Gucci owner, luxury conglomerate Kering, is in talks to sell its cosmetics division to giant L’Oréal. The deal, which values the business at about $4 billion, could be one of the first decisive steps by Kering’s new CEO, Luca de Meo, to revive the company, the WSJ reported.
For Paris-based L’Oréal, which owns brands such as Garnier and Maybelline New York, the deal is a strategic opportunity to strengthen its position in the premium segment. The acquisition of Kering’s beauty business will add, first of all, the prestigious perfume house Creed to L’Oréal’s portfolio.
In addition, the deal will open up the opportunity for L’Oréal to develop new cosmetics and perfume products under such world-famous Kering luxury brands as Bottega Veneta, Balenciaga and McQueen.
The decision to sell is a strategic U-turn for Kering. The company only launched its own cosmetics division in 2023 to capitalize on market growth by manufacturing its own products rather than licensing its brands to third-party companies. Kering even aggressively expanded the business last summer, acquiring Creed for cash.
But the initiative has run into serious problems elsewhere in the conglomerate:
- Gucci, Kering’s largest brand by revenue, is suffering from slowing sales in China.
- Saint Laurent is under pressure from a shrinking wholesale business and a challenging U.S. market.
- A sale of the cosmetics business could help Kering reduce its significant debt, which stood at about $11 billion as of June 30.