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Gucci Owner Kering Sells Beauty Division to L’Oreal for €4 Billion Amid Strategic Overhaul

By  |  October 20, 2025

Kering, the French luxury conglomerate behind Gucci, has agreed to sell its beauty business to L’Oreal for 4 billion euros ($4.66 billion), marking a major strategic shift under its new CEO, Luca de Meo. According to Reuters, the deal represents a move to reduce the company’s heavy debt burden and refocus on its core fashion operations.

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    Under the agreement, L’Oreal will acquire Kering’s high-end fragrance brand Creed — which Kering purchased in 2023 for 3.5 billion euros — as well as gain exclusive rights to develop beauty and fragrance products for Kering’s fashion houses such as Bottega Veneta and Balenciaga over the next 50 years. Per Reuters, the French cosmetics giant will also obtain the rights to produce Gucci-branded fragrances once its current licensing deal with Coty expires in 2028.

    Analysts at Bernstein described the sale as “bitter but necessary medicine,” acknowledging that selling Kering Beauté for roughly the same price it paid for Creed two years ago underscores the group’s urgent need to address its financial challenges. Discussions about divesting the beauty business had been underway before de Meo formally assumed leadership in September, but, according to Reuters, he accelerated negotiations with L’Oreal earlier this month to finalize the transaction.

    The acquisition will be L’Oreal’s largest to date, surpassing its 2023 purchase of Australian skincare brand Aesop for $2.5 billion. Bernstein analysts noted that Creed remains one of the most dynamic names in luxury perfumery, making the deal strategically sound for L’Oreal. For Kering, the move will help ease pressure from investors concerned about its debt load, which totaled 9.5 billion euros as of June, in addition to 6 billion euros in lease liabilities.

    Related: EU Imposes €157 Million in Fines on Gucci, Chloé, and Loewe for Antitrust Violations

    This sale also marks a decisive break from the strategy of former CEO François-Henri Pinault, whose family controls Kering. Pinault had steered the group toward building an in-house beauty business to diversify beyond Gucci, which remains Kering’s primary profit driver. However, the beauty division has struggled to gain momentum, posting a 60 million euro operating loss in the first half of the year, according to Reuters.

    At the same time, Kering is grappling with slowing sales at Gucci, particularly in China, where revenue dropped 25% year-on-year in the most recent quarter. De Meo, who took over in September, has told investors he plans to make tough decisions to stabilize the company’s finances, including restructuring operations and shedding non-core assets. Kering has also paused its plan to take full control of Italian fashion house Valentino and is reportedly looking to sell parts of its real estate portfolio to raise additional funds.

    Source: Reuters