profitability and brand focus.”
How L’Oréal Benefits From the Kering Beauty Deal
For L’Oréal, this acquisition is not just about adding another fragrance house. It’s about securing decades of long-term growth through brand licences and expanding dominance in luxury cosmetics.
The deal includes:
Ownership of The House of Creed (known for Aventus, one of the world’s best-selling luxury fragrances)
50-year exclusive licences to produce beauty and fragrance lines for Kering brands such as Gucci, Balenciaga, and Bottega Veneta (Gucci licence begins post-2028 after Coty’s term ends)
Joint initiatives exploring wellness and longevity, signalling a new frontier for beauty and lifestyle collaborations
The acquisition reinforces L’Oréal’s leadership in high-end beauty, combining its scale and R&D capabilities with Kering’s luxury brand DNA. It also provides L’Oréal access to some of fashion’s most recognizable names, expanding its dominance in the global luxury beauty business.
Business Strategy: Refocusing Kering on Core Luxury Fashion
Selling the beauty arm allows Kering to strengthen its core fashion empire. With rising competition in luxury and softening global demand, the group aims to channel resources into reviving Gucci, while also elevating Bottega Veneta and Balenciaga to greater profitability.
The proceeds from the €4 billion sale are expected to:
Reduce company debt and stabilize cash flow
Finance creative reinvestments into fashion innovation
Rebuild investor confidence, which has been shaken by recent earnings reports
This divestment also highlights a broader industry truth: fashion conglomerates don’t always succeed when crossing into beauty. Unlike apparel, beauty demands specialized R&D, distribution, and brand storytelling, areas where L’Oréal’s 100+ years of expertise outshine new entrants.
L’Oréal’s Growth Play: Expanding Luxury Beauty Portfolio
L’Oréal, already the world’s largest cosmetics company, gains a competitive edge in luxury fragrance with this acquisition. The company will now manage a powerful mix of heritage luxury and modern beauty, reinforcing its dominance over rivals like Estée Lauder and Coty.
This aligns with L’Oréal’s “premiumization strategy”, a focus on expanding luxury offerings and high-margin categories in fragrance and skincare.
Industry observers note that the Gucci licence is the crown jewel of this deal, giving L’Oréal an unmatched runway of brand power and creative collaboration. The company’s global scale, particularly in Asia-Pacific markets like Malaysia and China, positions it to drive record sales once the transition completes in 2026.
Financial Impact of the Kering–L’Oréal Deal
Transaction value: €4 billion (US $4.7 billion)
Structure: All-cash deal
Assets included: The House of Creed, licensing rights for multiple Kering brands
Completion: Expected in the first half of 2026, subject to regulatory approval
Royalties: Kering will continue earning royalties from L’Oréal for brand usage
According to Kering COO Jean-Marc Duplaix, the sale will create a “net gain” in company results and serve as a “decisive step in strengthening our balance sheet.”
Global Luxury Market Outlook Post-Deal
The sale reflects an ongoing consolidation trend in the luxury and beauty industries, where major players focus on scale, heritage, and global reach.
For Kering: It’s a necessary recalibration. The company sheds non-core assets and reclaims focus on fashion—the segment that built its empire.
For L’Oréal: It’s an expansion of power. The acquisition cements its role as the global leader in prestige beauty, while opening future opportunities in wellness and high-end lifestyle products.
For investors: The transaction offers short-term stability for Kering and long-term value creation for L’Oréal shareholders.
Key Takeaways: Business Lessons From the Kering Beauty Sale
Focus Wins Over Diversification — Luxury houses perform best when they stick to what they do exceptionally well.
Debt Discipline Is Critical — In volatile markets, liquidity and balance-sheet health outweigh expansion.
Partnerships Beat Rivalries — Instead of competing, Kering and L’Oréal found synergy: one exits, one expands, both benefit.
Wellness Is the Next Luxury Frontier — Both brands signalled future collaborations in wellness, longevity, and holistic beauty.
The €4 billion sale marks a turning point for both companies. Kering walks away leaner, more focused, and financially stronger. L’Oréal walks away with the keys to some of fashion’s most powerful beauty empires.
In an age where luxury consumers crave authentic storytelling and lifestyle integration, this deal may redefine what it means to own “beauty” in the modern era, less about makeup and more about legacy, experience, and long-term brand evolution.
The Uncommon Breed
Comments