In a landmark deal reshaping the luxury and cosmetics industries, French luxury group Kering announced on Sunday, October 19, 2025, the sale of its beauty products division, including its flagship perfume brand Creed, to cosmetics giant L’Oreal for $4.6 billion (approximately €4 billion). The agreement, revealed in a joint statement by both companies, also includes 50-year exclusive licenses for L’Oreal to develop and distribute beauty products under Kering’s prestigious fashion labels, such as Gucci, Bottega Veneta, and Balenciaga. This transaction marks a pivotal moment for Kering as it seeks to address its substantial financial challenges and refocus on its core fashion business.
The deal, subject to regulatory approval, is expected to be finalized in the first half of 2026, with payment to follow upon completion. The strategic partnership is described as a “long-term commitment to luxury beauty and wellness,” combining Kering’s high-end brand portfolio with L’Oreal’s global expertise in cosmetics. For L’Oreal, the acquisition of Creed, a renowned name in the niche fragrance market, is a significant step toward strengthening its position in the rapidly growing luxury perfume sector. “Through Creed, we will establish ourselves as one of the leading players in the fast-growing niche fragrance market,” said L’Oreal CEO Nicolas Hieronimus in the statement, highlighting the brand’s potential to elevate L’Oreal’s presence in premium beauty.
The exclusive licenses granted to L’Oreal will come into effect in 2028, once Kering’s existing licensing agreement with American cosmetics company Coty expires. This arrangement ensures a seamless transition for Kering’s beauty products, allowing L’Oreal to leverage iconic brands like Gucci and Balenciaga to expand its luxury beauty offerings. The deal aligns with L’Oreal’s strategy to dominate the high-end cosmetics market, where consumer demand for premium fragrances and beauty products continues to surge.
For Kering, the sale comes at a critical juncture. The luxury group, which owns some of the world’s most coveted fashion brands, is grappling with a debt burden of approximately €9.5 billion. The announcement follows a challenging financial period, with Kering reporting a 46 percent drop in net profit for the first half of 2024, amounting to €474 million, and a 16 percent decline in revenue to €7.6 billion. The appointment of Luca de Meo as Kering’s new CEO in September 2025 brought a renewed focus on financial stabilization. De Meo described the sale as a “decisive step for Kering,” signaling a strategic pivot to reduce debt and concentrate resources on the company’s core fashion and leather goods businesses.
The decision to divest the beauty division reflects Kering’s broader efforts to streamline operations amid a turbulent luxury market. The group has faced challenges in recent years, including declining sales at its flagship brand Gucci, which accounts for a significant portion of its revenue. By offloading its beauty division, Kering aims to bolster its balance sheet and invest in revitalizing its fashion portfolio, which includes other high-profile brands like Yves Saint Laurent and Alexander McQueen.
The deal has sparked significant interest in the luxury and beauty sectors, with industry analysts on platforms like X noting its potential to reshape market dynamics. For L’Oreal, the acquisition strengthens its competitive edge against rivals like Estée Lauder and LVMH’s beauty division, while Kering’s refocus on fashion could pave the way for a turnaround in its financial performance. As the luxury market navigates economic uncertainties, this partnership underscores the strategic maneuvers companies are undertaking to secure their positions in an evolving global landscape.
