Gucci Owner Kering Nears $4 Billion Sale of Beauty Unit to L’Oréal
Deal would be an early move by new Kering CEO Luca de Meo to revive luxury giant’s fortunes
- Kering is negotiating to sell its beauty business to L’Oréal for approximately $4 billion, aiming to revitalize the luxury group.
- The potential sale would allow L’Oréal to acquire Creed and develop new beauty offerings for Kering’s fashion brands.
- Kering’s beauty division, launched in 2023, faces challenges from slowing sales at Gucci and a difficult U.S. market for Saint Laurent.
Kering KER 0.34%increase; green up pointing triangle is in talks to sell its beauty business to L’Oréal OR 1.11%increase; green up pointing triangle in a deal that values the unit at roughly $4 billion, according to people familiar with the matter, an early move by the Gucci owner’s new chief to revive the luxury giant’s fortunes.
The details
The deal could be announced as soon as next week, assuming talks don’t break down unexpectedly or another bidder emerges, the people said. The development comes just weeks after Kering’s new chief executive, Luca de Meo, started in the top job.
L’Oréal, based in Paris, offers a range of beauty products, including under its namesake brand, Garnier and Maybelline New York. Its products are sold to both consumers and professionals. By acquiring Kering’s beauty business, L’Oréal would add cologne maker Creed to its portfolio.
A deal would also offer L’Oréal the opportunity to develop new offerings around Kering’s fashion brands, which include Bottega Veneta, Balenciaga and McQueen, the people familiar with the matter said.
The context
Kering, also based in France, launched a new beauty division in 2023. The move was aimed at capitalizing on the growth of cosmetics and perfumes by making the products in house, instead of licensing its brands to third parties for beauty products.
The company had quickly moved to scale its beauty business, striking an all-cash deal to acquire fragrance brand Creed over the summer of 2023.
But Kering’s beauty efforts have bumped up against struggles with other parts of the company’s business. Gucci—the company’s largest brand by revenue—has suffered from slowing sales in China. Meanwhile, its Saint Laurent label has been weighed down by a smaller wholesale business and a tougher U.S. market.
A sale could help Kering reduce its debt pile, which stood at roughly $11 billion as of June 30.
Kering competes with Bernard Arnault’s LVMH, Hermès and other European fashion powerhouses.
In tapping de Meo as its CEO, Kering is betting that the executive’s time in the auto industry will have given him the skills and fresh perspective needed to revive the conglomerate. He most recently served as boss of French carmaker Renault.
During more than three decades of experience in the automotive industry, de Meo earned a reputation as a brand builder and marketer. He helped turn Fiat’s modern 500 into a cultural icon, carved out Seat’s sporty Cupra line, and refocused Renault by slimming its model range and boosting profitability in hybrids and electric vehicles.
De Meo succeeded Francois-Henri Pinault, whose family founded Kering. Pinault has retained his role as chairman.