French luxury conglomerate Kering is restructuring its business by selling its beauty division to L’Oréal in a deal valued around €4 billion. The agreement not only transfers ownership of Creed and several major fragrance licenses but also establishes a partnership between the two giants to pursue new opportunities in wellness and longevity.

Kering Refocuses on Core Luxury and Deleveraging

The divestment marks a strategic reset for Kering, which has faced rising debt and a decline in margins amid slower demand for high-end goods. The company’s net debt reached roughly €9.5 billion by mid-2025, prompting management to prioritize liquidity and operational efficiency.

Kering’s beauty division, formed after its acquisition of Creed in 2023, had struggled to achieve profitability, posting an estimated €60 million operating loss in the first half of 2025. By selling the division to L’Oréal, Kering will release capital and pivot toward its core luxury houses—Gucci, Saint Laurent, Balenciaga, and Bottega Veneta—where it continues to see stronger long-term value. The sale also transitions Kering into a licensing model, allowing it to maintain a financial link to beauty without the operational risk.

L’Oréal Expands Luxury Portfolio and Enters Wellness

For L’Oréal, the acquisition strengthens its dominance in luxury cosmetics and fragrances. The deal includes Creed, a highly profitable niche brand, as well as long-term exclusive rights to develop and distribute beauty products under Kering’s flagship luxury labels.

The transaction extends beyond cosmetics. Both companies will jointly invest in a new venture aimed at the wellness and longevity market, a segment projected to grow at double-digit rates over the next decade. The partnership combines L’Oréal’s R&D expertise with Kering’s brand prestige, reflecting an industry-wide shift toward holistic beauty, health, and well-being products.

Strategic and Market Implications

This move underscores how luxury and beauty companies are adapting to macroeconomic headwinds and changing consumer behavior. Global demand for traditional luxury goods has softened, particularly in China and the U.S., pushing conglomerates to streamline operations and pursue adjacent growth categories.

For Kering, the sale reinforces its transformation strategy following recent management changes, signaling a commitment to financial discipline and renewed brand focus. For L’Oréal, the acquisition diversifies its portfolio at a time when the line between beauty, health, and wellness continues to blur.

Market observers will closely watch how the companies execute their respective strategies—Kering’s shift toward a leaner luxury model and L’Oréal’s integration of new assets. The alliance may also serve as a blueprint for future collaborations between fashion and beauty leaders seeking to expand into wellness and longevity.

In the coming quarters, attention will center on how Kering deploys the proceeds to reduce debt and support brand investment, while analysts track L’Oréal’s performance in the premium beauty segment and its ability to capture early momentum in the wellness economy.