Will Kering and L’Oreal's Alliance Grow Their Luxury Status?

Kering announced on 19 October that it is selling its beauty business to L’Oréal for €4bn (US$4.66bn) - signalling a long-term strategic partnership in luxury beauty and wellness.

For Kering CEO Luca de Meo, the move is an attempt to tackle the luxury group’s high debt and refocus on its core fashion business.

French beauty giant L’Oréal will take ownership of Kering’s Creed fragrance line and the right to develop products under Kering’s fashion labels.

The partnership includes the rights to enter into a 50-year exclusive license for the creation, development and distribution of beauty products for fashion House Gucci, according to Kering.

The license to make Gucci’s beauty products will commence after its current license with Coty expires, expected in 2028.

According to Kering, the 50-year license will also apply to products for Bottega Veneta and Balenciaga.

Discussing the partnership, Luca said: “This strategic alliance makes a decisive step for Kering.

“Joining forces with the global leader in beauty, we will accelerate the development of fragrance and cosmetics for our major Houses, allowing them to achieve scale in this category and unlock their immense long-term potential, as did Yves Saint Laurent Beauté under L’Oréal’s stewardship. 

“Together, we will also venture into new frontiers of wellness, combining the unrivalled expertise of L’Oréal with our unique luxury reach. This partnership allows us to focus on what defines us best: the creative power and desirability of our Houses.”

How will the alliance benefit Hering?

The sale is a major step towards reducing Kering’s net debt - sparking investor concerns by standing at €9.5bn (US$11bn) at the end of June, according to Reuters. 

Sales at the Italian fashion House have been dropping year-on-year since the third quarter of 2023.

Kering’s latest Q2 2025 earnings update reported Gucci’s sales down 25% alongside reduced profits - linked to slowing demand in the key Chinese market.

The brand has faced other challenges in 2025 including a cyber attack and data breach. 

Kering named Francesca Belettini as the new CEO of Gucci on 17 September, tasked with turning around declining sales and maintaining heritage.

Beyond beauty, Kering is joining forces with L’Oréal to “explore business opportunities at the intersection of luxury, wellness and longevity” in a 50/50 joint venture.

The programme is planned to combine L’Oréal’s innovation capabilities with Kering’s deep understanding of luxury clients.

Success for L’Oréal

Nicolas Hieronimus, L’Oréal Groupe's CEO, said the strategic partnership will “further solidify our position as the world’s number one luxury beauty company and allows us to explore new avenues in wellness together”.

Under the terms of the agreement, L’Oréal has the rights to House of Creed, a heritage name in haute parfumerie celebrated for its craftsmanship of rare natural ingredients.

Creed will be positioned within L’Oréal Luxe, focusing on luxury beauty as the name suggests, to accelerate its growth further across men’s and women’s markets.

The French company has made fragrances and cosmetics for YSL since 2008, with particular success in fragrance and complexion products.

Nicolas says: “The addition of these extraordinary brands will perfectly compliments our existing portfolio and significantly expands our reach into new, dynamic segments of luxury beauty.

“Through Creed, we will establish ourselves as one of the leading players in the fast-growing niche fragrance market.

“Gucci, Bottega Veneta and Balenciaga are all exceptional couture brands with enormous potential for growth.”

According to Kerring, a strategic committee is being established to ensure coordination between L’Oréal and its brands to monitor the partnership’s progress.