Kering to Sell Beauty Arm to L’Oréal for €4bn

Kering has agreed to sell its beauty division to L’Oréal for €4bn, drawing a line under its short-lived in-house push into fragrance and cosmetics and returning the Gucci owner to a licensing model. The all-cash deal hands L’Oréal the House of Creed and long-term rights to develop and distribute beauty for Kering’s fashion labels including Gucci, Bottega Veneta and Balenciaga, with 50-year licences set to take effect once existing arrangements end. Closing is targeted for the first half of 2026, subject to regulatory approvals.

Kering launched its beauty arm in 2023 with the €3.5bn acquisition of Creed, but the unit failed to move the dial as the group grappled with weaker momentum at Gucci. Under new chief executive Luca de Meo, Kering is prioritising debt reduction and refocusing on core fashion, a pivot analysts say favours capital-light licensing over building a standalone beauty platform.

“This strategic alliance marks a decisive step for Kering,” declared Luca de Meo, CEO of Kering. “Joining forces with the global leader in beauty, we will accelerate the development of fragrance and cosmetics for our major Houses, allowing them to achieve scale in this category and unlock their immense long-term potential, as did Yves Saint Laurent Beauté under L’Oréal’s stewardship. Together, we will also venture into new frontiers of wellness, combining the unrivalled expertise of L’Oréal with our unique luxury reach. This partnership allows us to focus on what defines us best: the creative power and desirability of our Houses.”

For L’Oréal, the acquisition strengthens its Luxe division with an ultra-prestige fragrance house and the prospect of a unified relaunch across Kering’s couture brands. The Gucci beauty licence will transfer once Coty’s current term expires in 2028, positioning L’Oréal to align fragrance, colour and skincare under one global playbook. The companies also plan a strategic committee to explore wellness and longevity, pointing to where premium beauty is expanding next.

Market reaction was broadly positive, with commentators calling it L’Oréal’s largest deal to date and a pragmatic reset for Kering after a difficult period. For retailers and distributors, Creed brings immediate scale at the very top of the fragrance market, while half-century licences give L’Oréal room to invest behind phased rollouts without brand whiplash. Execution risk sits in the Gucci handover timetable and in balancing couture equity with faster product calendars, but the direction of travel is clear: Kering exits beauty operations, keeps brand control via royalties, and L’Oréal deepens its grip on luxury.