Kering to sell its beauty arm to L’Oréal in a €4 billion cash deal

Luxury giant Kering is getting out of the beauty game, offloading its perfume and cosmetics empire to L’Oréal in a €4 billion ($4.7 billion) cash deal, only two years after launching Kering Beauté to get into the beauty space.

The sale includes Creed, the high-end perfume house Kering bought in 2023 for €3.5 billion, along with long-term fragrance and beauty licenses for Gucci, Bottega Veneta, and Balenciaga. L’Oréal, already the world’s biggest beauty company, will take over those brands under 50-year licenses, while continuing to run Creed directly under its own portfolio.

Gucci slides

For Kering, a €4 billion ($4.7 billion) cash injection and a stream of future royalties might be just what the embattled luxury giant needs. After a spree of acquisitions that included Creed and Valentino, as well as prime real estate buys in Paris, Milan, and New York, Kering’s net debt ballooned to €10.5 billion by the end of 2024. That coincided with a major slump in demand for its crown jewel: Gucci, which made up nearly half (45%) of group revenue last year.

The brand’s struggle mirrors a broader luxury slowdown, with the postpandemic revenge spending rush fading — particularly in China. However, Gucci’s weakness doesn’t seem to have been limited to one region, with Kering’s sales dropping in North America, Europe, Japan, and Asia more broadly, in part due to a shift toward “quiet luxury,” as flashier brands like Gucci and Balenciaga have fallen out of favor with some consumers.

All told, Gucci’s sales tumbled 25% in the first half of 2025, and analysts expect Gucci’s full-year sales to slump another 22%.

Kering’s shares rose nearly 4% on the news this morning, extending year-to-date gains to 36%. Still, the stock lags other luxury rivals, down more than 20% over the past three years.