Gucci owner Kering (PPRUY) has agreed to sell its beauty division to L’Oréal (LRLCY) in a €4 billion ($4.66 billion) deal. The move marks a major change under new Chief Executive Luca de Meo, who is working to revive the company after years of weak sales at its main brand, Gucci. To add context, Gucci’s sales fell about 26% in the first half of 2025, with revenue of roughly €3.0 billion, according to Kering’s H1 2025 results.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Kering Hands Over Beauty Business to L’Oréal
The deal covers Kering’s luxury perfume brand House of Creed and includes 50-year licenses allowing L’Oréal to develop and sell beauty products under the Gucci, Bottega Veneta, and Balenciaga names. Kering will receive royalty payments from L’Oréal for the use of these brands.
The sale is expected to close in the first half of 2026. It marks a reversal of Kering’s earlier plan to grow its beauty division on its own. Instead, the group will now rely on L’Oréal’s strong global network to develop and market its beauty products.
De Meo’s First Major Restructuring Move
This is one of the first major decisions by Luca de Meo since he took over as CEO in September, joining from carmaker Renault. De Meo was brought in to restructure and reinvigorate Kering, which has fallen behind luxury peers such as LVMH (MC) and Hermès due to sluggish sales at Gucci.
Under the deal, L’Oréal will take over Gucci’s beauty license in 2028, once its current contract with Coty ends. The partnership gives Kering a more predictable revenue stream while allowing its brands to reach wider global audiences through L’Oréal’s powerful beauty network.
Calling the agreement “a decisive step,” de Meo said the deal will help Kering’s fragrances and cosmetics achieve greater scale and visibility.
Is Kering Stock a Good Buy?
Overall, KER stock has received a Hold rating on TipRanks, backed by a total of 18 recommendations from analysts. It includes five Buys, eight Holds, and five Sells assigned in the last three months. The KER share price target is €245.00, which is 20.85% lower than the current trading level.
