Yesterday, according to report, French luxury powerhouse Kering, renowned for its ownership of prestigious brands like Gucci, is nearing the sale of its beauty division to L’Oréal, according to sources familiar with the deal. The transaction, expected to be valued at around $4 billion, would mark a significant shift for Kering as it looks to streamline its operations under the leadership of new CEO Luca De Meo, who officially took office in September.
L’Oréal, the world’s largest dedicated cosmetics and beauty conglomerate, is set to acquire Kering’s fragrance brand, Creed, and gain exclusive rights to develop beauty products linked to Kering’s portfolio of luxury fashion labels, including Bottega Veneta, Balenciaga, and Alexander McQueen. The deal, which could be officially announced as soon as next week, builds on Kering’s 2023 acquisition of Creed for 3.5 billion euros ($4 billion), a move that was part of the company’s broader efforts to expand its presence in the high-end beauty market.
Despite the lack of official comments from either company, the move is being viewed as a crucial step for Kering as it looks to manage its financial health. The company has faced increasing investor scrutiny due to its mounting debt, which stood at 9.5 billion euros as of the end of June. Kering’s efforts to address these concerns are a key priority for De Meo, who has seen Kering’s shares rise by approximately 60% since his appointment.
The sale also comes at a time when Kering’s largest brand, Gucci, has struggled to maintain growth amidst a slowdown in the luxury market, particularly in China, where demand has cooled after years of rapid expansion. While Kering has made efforts to rejuvenate the Gucci brand, the company’s broader portfolio has also been impacted by the challenging economic landscape.
As for L’Oréal, the beauty giant continues to expand its influence in the luxury segment. In addition to its potential acquisition of Kering’s beauty assets, L’Oréal has also been approached by representatives of the Armani Group regarding a potential deal for a minority stake in the late Giorgio Armani’s fashion house. This further underscores L’Oréal’s ongoing strategy to strengthen its presence in the luxury beauty market.
The deal between Kering and L’Oréal is expected to reshape the landscape of both the luxury fashion and beauty industries, as both companies look to position themselves for the future amid evolving consumer trends and shifting market conditions.
