Kering Shares Make 52 Wk High on €4 Billion Beauty Division Sale to L’Oréal

Kering shares (EPA: KER) are 5% higher at the open today, setting a new 52 week high of 326.50, with eyes on the stock following the announcement of a definitive agreement to sell its beauty division to L'Oréal for €4 billion. The strategic decision reflects a significant shift in Kering's focus, aiming to streamline operations and reduce debt.

The all-cash transaction, expected to close in the first half of 2026, includes the sale of the House of Creed and the establishment of 50-year exclusive licenses for fragrance and beauty products for Kering's prestigious brands such as Gucci, Bottega Veneta, and Balenciaga. The license for Gucci fragrances will transition from Coty to L'Oréal upon its expiration, anticipated in 2028.

This move signals a reversal of the diversification strategy previously pursued, with the company now prioritizing its core luxury fashion business. The beauty division had been facing challenges, reporting an operating loss of €60 million in the first half of 2025. Divesting this segment is intended to improve financial performance and address the company’s €9.5 billion debt. The sale price of €4 billion, which includes the House of Creed (acquired in 2023 for approximately €3.5 billion), highlights the perceived value of Kering's beauty assets.

Beyond the immediate financial implications, Kering and L'Oréal are also forging a strategic alliance to explore collaborative ventures in the wellness and longevity markets. This partnership aims to leverage L'Oréal's innovation capabilities and Kering's understanding of luxury consumers. A strategic committee will be formed to coordinate efforts between the brands and identify joint business opportunities.

For L'Oréal, this acquisition represents a substantial expansion into the luxury beauty sector, surpassing its previous acquisition of Aesop. The addition of Creed and the long-term licenses for Kering's brands are expected to significantly strengthen L'Oréal's market position. The agreement also includes royalty payments from L'Oréal to Kering for the use of its licensed brands, ensuring continued financial benefits for Kering.

Analysts will be keenly observing Kering's financial reports in the coming quarters to assess the impact of this divestiture on the company's overall performance and profitability. The proceeds from the sale are expected to bolster Kering's balance sheet and provide greater financial flexibility for future investments in its core fashion brands.

The move represents a bold strategic shift for Kering, potentially reshaping its future in the luxury market and leaving the markets to consider the impact of this decision as the company refocuses on its core brands to make a significant impact on the company's overall value.