At YourDailyAnalysis, we note – Kering, the owner of Gucci, has announced the sale of its Kering Beauté division to L’Oréal for 4 billion euros ($4.66 billion). This move by new CEO Luca de Meo marks a major strategic shift aimed at reducing the luxury group’s debt and sharpening its focus on its core business – fashion and accessories.
Under the deal, L’Oréal will acquire the Creed fragrance brand as well as a 50-year exclusive license to develop and produce fragrance and beauty products under Gucci, Bottega Veneta, and Balenciaga. The current Gucci fragrance license is held by Coty and is expected to expire in 2028, after which L’Oréal will take over.
Our analysts at YourDailyAnalysis highlight that the deal represents an important step in reducing Kering’s net debt, which stood at 9.5 billion euros as of June, in addition to 6 billion euros in long-term lease liabilities. The decision also demonstrates the new CEO’s willingness to make “tough but necessary” choices to restore investor confidence.
Kering Beauté was established in 2023 following the €3.5 billion acquisition of Creed, part of an effort to diversify the group’s portfolio and reduce reliance on Gucci, which generates the bulk of its profits. However, the division has struggled to scale, reporting an operating loss of €60 million in the first half of this year.
At YourDailyAnalysis, we believe that returning to a licensing-based model will allow Kering to reduce capital intensity and improve margins. RBC analysts also note that the freed-up resources could be redirected toward Kering’s core strengths – high-end fashion and accessories.
The transaction will be L’Oréal’s largest acquisition to date, surpassing its $2.5 billion purchase of Aesop in 2023, and is expected to close in the first half of 2026.
Kering has also postponed plans to fully acquire Valentino and is exploring real estate asset sales to boost liquidity.
At Your Daily Analysis, we view Luca de Meo’s actions as a pragmatic and disciplined response to the group’s challenges. The sale of Kering Beauté will strengthen the company’s financial foundation and help refocus efforts on revitalizing Gucci and Bottega Veneta amid slower Chinese demand and rising competition in the luxury market.
Previously, we reported on BlackRock’s new record – assets under management reached $13.46 trillion amid a market rally.
