Kering Bets on L’Oréal to Shape the Future of Gucci Beauty?

What Could It Actually Mean?

I’ve spent a good part of the last few months studying luxury brand strategy and writing about it, reading into how these houses think, how conglomerates operate, and what actually drives the decisions behind the scenes. So when the news broke that Gucci and L’Oréal had signed a fifty-year beauty licensing deal, it landed differently for me than it might have for most people. Not because I was trying to get ahead of anyone with it, but because this is exactly the kind of story I find myself unable to leave alone, I wanted to trace every thread of it: “What led to it”, “How Kering, L’Oréal, Gucci, and Coty all fit together”, and “What it actually means for each of them going forward”. So I went digging, pulled the facts together, and pieced together the full picture. My hope is that this piece works as a single, complete read which includes everything you need to actually understand what happened here, without having to go chase it down anywhere else.

Before the deal itself, it helps to know the three players sitting at this table and not just as logos, but as businesses with their own histories.

L’Oréal: A Century of Scientific Beauty

L’Oréal’s story starts in 1909, with French chemist Eugène Schueller, who developed a safe synthetic hair dye and started selling it to Parisian hairdressers. The company diversified early, moving into soap with the Monsavon acquisition, and was formally incorporated under the L’Oréal name in 1939.

Schueller died in 1957, and François Dalle took over as CEO, steering the company from a founder-led chemical business into the modern consumer goods powerhouse it is today. Dalle led the acquisition of Lancôme in 1964, the same year L’Oréal created Kérastase in-house which was developed internally by L’Oréal’s own scientists, not acquired. From there: La Roche-Posay in 1989, Maybelline in 1996 for $758 million, and Aesop in 2023. Today L’Oréal owns roughly 37 global brands, holds a market cap in the hundreds of billions, and reported around €41.2 billion in revenue in 2023. It’s often mistaken for a marketing company, but it’s really a science company first which files hundreds of patents a year, and that R&D base is what the rest of the business runs on.

Kering: The Conglomerate Behind the Houses

Here’s the thing most people don’t know, Kering is not Gucci. Kering is the parent company that owns Gucci, along with Saint Laurent, Bottega Veneta, Balenciaga, and others. The two get conflated constantly, largely because Kering keeps a much lower public profile than its own brands.

Kering started as a timber trading company, founded by François Pinault in 1962. It moved into retail and distribution, running chains like Conforama, and became Pinault-Printemps-Redoute. In 1999, PPR acquired a 42% stake in the Gucci Group for $3 billion, following a prolonged and highly publicized takeover battle against Bernard Arnault’s LVMH. PPR won, took full control of Gucci by 2004, added Bottega Veneta and Balenciaga along the way, and eventually shed its retail businesses to become a pure luxury player. In 2013, it renamed itself Kering to reflect that singular focus, later expanding into eyewear as Kering Eyewear and high jewelry as Boucheron and Pomellato.

Kering’s current numbers tell a more complicated story. As of Q1 2026, group revenue sat at €3.568 billion, down 6% reported, but flat on a comparable basis, which the company is treating as a real turning point. The main drag is Gucci, down 14% reported (8% comparable) that same quarter, its tenth straight quarter of decline. That matters more than it might seem, since Gucci alone made up 59% of Kering’s entire operating profit in 2025. Kering’s response is a full reset under CEO Luca de Meo, branded internally as “ReconKering,” aimed at doubling operating margins and pushing Gucci back toward full-price, lower-distribution, higher-exclusivity selling.

Gucci: leather goods, bankruptcy, and Tom Ford’s rescue

Gucci goes back to 1921, founded by Guccio Gucci in Florence as a small leather goods and luggage shop with an equestrian, aristocratic aesthetic. During WWII-era material shortages, the brand turned to hemp, jute, and bamboo, giving us the 1947 bamboo bag. The Horsebit loafer followed in 1953. A rough patch of bankruptcy fears and family drama nearly took the brand down before Tom Ford stepped in as creative director in the ’90s working alongside CEO Domenico De Sole and pulled Gucci into modern relevance with sleek, provocative design. Alessandro Michele’s 2015–2022 tenure pushed it further with a maximalist, gender-fluid aesthetic that captured a new generation.

Today Gucci sits inside Kering, and it’s not in a great moment. Its brand value is estimated around $11.4–11.6 billion in 2025 rankings, down sharply from its 2022 peak near $18 billion, and the single biggest value loss of any brand in Interbrand’s luxury rankings that year. Kering’s response: cutting wholesale distribution, cutting discounting, focusing entirely on full-price sales, and resetting the product architecture from the ground up.

Three companies, three different trajectories: L’Oréal, a scientific powerhouse dominating global beauty; Kering, a conglomerate trying to stabilize its crown jewel; and Gucci, a storied house mid-turnaround. Now, the actual deal.

What actually happened? What the deal really means?

Before this deal, Gucci didn’t make its own perfumes and makeup but Coty did. Coty has held the Gucci Beauty license since 2016, handling the creation, production, and distribution of everything from Gucci Bloom to Gucci Guilty. Under Coty, Gucci Beauty grew revenue by more than 60% since 2019. That’s the “before” picture worth holding onto: this deal isn’t Gucci launching beauty for the first time, it’s a handover of something that already existed.

The timeline: In October 2025, Kering announced it was selling its entire beauty division which was Kering Beauté, including the fragrance house Creed to L’Oréal, for €4 billion. Inside that deal was also a 50-year exclusive license for L’Oréal to create, develop, and distribute beauty and fragrance products for Gucci, Bottega Veneta, and Balenciaga. The Gucci piece came with a condition, though, it could only take effect once Coty’s existing license expired, which was scheduled for June 2028.

This July, Kering and Coty agreed to move that timeline up by a year. Coty will receive roughly $400 million to exit the Gucci license early, $250 million up front, $150 million by September 2027, and up to $30 million tied to performance during the transition. L’Oréal is covering about 70% of the transition costs. The new license now takes effect in mid-2027 instead of mid-2028, pending regulatory approval.

This wasn’t a purely cooperative handover, either. Coty had sued Kering and Gucci in UK Commercial Court after the original October 2025 announcement, arguing the arrangement violated its existing contractual rights. This new agreement resolves that litigation entirely so it’s also a negotiated settlement, not just a business transition.

Kering CEO Luca de Meo said the agreement “creates value for Gucci, L’Oréal and Coty alike,” accelerating the transition so both companies can “begin shaping the next chapter of Gucci Beauty a year earlier than planned.” Coty, meanwhile, gets to redeploy that $400 million into paying down debt and refocusing on its core prestige fragrance portfolio.

Why it happened?

Three separate pressures converged here, not one company’s decision alone.

Coty was under real financial strain. It posted a net loss of $411.4 million in its most recent fiscal quarter, driven partly by a $362.8 million non-cash impairment tied to its struggling Consumer Beauty business. Controlling shareholder JAB Holdings has been pushing a top-level corporate reset in response. Exiting the Gucci license early, for guaranteed cash now, fit that need.

L’Oréal had wanted this for a while. L’Oréal’s CEO reportedly confirmed discussions were underway well before this accelerated deal came together. The logic: pair Gucci’s cultural weight with L’Oréal’s global distribution and R&D machine to build toward a multi-billion-euro beauty house. This also isn’t L’Oréal’s first deal of this kind with Kering, L’Oréal acquired YSL Beauté from Kering back in 2008, and that partnership has held up well. This new, larger deal expands on a template that already had a track record.

And Kering had its own reasons to want beauty off its plate. Under de Meo’s “ReconKering” strategy, the group is trying to simplify operations and redirect resources into fixing its core fashion and leather goods business which largely means fixing Gucci. Outsourcing beauty manufacturing and distribution to L’Oréal, while collecting long-term royalties and a one-time cash infusion, lets Kering focus internally on the turnaround that actually matters most to its bottom line.

What it could mean going forward?

For Gucci, the goal is to reshape and reenergize Gucci Beauty, returning it to multibillion-euro status. The fifty-year horizon provides the structural stability and investment runway necessary to develop deep, multigenerational beauty lines and brand equity something a shorter license simply couldn’t support. This move directly follows Kering’s broader alliance with L’Oréal, letting both companies begin shaping the next chapter of Gucci Beauty sooner, and it aligns Gucci’s fashion collections more closely with its makeup and fragrance lines, giving the brand a consistent luxury identity across every consumer category.

For Kering, most analysts see this as a long-term cash and deleveraging play rather than an instant fix. The $400 million Coty compensation, the transition-cost arrangement with L’Oréal, and future royalty income all help the balance sheet but Kering’s actual market performance still depends on whether Gucci’s core fashion and leather goods business turns around. Beauty licensing revenue helps; it doesn’t replace fixing the flagship.

For L’Oréal, this consolidates its control over beauty and fragrance across most of Kering’s major houses like Gucci, Bottega Veneta, Balenciaga, building on the YSL Beauté precedent from 2008. If it plays out as intended, it becomes another multi-billion-euro pillar reinforcing L’Oréal’s already-dominant prestige beauty position.

And for the luxury industry as a whole, this deal signals that fashion houses are increasingly comfortable handing their beauty divisions to specialized beauty conglomerates rather than running them in-house. It also reframes how seriously the industry treats prestige beauty: a fifty-year term is a dramatic departure from the fashion industry’s traditional licensing cycles, which typically run just a handful of years with periodic renewals. That’s not a short-term cash grab it’s a conglomerate treating beauty licensing as a multi-generational profit engine, a bet on where it wants both brands to be decades from now, not just next quarter.

Strip away the press releases, and this deal is really about three companies solving three different problems with one signature. Coty needed cash and an exit. L’Oréal needed Gucci to complete its Kering beauty portfolio. Kering needed to offload a business it no longer wanted to run, so it could pour everything into fixing the one it can’t afford to lose. Fifty years is a long time to bet on any of that working out but it’s also the clearest sign yet that in luxury, beauty isn’t a side business anymore.

It’s the business.

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