In one of the biggest deals in global luxury history, French fashion powerhouse Kering — parent of iconic brands Gucci, Balenciaga, Bottega Veneta, and Alexander McQueen — has announced the sale of its entire beauty business to L’Oréal for €4 billion (approximately Rs4.15 lakh crore).
The transaction gives L’Oréal a 50-year exclusive global license to design, manufacture, and market beauty and fragrance lines for Kering’s high-end fashion labels, including Gucci Beauty and Creed Fragrances.
Kering’s Strategic Realignment Under CEO Luca de Meo
Under the leadership of newly appointed CEO Luca de Meo, Kering is undergoing a sweeping restructuring drive aimed at cutting debt and re-centering its focus on luxury fashion.
As of June 2025, the company reported €9.5 billion (Rs9.85 lakh crore) in debt and an additional €6 billion (Rs6.22 lakh crore) in lease liabilities — a financial burden that has drawn investor scrutiny.
Kering’s acquisition of the British luxury perfume house Creed in 2023 for €3.5 billion (Rs3.63 lakh crore) failed to deliver the expected returns, with the division reporting a €60 million (Rs62 crore) loss.
The sale to L’Oréal is therefore viewed as a strategic lifeline to restore balance sheet health and sharpen its fashion-first identity.
L’Oréal Strengthens Its Grip on the Luxury Beauty Market
The agreement grants L’Oréal a half-century-long global license to create and market perfumes and cosmetics for Gucci, Balenciaga, Bottega Veneta, and Creed — expanding its footprint in the ultra-premium beauty sector.
Currently, Gucci’s fragrance rights rest with Coty, which will expire in 2028, after which L’Oréal will assume full control.
Industry analysts call the move a “game-changer” that positions L’Oréal as the undisputed global leader in the luxury beauty segment.
Gucci’s Struggles Prompt a Reset
Gucci — Kering’s crown jewel — contributes nearly 60% of the group’s total revenue, but has faced slowing sales in China and Europe amid weakening luxury demand.
The company has already shelved plans to fully acquire Italian fashion house Valentino and is reportedly considering the sale of real estate assets to boost liquidity.
Experts see this divestment as a turning point, signalling Kering’s intent to stabilize operations, rebuild confidence, and reduce exposure to volatile consumer trends.
L’Oréal’s Largest Acquisition to Date
This marks L’Oréal’s most expensive acquisition ever, surpassing its 2023 purchase of Australian skincare brand Aesop for $2.5 billion (Rs20,850 crore).
The deal — expected to close in the first half of 2026, pending regulatory approvals — will significantly enhance L’Oréal’s global dominance in the luxury beauty and fragrance sector, strengthening its profit margins and market influence.
A Win-Win Deal for the Luxury Titans
Market observers see the transaction as a strategic masterstroke for both conglomerates.
While L’Oréal gains control of some of the most desirable brands in the world, Kering can streamline its empire and reduce debt, ensuring long-term sustainability.
Ultimately, this Rs4.15 lakh crore mega deal underscores a defining trend in global luxury — where giants are shedding non-core divisions to refocus, innovate, and deliver stronger shareholder value.
