Kering’s $4.7 Billion Beauty Exit Strategy: How a Luxury Giant Is Reinventing Itself Through L’Oréal Partnership

Strategic Realignment in Luxury Beauty

In a landmark deal that reshapes the luxury beauty landscape, L’Oréal has acquired Kering Beauté for approximately $4.7 billion, marking the beauty giant’s largest acquisition to date. The transaction includes the prestigious Creed fragrance brand and establishes a 50-year strategic partnership between the two French powerhouses. This move represents a fundamental strategic shift for both companies as they double down on their respective core competencies in an increasingly competitive market.

Strategic Realignment in Luxury Beauty
The Deal Structure and Immediate Benefits
Kering’s Turnaround Strategy
Focusing on Core Fashion Competencies
L’Oréal’s Luxury Ambitions
Industry Implications and Future Outlook
Path Forward and Completion Timeline

The Deal Structure and Immediate Benefits

The acquisition encompasses Kering’s entire beauty portfolio, with Creed serving as the crown jewel. Kering had acquired Creed just two years prior for an estimated $3.8 billion, making its inclusion in this deal particularly significant. Beyond Creed, L’Oréal gains exclusive licensing rights to develop beauty and fragrance products for Kering’s luxury houses including Gucci, Bottega Veneta, and Balenciaga., according to market trends

The companies are also establishing a 50/50 joint venture to explore new opportunities in luxury wellness and longevity markets. This comprehensive partnership framework ensures both companies maintain strategic alignment while leveraging their respective strengths.

Kering’s Turnaround Strategy

For Kering, this transaction represents a crucial strategic pivot under new leadership. Recently appointed CEO Luca de Meo, who joined just over a month ago after successfully turning around Renault, is making decisive moves to address the company‘s challenges. Kering has faced significant headwinds, with revenues declining 12% in 2024 to $20 billion and dropping another 16% through the first half of 2025.

The sale proceeds are expected to substantially reduce Kering’s $11 billion debt load, providing crucial financial flexibility. As Bernstein analysts noted, “selling Kering Beauté at around the same price paid for Creed two years ago is a bitter but necessary medicine” for the struggling luxury group.

Focusing on Core Fashion Competencies

Beyond debt reduction, this move allows Kering to concentrate entirely on revitalizing its flagship fashion brands. Gucci, which suffered a 26% revenue decline in the first half of 2025, now becomes the central focus of de Meo’s turnaround efforts. By exiting the beauty business, Kering can redirect resources and management attention toward its core fashion operations where it maintains competitive advantages., according to expert analysis

This strategic withdrawal contrasts sharply with competitor LVMH’s approach of developing beauty businesses in-house. As Bernstein analyst Luca Solca characterized it, Kering’s move represents a necessary “U-turn” in strategy that acknowledges the company‘s limitations in the beauty sector.

L’Oréal’s Luxury Ambitions

For L’Oréal, this acquisition significantly bolsters its position as the world’s leading luxury beauty company. The addition of Creed and future development rights to Kering’s luxury portfolios complements L’Oréal’s existing brand architecture perfectly. The company’s Luxe division generated $18.1 billion last year and nearly matched its consumer products division in scale.

The timing is particularly strategic given that fragrances were L’Oréal’s fastest-growing category last year, increasing 14% to $6.9 billion. Creed’s reported, as previously reported, $300 million in annual revenue preceding its sale to Kering, combined with Kering Beauté’s 9% sales growth in the first half of this year, suggests strong momentum that L’Oréal can accelerate.

Industry Implications and Future Outlook

This partnership creates a new paradigm in luxury beauty licensing. The 50-year term provides unprecedented stability for brand development, while the joint venture structure allows for exploration of emerging wellness categories. The deal also positions L’Oréal to eventually absorb the Gucci beauty license when it reverts from Coty in 2028, creating a comprehensive brand portfolio.

As consultant Bruno-Roland Bernard observed, “L’Oréal enjoys strong momentum in the Luxe division and they must be looking forward to getting hold of the perfume and beauty licenses associated with Kering’s prestigious yet relatively underdeveloped brands.” The transaction also demonstrates L’Oréal’s ability to capitalize on favorable negotiating positions when competitors face time pressure.

Path Forward and Completion Timeline

The all-cash transaction remains subject to French regulatory approvals and is expected to finalize in the first half of 2026. This extended timeline allows for smooth transition planning and maintains business continuity for both organizations. The deal structure ensures that Kering’s beauty brands immediately benefit from L’Oréal’s global distribution, marketing expertise, and research capabilities while Kering focuses on its fashion renaissance.

This strategic realignment represents a classic case of companies playing to their strengths in a rapidly evolving luxury market. While Kering sheds non-core operations to fortify its fashion foundations, L’Oréal expands its luxury dominance through strategic acquisition and partnership. The outcome appears to be that rare corporate transaction where both parties emerge meaningfully stronger.

References & Further Reading

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