New Kering CEO Luca de Meo has made a huge restructuring decision. 

Two global leaders in the luxury and beauty worlds, Kering and L’Oréal, are coming together in a €4 billion long-term strategic partnership that will have some major implications for the travel retail channel.

Global luxury powerhouse Kering, whose brands include Gucci and Yves Saint Laurent, is offloading its beauty business by selling House of Creed to perfume and cosmetics giant L’Oréal, the biggest beauty player in travel retail. The French beauty conglomerate will also acquire the beauty and fragrance licences of some of Kering’s major brands.

In a statement, Kering also talked of “an exclusive venture to explore business opportunities in the field of wellness and longevity”.

Under the terms of the agreement, announced on Sunday, Kering has the right to sell Kering Beauté – a division created in 2023 to support the development of the beauty businesses of its in-house brands, such as Bottega Veneta, Balenciaga, McQueen, Pomellato, and Qeelin – plus the House of Creed, to L’Oréal.

Kering bought the haute parfumerie brand Creed outright in mid-2023 to give weight to the Kering Beauté entity. However, the luxury group has struggled with sales in its core fashion empire as first-half revenue crashed by -16% to €7.6 billion. Its biggest units, Gucci and Yves Saint Laurent, declined by -26% and -11% respectively. One of the few bright spots was Kering’s eyewear business, which grew by 2%.

Major move from new Kering CEO

The beauty sale is seen as a major company restructure by new chief executive Luca de Meo, the former CEO of carmaker Renault, who was appointed in June. As Creed moves into the L’Oréal Luxe division, it will be in the company of brands like Armani, Lancôme, and Prada. and probably leave it in a better place for global acceleration, including travel retail. L’Oréal Luxe already has Yves Saint Laurent Beauté in its stable, underlining the two groups’ long history of collaboration.

“This strategic alliance marks a decisive step for Kering,” said de Meo. “We will accelerate the development of fragrance and cosmetics for our major houses, allowing them to achieve scale in this category and unlock their immense long-term potential, as did Yves Saint Laurent Beauté under L’Oréal’s stewardship.”

Adding Creed is a big win for L’Oréal Luxe. 

Nicolas Hieronimus, CEO of L’Oréal Groupe, added: “This partnership will further solidify our position as the world’s number one luxury beauty company. The addition of these extraordinary brands perfectly complements our existing portfolio and significantly expands our reach into new, dynamic segments of luxury beauty. Through Creed, we will establish ourselves as one of the leading players in the fast-growing niche fragrance market.”

50-year exclusive licences coming soon

Importantly, the new partnership includes the rights to enter into a 50-year exclusive licence for the creation, development, and distribution of fragrance and beauty products for Gucci. This will start after the expiration of the current licence with Coty.

Kering is also granting L’Oréal 50-year exclusive licences for the creation, development, and distribution of fragrance and beauty products for Bottega Veneta and Balenciaga, as soon as the transaction closes, which is expected in the first half of 2026, subject to regulatory approvals. L’Oréal will also pay royalties to Kering for the use of its licenced brands. Hieronimus commented: “Gucci, Bottega Veneta and Balenciaga are all exceptional couture brands with enormous potential for growth.”

“A strategic committee will be established to ensure coordination between Kering brands and L’Oréal and monitor the progress of our partnership,” said Kering. The luxury group added: “Beyond beauty, Kering and L’Oréal are joining forces to explore business opportunities at the intersection of luxury, wellness, and longevity.”

This tie-up will be in the form of a planned 50:50 joint venture that will focus on novel experiences and services that combine L’Oréal’s capabilities in innovation, which are being stepped up, and Kering’s knowledge of the luxury world.

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