Kering offloads beauty division to L’Oréal in €4 billion deal

Global luxury group Kering and beauty leader L’Oréal have entered a long-term strategic partnership in luxury beauty and wellness, including the creation of a joint venture in the wellness space.

Under the agreement - valued at €4 billion and expected to close in the first half of 2026 - L’Oréal will acquire Kering Beauté, including the House of Creed, a heritage fragrance brand renowned for its craftsmanship.

Creed will join the L’Oréal Luxe division, positioning the brand for accelerated global expansion in both men’s and women’s luxury fragrance markets.

The transaction also grants L’Oréal exclusive 50-year licenses for the creation, development, and distribution of beauty and fragrance products under three of Kering’s major fashion houses: Gucci, Bottega Veneta, and Balenciaga.

The Gucci license will commence after the expiration of Kering’s current licensing agreement with Coty, in accordance with existing contractual obligations. Meanwhile, the licenses for Bottega Veneta and Balenciaga will take effect upon closing of the transaction.

L’Oréal will pay Kering royalties for the use of its licensed brands. Additionally, a strategic committee will be established to coordinate efforts between the two companies and oversee the implementation of the partnership.

Beyond beauty, Kering and L’Oréal will form a 50/50 joint venture focused on the intersection of luxury, wellness, and longevity.

The companies aim to combine L’Oréal’s scientific and beauty innovation with Kering’s expertise in luxury to develop new services and experiences in the growing wellness segment.

Luca de Meo, CEO of Kering, said: "This strategic alliance marks a decisive step for Kering. By 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. Together, we will also explore new frontiers in wellness, combining L’Oréal’s expertise with our luxury reach."

Nicolas Hieronimus, CEO of L’Oréal Group, added: "This partnership will further solidify our position as the world’s #1 luxury beauty company and expand our portfolio with exceptional couture brands. Through Creed, we also strengthen our presence in the niche fragrance segment."

The partnership builds on the long-standing collaboration between the two companies - most notably the success of Yves Saint Laurent Beauté under L’Oréal’s management - and aims to unlock significant value across high-potential luxury beauty categories.

Earlier this year, Kering posted a 16% decline in revenue to €7.6 billion (£6.5 billion) for the first half of 2025, driven by a 26% drop in sales at its flagship brand, Gucci.

In the second quarter, the luxury group's revenue fell 18%. While sales trends improved in North America (-10%) and Asia-Pacific (-19%) compared to the first quarter, performance weakened in Western Europe (-17%) and Japan (-29%), largely due to a significant drop in tourism.

However, Kering Beauté generated first-half revenue of €150 million (£129 million), up 9%, driven primarily by "strong" demand for Creed’s women’s fragrances - an area of the business now acquired by L'Oreal.