The news: Kering is selling its beauty business to L’Oréal for €4 billion ($4.3 billion).

The move will give Kering a much-needed cash infusion as it carries out a turnaround under new CEO Luca de Meo, while positioning L’Oreal to become a leader in luxury fragrance and beauty.

What the deal entails: Per the agreement, Kering will transfer House of Creed—which it acquired for an estimated €3.5 billion ($3.8 billion) just two years ago—to L’Oréal.

L’Oreal will receive 50-year exclusive licenses to create, develop, and distribute fragrance and beauty products for Gucci, Bottega Veneta, and Balenciaga.

• The company will have to wait for Gucci’s contract with Coty to expire, expected in 2028, before assuming that license.
• L’Oréal will pay royalties to Kering on the licensed products.

What it means for Kering: The sale marks a bold first step by de Meo, who has the challenge of revitalizing Kering’s business amid considerable uncertainty in the luxury market.

• The sale will help ease Kering’s debt load, which rose sharply due to the company’s acquisition spree and efforts to keep pace with rivals LVMH and Hermès. The company ended 2024 with €10.5 billion ($11.4 billion) in debt, a 24% increase YoY, and was forced to defer its purchase of Valentino until 2028 because of limited funds.
• It sets the stage for further divestitures and a tighter management focus. Kering’s eyewear business could be next up for sale, according to WWD, as de Meo looks to focus resources on the company’s core fashion and leather-goods business.

What it means for L’Oréal: The deal is a major strategic move for L’Oréal, positioning it as one of the world’s top producers of luxury fragrances at a time when the category is a driving force behind beauty growth.

• Changing behaviors among younger consumers—including the rising popularity of scent “libraries,” perfume layering, and fragrance for men—are fueling strong demand, particularly at the top end.
• Fragrance was one of the bestselling prestige beauty categories in the first half of 2025, with sales increasing 6% YoY, per Circana. Much of that growth is being driven by niche perfumes like Creed.
• While beauty demand overall is becoming more uncertain as tariffs raise prices and consumer buying power decreases, perfume is one area where shoppers are willing to splurge. Over half (55%) of consumers worldwide reported spending over $75 on fragrances in the previous six months, per Business of Fashion and McKinsey’s latest State of Fashion report, compared with 43% of skincare and 45% of color cosmetics buyers.

Our take: L’Oréal’s purchase of Kering Beauté could significantly alter the competitive dynamics of the beauty sector.

• The implications are particularly severe for Coty, which stands to lose one of its most lucrative licenses just as it reconfigures its business to focus on fragrances.
• The acquisition could set off a beauty arms race, pushing competitors like Puig and Estée Lauder to expand their fragrance and luxury portfolios to keep from falling behind.