
Gucci Owner Kering's Stock In Focus After $4.7B Deal To Sell Beauty Unit To L'oreal SA
Gucci owner Kering SA's stock rallied nearly 5% in early trading on the Euronext Paris on Monday, hours after the luxury goods giant announced the sale of its beauty division to L'Oreal SA for 4 billion euros ($4.7 billion). Kering's shares in the U.S. are likely to garner attention when the market opens for the new week.
The move comes as the first major step under Luca de Meo, who took over as the luxury group's CEO last month, to tackle its high debt and refocus on the core fashion business.
Long-term Tie-Up
Under the deal, L'Oreal will acquire Kering's fragrance brand Creed, as well as the rights to develop fragrance and beauty products under Kering's fashion labels Gucci, Bottega Veneta and Balenciaga under a 50-year exclusive license. The licence for Gucci fragrances is currently held by Coty, and L'Oreal's license is expected to commence likely in 2028.
Kering bought Creed for 3.5 billion euros in 2023, although it struggled to ramp it up. At the time, it was seen as a bold move by the then CEO Francois-Henri Pinault to diversity the company's business beyond fashion apparel and accessories.
Effort To Trim High Debt
The divestiture comes as Kering battles declining growth at its largest brand, Gucci, partly due to a slowdown in the luxury and beauty markets in China, and deteriorating luxury sale trends globally. Kering has also issued a number of profit warnings over the past year.
How Do Analysts And Retail Traders Feel?
Last week, Berenberg downgraded Kering's stock to 'Sell' from 'Hold,' and warned that "after three decades, the luxury super cycle is over." It forecast 2% to 3% annual growth for the luxury goods industry, below the historic 6%.
On Stocktwits, the retail sentiment for PPRUY shifted to 'neutral' as of early Monday, from 'bullish' the prior day. The stock is up 48% year-to-date.
Kering's mulit-step deal with L'Oreal is expected to close in the first half of 2026.
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