The Kering Beauté division has been sold to L’Oréal for EUR 4 billion. Following a string of property disposals and the delayed agreement with Mayhoola over Valentino, Kering’s new CEO, Luca de Meo, has taken another major step to reduce the group’s debt. Should we expect further asset sales? The Kering–L’Oréal deal, moreover, could prompt the beauty giant to withdraw from the race to acquire Armani.
The Kering–L’Oréal deal
Kering has announced a partnership with L’Oréal involving the sale of its Beauté division for EUR 4 billion. The agreement includes the acquisition of the Creed brand and a 50-year licence for the Bottega Veneta and Balenciaga beauty lines — and, crucially, Gucci once its current licensing deal with Coty expires (likely by 2028). The partnership also includes the creation of a 50–50 joint venture in the wellness sector. L’Oréal will pay Kering royalties on its licensed brands. The deal is expected to be completed in the first half of 2026.
Market reactions
“We are surprised by this reversal in the strategy for the beauty division, which was intended to replicate the success of Kering Eyewear”, Citi commented in a note. Bernstein described the sale of Kering Beauté “at roughly the same price paid for Creed two years ago” as “a bitter but necessary medicine”. Necessary, that is, to reduce the French luxury group’s heavy debt burden — long the focus of its strategy to shore up cash reserves, a plan that de Meo has further accelerated and reinforced.
“Exiting the beauty business will allow de Meo to devote his full attention to turning Gucci around”, Bernstein analysts noted. Still, selling off such a young division (launched in 2023) suggests that Kering’s situation had reached a truly critical stage. Analysts, however, maintain that the division was far from undersold. In fact, the move secures Kering’s finances, making further major sales unlikely — at least for now.
Is L’Oréal stepping back from Armani?
L’Oréal’s EUR 4 billion-plus investment could be read as a sign that it is no longer pursuing the acquisition of the Armani fashion house. As outlined in Giorgio Armani’s will, L’Oréal is one of three preferred companies to which the group’s assets could be sold, alongside LVMH and EssilorLuxottica.
Photo: Creed
Read also:
