L'Oréal deal to 'help us lighten the ship and relaunch our fashion brands' - Kering's Luca de Meo

Kering, which has been trying to revive its flagship brand Gucci for years, will present its third-quarter revenue on Wednesday. This is the first financial publication since Luca de Meo's arrival in September as chief executive officer to turn around the luxury group.

This publication comes 72 hours after the announcement of the sale of Kering's beauty division to L'Oréal for 4 billion euros. The division was created just two years ago by absorbing the luxury perfume brand Creed, which was acquired for 3.5 billion euros.

Beauty division sales to L'Oréal - a strategy to reduce Kering's debt

The agreement includes the establishment of 50-year perfume licenses for the flagship brands Gucci, Bottega Veneta and Balenciaga. It also includes a partnership “in the form of a 50/50 joint venture, which will create experiences and services,” explained Luca de Meo in an interview with Le Figaro on Tuesday.

The transaction, payable in cash, should help the group that owns Gucci, Bottega Veneta, Saint Laurent and Balenciaga reduce its debt, which amounts to 9.5 billion euros.

For Kering, “this is not a 180-degree turn, but a way to accelerate the development of [its] brands in the beauty segment. It's good to do it alone, but it's better to do it together, especially with the leader, L'Oréal,” he stated.

“If we put our brands in the hands of L'Oréal, they will take off,” de Meo believes. L'Oréal will pay royalties to Kering for the use of the licensed brands. “L'Oréal invests more in media for its perfumes than we do for our fashion brands. We will benefit from this firepower,” he anticipates.

Lightening the ship and relaunching fashion

Meanwhile, Kering's third-quarter revenue is expected to fall by 12 percent to 3.3 billion euros, according to the Bloomberg analyst consensus.

“There was an urgent need to focus on what we do best,” de Meo told Le Figaro. “The world is moving fast, we have to keep up.” He added, “I have always been convinced that speed is important and we need to pick up some pace.”

Contacts between L'Oréal and Kering began a year ago, well before de Meo's arrival. They accelerated when the Italian met with Nicolas Hieronimus, who heads L'Oréal, this summer before he even took office.

“This transaction will help us lighten the ship and relaunch our fashion brands, chief among them Gucci,” estimates de Meo. It is expected to be completed in the first half of 2026.

Gucci, the flagship brand of the luxury group chaired by François-Henri Pinault, alone accounts for 44 percent of revenue and two-thirds of operating profitability. The brand is going through a difficult period. Its sales fell by 26 percent in the first half of the year, to three billion euros.

The partnership with L'Oréal includes “the rights to conclude an exclusive fifty-year license agreement for the creation, development and distribution of Gucci's perfume and beauty products,” starting after the current license with the American company Coty expires. According to several financial analysts, this license expires in 2028.

“Yves Saint Laurent's revenue in beauty is equivalent to that of its fashion and leather goods,” which was 2.9 billion euros in 2024, de Meo pointed out to Le Figaro. “This gives you an idea of the potential for Gucci.”

This article was translated to English using an AI tool.

OR CONTINUE WITH

Gucci

Kering

Saint Laurent