Will Kering & L’Oréal Boost Their Brand Power Together?

Kering has moved to streamline its portfolio and sharpen brand stewardship, announcing on 19 October the €4bn (US$4.66bn) sale of its beauty business to L’Oréal.

The deal signals a long-term partnership in luxury beauty and wellness designed to match Kering’s fashion equity with L’Oréal’s category scale and operational excellence.

Under the agreement, L’Oréal will acquire the House of Creed and gain the right to develop beauty 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, commencing 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 - an unusual time horizon that enables coherent, long-term brand strategies across fragrance, makeup and skincare.

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.”

Brand stewardship and portfolio focus

From a brand management standpoint, the move concentrates Kering’s resources on its core fashion Houses while entrusting beauty execution to a specialist partner - supporting equity consistency as each House expands into adjacent categories.

It also targets balance-sheet repair. The sale is a major step towards reducing Kering’s net debt - which stood at €9.5bn (US$11bn) at the end of June, according to Reuters - after investor concerns.

Redirecting capital to brand revitalisation is timely: 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 also faced challenges in 2025 including a cyber attack and data breach.

Leadership is being realigned to protect desirability and heritage. Kering named Francesca Belettini as the new CEO of Gucci on 17 September, tasked with turning around declining sales and maintaining heritage.

The L’Oréal partnership offers a route to refresh Gucci’s beauty codes in sync with the fashion narrative, preserving consistency across touchpoints as the House evolves.

Beyond beauty, Kering and L’Oréal will “explore business opportunities at the intersection of luxury, wellness and longevity” via a 50/50 joint venture - combining L’Oréal’s innovation capabilities with Kering’s deep understanding of luxury clients.

According to Kering, a strategic committee is being established to ensure coordination between L’Oréal and its brands to monitor the partnership’s progress - important governance to safeguard positioning and avoid portfolio overlap.

L’Oréal’s luxury expansion

For L’Oréal, the acquisition strengthens leadership in luxury beauty and niche fragrance. 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, 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 to accelerate growth across men’s and women’s markets, adding a high-margin, craft-led pillar to its portfolio.

The French company has made fragrances and cosmetics for YSL since 2008, with particular success in fragrance and complexion products, a precedent for scaling couture-driven beauty while maintaining brand codes.

Nicolas says: “The addition of these extraordinary brands will perfectly complement our existing portfolio and significantly expand 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.”

With long-dated licenses, dedicated governance and a clear split of roles, Kering as brand owner and L’Oréal as category specialist, the alliance creates room to rebuild momentum at Gucci and selectively extend Bottega Veneta and Balenciaga, while safeguarding the creative integrity that underpins desirability.