What impact will the sale of Kering's beauty division have on Armani?

The sale of Kering's beauty division to L'Oréal has called into question the potential acquisition of a stake in the Armani Group by the French beauty giant. Concern as to the future of L'Oréal's relationship with Armani has been raised by the media, which has speculated whether the brand's heirs may be forced to seek a different future home for the Italian fashion house.

In an article, media outlet Glitz suggested that Kering's deal with L'Oréal "pulls the rug out from under the Armani heirs". According to the publication, by selling its Beauty division to L'Oréal, Kering weighs down the cosmetics giant's balance sheet. This reduces its room for manoeuvre to acquire a 15 percent stake in Armani.

The four billion euros from the sale are “payable in cash upon completion of the transaction, scheduled for the first half of 2026,” according to L'Oréal's press release. The group will also have to pay royalties to Kering for the use of the licensed brands.

L'Oréal has held the Armani licence for fragrances and cosmetics since 1988. It was named in Giorgio Armani's will as a potential buyer. According to the will, the heirs of the Armani house must open up the capital or proceed with a partial sale of 15 percent within 12 to 18 months.

Glitz has now suggested the Kering-L'Oréal deal may limit the Armani heirs' option of using L'Oréal as a strategic investor, given that L'Oréal is now heavily committed elsewhere. This would mean the heirs would have to turn to the other giants mentioned: LVMH and EssilorLuxottica.

The Armani group generated approximately 2.3 billion euros in revenue in 2024. Including licences for beauty and eyewear, as well as other activities, Reuters estimated that total revenue came to around 4.25 billion euros. A company's valuation, however, is not based solely on its revenue.

In the luxury sector, groups are often valued at two to three times their revenue. This can be even higher if margins and prestige are high. It can therefore be reasonably estimated that the 15 percent stake could be worth between one and 1.5 billion euros.

This article was translated to English using an AI tool.

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