Paris
The fashion and beauty industries are poised for a shake-up after luxury group Kering agreed to sell its beauty business to French cosmetics giant L’OrĂ©al for €4 billion ($4.66 billion) – the biggest acquisition in L’OrĂ©al’s history.
This also marks a strategic retreat by Kering, which is seeking to cut debt and refocus on its core fashion labels. The sale includes the prestigious perfume house Creed and long-term fragrance and beauty licences for Kering’s fashion brands, including Bottega Veneta and Balenciaga.
It will also give L’OrĂ©al rights to the Gucci fragrance line once Kering’s current licensing deal with Coty ends in 2028. For L’OrĂ©al, which already handles Yves Saint Laurent perfumes, the acquisition deepens its hold over luxury fragrance, a segment now outpacing other beauty categories in growth.
For Kering, owner of Gucci, Saint Laurent and Balenciaga, the sale is both a concession and a correction. The company launched its beauty division only last year under former CEO François-Henri Pinault, following the €3.5 billion purchase of Creed.
But despite the investment, the business failed to take off, reporting a €60 million operating loss in the first half of this year. With Gucci’s sales plunging 25% amid slowing Chinese demand, the new chief executive, Luca de Meo, moved quickly to streamline operations and reduce Kering’s €9.5 billion debt.
Analysts have called the sale “bitter but necessary medicine.” It marks the first major move by De Meo since taking charge in September, signalling a decisive shift away from the beauty ambitions of his predecessor.
For L’OrĂ©al, the timing could not be better. The group’s luxury division has been expanding rapidly, driven by strong demand for high-end perfumes. Experts say L’OrĂ©al’s scale, marketing reach, and beauty expertise could finally give brands like Balenciaga and Bottega Veneta the visibility they lacked in cosmetics.
As Kering retrenches to stabilise its finances, L’OrĂ©al emerges stronger – a rare winner in a luxury market facing uneven recovery. The deal underscores how the worlds of fashion and beauty are once again converging, but this time, L’OrĂ©al clearly holds the mirror.
