Kering in talks to sell beauty business to L’Oréal for $4B: report

Kering SA, the French luxury conglomerate and parent company of Gucci, is in advanced discussions to sell its beauty division to L’Oréal in a deal that could value the unit at approximately $4 billion, reported WSJ, citing sources familiar with the matter.

The transaction could be announced as early as next week, provided negotiations conclude smoothly and no rival bidder intervenes.

The prospective deal comes just weeks after Kering’s new chief executive, Luca de Meo, took the helm, marking one of his first major strategic moves aimed at reviving the company’s performance.

L’Oréal, also based in Paris, is one of the world’s largest beauty and cosmetics groups, with brands such as Garnier, Maybelline New York, and its flagship L’Oréal Paris.

Acquiring Kering’s beauty arm would expand L’Oréal’s product portfolio, notably adding luxury fragrance maker Creed, which Kering acquired in 2023.

The move would also open the door for potential beauty collaborations linked to Kering’s high-end fashion labels, including Bottega Veneta, Balenciaga, and Alexander McQueen.

Kering’s shift away from in-house beauty production

Kering’s beauty division was launched in 2023 as part of the company’s broader effort to capitalize on the booming global cosmetics and fragrance sector.

The decision marked a departure from its traditional licensing strategy, where third-party companies produced perfumes and cosmetics under Kering’s brands.

Within months of the division’s creation, Kering made a major push into the space by acquiring Creed, a luxury fragrance brand known for its high-end colognes.

The move was viewed as an effort to establish credibility in a crowded beauty market dominated by established players such as L’Oréal, Estée Lauder, and Coty.

However, despite its ambitions, Kering’s beauty operations have struggled to gain traction amid broader headwinds facing the company’s core fashion business.

Gucci, which accounts for the majority of Kering’s revenue, has been hit by slowing sales in China — one of its largest markets.

At the same time, Saint Laurent has seen weaker wholesale performance and softer demand in the US market.

Selling the beauty division could provide Kering with a financial boost, helping the group reduce its debt, which stood at roughly $11 billion as of June 30.

Analysts suggest the move would allow Kering to refocus resources on stabilizing and reinvigorating its fashion portfolio.

Leadership transition and strategic reset

The negotiations with L’Oréal coincide with a broader leadership transition at Kering.

Luca de Meo, who took over as CEO from François-Henri Pinault earlier this year, brings a fresh perspective from outside the luxury fashion industry.

De Meo, previously the CEO of Renault, has over three decades of experience in the automotive sector, where he built a reputation as a skilled marketer and brand strategist.

During his tenure in the car industry, de Meo helped revive several major brands, including Fiat’s 500, Seat’s Cupra line, and Renault’s hybrid and electric vehicle range.

His appointment signals Kering’s intent to rethink its brand positioning and operational structure under new leadership.

Pinault, whose family founded Kering, remains chairman of the board, maintaining continuity at the top.

As competition intensifies among European luxury houses — including LVMH, Hermès, and Chanel — Kering’s divestment of its beauty arm could mark the start of a strategic reset.

If finalized, the sale to L’Oréal would represent one of the first significant moves under de Meo’s leadership to restore growth momentum and financial stability at the luxury group.

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