What's happened
On October 20, 2025, Kering announced a €4 billion deal to sell its beauty division, including the Creed fragrance brand, to L'Oréal. The agreement includes a 50-year license for L'Oréal to develop beauty and fragrance products for Kering's Gucci, Bottega Veneta, and Balenciaga brands, aiming to reduce Kering's €9.5 billion net debt and refocus on core fashion.
What's behind the headline?
Strategic Financial Relief for Kering
Kering's sale of its beauty division to L'Oréal is a decisive move to alleviate its heavy debt burden, which stood at €9.5 billion by mid-2025. The €4 billion cash influx will provide immediate financial breathing room, allowing CEO Luca de Meo to focus on revitalizing Gucci, the group's largest and most challenged brand.
Long-Term Partnership and Market Expansion
The 50-year exclusive license grants L'Oréal rights to develop beauty and fragrance products for Gucci, Bottega Veneta, and Balenciaga, starting after existing contracts expire (notably Gucci's license with Coty in 2028). This long horizon signals a deep strategic alliance, leveraging L'Oréal's expertise in beauty to scale Kering's luxury brands in this category.
L'Oréal's Growth in Niche Luxury Fragrance
Acquiring Creed, a fast-growing niche fragrance brand, positions L'Oréal to strengthen its foothold in the premium fragrance market. This complements its existing luxury portfolio, including Yves Saint Laurent and Armani, and expands its reach into dynamic luxury segments.
Market Timing and Competitive Positioning
The deal reflects L'Oréal's readiness to capitalize on undervalued luxury assets amid Kering's financial pressures. Creed's valuation in this transaction was reportedly lower than Kering's 2023 purchase price, indicating a buyer's market.
Forecast and Impact
This partnership will likely accelerate product innovation and distribution efficiency for Kering's beauty lines, potentially boosting brand appeal and revenue streams. For consumers, it may mean more cohesive luxury beauty offerings under globally recognized brands. Investors should watch how effectively Kering leverages this capital to stabilize and grow its core fashion business.
What the papers say
Anna Wise in The Independent highlights CEO Luca de Meo's intent: "Joining forces with the global leader in beauty, we will accelerate the development of fragrance and cosmetics for our major houses," emphasizing the strategic growth potential. Nicolas Hieronimus, L'Oréal's CEO, told AP News that "Creed is one of the fastest growing players in the niche fragrance market," underscoring L'Oréal's ambition to expand in luxury fragrance.
The Japan Times and NY Post focus on the financial rationale, noting Kering's €9.5 billion net debt and the deal's role in debt reduction. Bloomberg's Andrea Felsted points out that L'Oréal is paying a premium for the business but gains upside by acquiring brands Kering is willing to sacrifice.
Gulf News and The Guardian stress the long-term nature of the 50-year license agreement, which will commence after existing contracts expire, signaling a sustained collaboration. Russ Mould, quoted by The Independent, calls the deal a "decisive step for Kering" to address its financial challenges and leverage L'Oréal's logistics and expertise.
Together, these sources paint a picture of a financially motivated but strategically sound partnership, with both companies aiming to strengthen their positions in luxury beauty and fragrance markets.
How we got here
Kering, owner of luxury brands like Gucci, has faced declining sales and rising debt, with Gucci revenues dropping about 25% in early 2025. New CEO Luca de Meo is restructuring to improve finances. L'Oréal previously acquired the beauty license for Kering's Yves Saint Laurent in 2008, setting a precedent for this strategic partnership.
Go deeper
- How will this deal affect Gucci's beauty products?
- What does the 50-year license mean for Kering and L'Oréal?
- How will this sale impact Kering's financial health?
More on these topics
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Kering S.A. (French: [kɛːʁiŋ]) is a French multinational holding company specializing in luxury goods, headquartered in Paris. It owns the brands Gucci, Yves Saint Laurent, Balenciaga, Bottega Veneta, Creed, Maui Jim, and Alexander McQueen, among othe
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Luca de Meo is currently the CEO of Renault.
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Gucci is an luxury brand of fashion house based in Florence, Italy. Its product lines include handbags, ready-to-wear, shoes and accessories, makeup, fragrances, and home decoration.
Gucci was founded by Guccio Gucci in Florence, Tuscany, in 1921.
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Balenciaga is a luxury fashion house founded in 1917 by Spanish designer Cristóbal Balenciaga in San Sebastián, Spain and currently based in Paris.
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Bottega Veneta S.r.l (pronounced [botˈteːɡa ˈvɛːneta]; Italian for 'Venetian Boutique') is an Italian luxury fashion house based in Milan, Italy. The house produces haute couture, ready-to-wear, handbags, shoes, accessories, jewellery and fragrances
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L'Oréal S.A. is a French personal care company headquartered in Clichy, Hauts-de-Seine with a registered office in Paris. It is the world's largest cosmetics company and has developed activities in the field concentrating on hair colour, skin care, sun p
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Creed is an Anglo-French multi-national niche perfume house, based in Paris.
The company was originally founded as a tailoring house in London, England in 1760 by James Henry Creed. It has boutiques in Paris, London, New York City, Beverly Hills, Sydney..
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Nicolas Hieronimus, is a French businessman, and the CEO of the L’Oréal Group since May 1, 2021, the sixth CEO in the history of the group, taking the place of Jean-Paul Agon, who remains the chairman of the group.