L'Oreal(US:LRLCY) Di Yi Cai Jing·2025-10-20 13:11Core Viewpoint - Kering Group has agreed to sell its beauty division to L'Oréal for €4 billion, marking a significant strategic shift under the new CEO, aimed at reducing debt and focusing on core luxury goods [1][7]. Group 1: Transaction Details - The sale includes the high-end perfume brand Creed and a 50-year exclusive licensing agreement for producing beauty products for Kering's brands like Gucci, Balenciaga, and Bottega Veneta [3]. - The transaction is expected to be completed in the first half of 2026 [1]. Group 2: Financial Context - Kering's beauty segment accounted for only 2% of its total revenue, which highlights its limited contribution to the overall business [4]. - Kering's revenue fell by 16% to €7.587 billion in the first half of 2025, with net profit dropping 46% to €474 million [6]. - Kering's debt reached €9.5 billion by mid-2023, prompting the need for financial restructuring [6]. Group 3: Industry Trends - The acquisition signifies a shift from brand-led to platform-led ecosystems in the luxury and beauty sectors, with brands focusing on creativity and brand value while outsourcing operations to specialized groups [3][7]. - The luxury sector is experiencing intensified competition, leading companies to divest non-core businesses and concentrate on primary areas like leather goods and high fashion [7]. Group 4: L'Oréal's Strategy - L'Oréal aims to enhance its position in the high-end beauty market by integrating multiple luxury brands into its portfolio, following its successful acquisition of Yves Saint Laurent's beauty business in 2008 [8]. - L'Oréal's fragrance division has shown strong growth, with a reported 11% increase in sales, indicating a robust market potential [10].