In a landmark decision, French luxury group Kering, the parent company of Gucci, Balenciaga, and Bottega Veneta, has agreed to sell its entire beauty business to L’Oréal for approximately €4 billion ($4.7 billion). The transaction marks the first major strategic shift under the new CEO, Luca de Meo, who took the helm in September 2025.
This move is intended to reduce Kering’s mounting debt, streamline operations, and bring sharper focus back to its core fashion and luxury labels. For L’Oréal, the acquisition represents its largest takeover ever, strengthening its dominance in the global beauty and fragrance market.
Why Kering Decided to Sell
Kering’s balance sheet has come under growing pressure in recent quarters. As of June 2025, the company reported net debt exceeding €9.5 billion, with additional lease liabilities around €6 billion. Despite years of expansion into adjacent sectors such as eyewear and fragrances, returns have been inconsistent.
The beauty division formed in 2023 following Kering’s acquisition of Creed was originally meant to reduce reliance on Gucci. However, the unit posted an operating loss of €60 million in the first half of 2025, while Gucci’s own sales dropped nearly 25 percent year-on-year, particularly in the Chinese market.
Luca de Meo, known for his focus on efficiency during his previous tenure at Renault, viewed the sale as a necessary financial reset. Analysts describe the decision as “strategically painful but operationally wise,” allowing Kering to stabilise its cash flow and strengthen investor confidence.
What L’Oréal Gains from the Acquisition
For L’Oréal, this deal is a masterstroke. The beauty giant will acquire the high-end Creed fragrance brand and secure 50-year licences to develop perfumes and cosmetics for Kering’s fashion houses Balenciaga, Bottega Veneta, and Alexander McQueen.
Moreover, once the current Gucci fragrance licence with Coty expires (likely by 2028), L’Oréal is expected to take over that line as well. This would give L’Oréal access to one of the most recognisable names in global luxury, further elevating its prestige division.
The global luxury fragrance market has become one of the beauty industry’s fastest-growing segments, offering higher margins and longer customer retention. By adding Kering’s portfolio, L’Oréal solidifies its position against rivals like Estée Lauder Companies.
As one Paris-based analyst noted, “Kering needed liquidity; L’Oréal had the scale, speed, and credibility to deliver it. It’s a textbook win-win deal.”
Following the announcement, Kering shares rose nearly 5 percent, while L’Oréal’s stock gained around 1 percent an indication that investors see benefits for both sides. The sale is scheduled to close in the first half of 2026, pending regulatory approvals.
For Kering, the cash infusion will help reduce debt and fund future reinvestments in its key luxury brands. Analysts suggest that further restructuring may follow, possibly involving the sale of smaller divisions like eyewear or non-core retail operations.
L’Oréal, meanwhile, is expected to integrate the acquired brands into its Luxury Division, managed by Cyril Chapuy, whose team has successfully handled similar high-profile acquisitions, including Aesop in 2023.
Selling the beauty unit signals Kering’s return to fundamentals high fashion, leather goods, and couture. The group intends to refocus on elevating Gucci’s desirability, revamping Balenciaga’s brand image, and investing in experiential luxury rather than broad diversification.
It also underscores Kering’s recognition that beauty is a scale game. Competing with L’Oréal or Estée Lauder requires deep marketing infrastructure, supply chain integration, and R&D investment areas outside Kering’s historical expertise.
L’Oréal, on the other hand, emerges stronger than ever. The acquisition gives it access to untapped luxury fashion labels, long-term exclusivity, and a near-monopoly over some of Europe’s most prestigious perfume licences.
The company’s CEO, Nicolas Hieronimus, said in a statement that the deal “reinforces L’Oréal’s mission to merge the worlds of high fashion and high science in beauty.”
While strategically sound, the transaction carries risks. For Kering, losing control of its beauty arm could make brand synergy harder to maintain. Without direct oversight, its perfumes and beauty products may evolve independently of fashion direction.
For L’Oréal, the challenge lies in integration and brand positioning ensuring that each acquired label retains its unique identity rather than being homogenised under one corporate umbrella. The company will also need to navigate shifting global demand, particularly in Asia, where luxury consumption remains volatile.
Kering’s decision to sell its beauty division to L’Oréal for $4.7 billion represents a strategic course correction at a pivotal moment. Under Luca de Meo’s leadership, the group appears intent on reducing debt, consolidating core luxury assets, and restoring profitability after a challenging year.
For L’Oréal, the acquisition cements its position as the undisputed powerhouse of global beauty, giving it decades-long control over some of the world’s most iconic fragrance brands.
In essence, this deal illustrates two contrasting yet complementary strategies: Kering’s disciplined retreat to focus on luxury fashion and L’Oréal’s bold expansion into the ultra-premium segment. Both companies stand to gain provided they execute with precision in a luxury market that rewards brand purity, consistency, and vision.
