Paris
The fashion and beauty industries are poised for a shake-up after luxury group Kering agreed to sell its beauty business to French cosmetics giant L’Oréal for 4 billion ($4.66 billion) – the biggest acquisition in L’Oréal’s history.
This also marks a strategic retreat by Kering, which is seeking to cut debt and refocus on its core fashion labels. The sale includes the prestigious perfume house Creed and long-term fragrance and beauty licences for Kering’s fashion brands, including Bottega Veneta and Balenciaga.
It will also give L’Oréal rights to the Gucci fragrance line once Kering’s current licensing deal with Coty ends in 2028. For L’Oréal, which already handles Yves Saint Laurent perfumes, the acquisition deepens its hold over luxury fragrance, a segment now outpacing other beauty categories in growth.
For Kering, owner of Gucci, Saint Laurent and Balenciaga, the sale is both a concession and a correction. The company launched its beauty division only last year under former CEO François-Henri Pinault, following the 3.5 billion purchase of Creed.
But despite the investment, the business failed to take off, reporting a 60 million operating loss in the first half of this year. With Gucci’s sales plunging 25% amid slowing Chinese demand, the new chief executive, Luca de Meo, moved quickly to streamline operations and reduce Kering’s 9.5 billion debt.
Analysts have called the sale “bitter but necessary medicine.” It marks the first major move by De Meo since taking charge in September, signalling a decisive shift away from the beauty ambitions of his predecessor.
For L’Oréal, the timing could not be better. The group’s luxury division has been expanding rapidly, driven by strong demand for high-end perfumes. Experts say L’Oréal’s scale, marketing reach, and beauty expertise could finally give brands like Balenciaga and Bottega Veneta the visibility they lacked in cosmetics.
As Kering retrenches to stabilise its finances, L’Oréal emerges stronger – a rare winner in a luxury market facing uneven recovery. The deal underscores how the worlds of fashion and beauty are once again converging, but this time, L’Oréal clearly holds the mirror.
