Core Viewpoint - L'Oréal's third-quarter revenue increased by 3.4% year-on-year, with North Asia, including China, growing by 4.7%, surpassing analyst expectations of 3.2% [3] Revenue Performance - The mass cosmetics segment showed the lowest growth at 0.4%, while luxury beauty and professional hair care grew by 1.5% and 1.1%, respectively. The skin science beauty segment led with a growth rate of 6.1%, although this growth has noticeably slowed [4] - In China, all segments except mass cosmetics achieved growth exceeding market levels, with notable performances from brands like Lancôme, Helena Rubinstein, and YSL [4] Strategic Acquisition - L'Oréal announced a €4 billion acquisition of Kering's beauty business, which includes the luxury perfume brand Creed and the fragrance rights for Balenciaga and Bottega Veneta [4][5] - This acquisition is seen as a significant move for L'Oréal in the high-end fragrance market, which is expected to enhance its market share in this segment from 13.7% to potentially 19.7% [5] Market Dynamics - The luxury beauty sector remains competitive, with L'Oréal's luxury division still showing growth despite overall high-end consumption slowing down [4][5] - The global fragrance market's annual sales growth has slowed from 13% last year to 11% this year, with high-end fragrances experiencing a more pronounced slowdown [6] Challenges Ahead - The Gucci fragrance business, currently licensed to Coty until 2028, poses a challenge as L'Oréal will need to invest significantly to reshape the brand's image upon acquisition [6][7] - Creed, while a promising asset, currently generates approximately $400 million in annual sales, indicating that L'Oréal will need to invest heavily to expand the sales network for Creed and the other brands acquired [7]

Core Viewpoint - LVMH is exploring the sale of its 50% stake in Fenty Beauty, collaborating with investment bank Evercore for this process [1][4] Group 1: Company Overview - Fenty Beauty was co-founded by singer Rihanna and LVMH's Kendo Brands in 2017, with both parties holding equal shares [1] - The brand has gained popularity on social media, known for its inclusive range of beauty products, including 40 foundation shades [1] - In 2024, Fenty Beauty is projected to generate approximately $450 million in net sales, with a market valuation estimated between $1 billion and $2 billion [4] Group 2: Kendo Brands and Market Adjustments - Kendo Brands, established in 2010, focuses on creating and acquiring innovative beauty brands and has previously launched brands like Ole Henriksen Skin Care [4] - Recently, Kendo Brands sold its vegan makeup brand KVD Beauty to Windsong Global, as the brand faced challenges amid changing beauty trends [6] - KVD Beauty's revenue significantly declined to tens of millions after a reduction in marketing investment [8] Group 3: Industry Trends and Strategic Moves - The luxury beauty market is experiencing a slowdown, prompting companies to reassess their business strategies [14] - LVMH's beauty segment, including perfumes and cosmetics, reported a slight revenue decline of 1% in the first half of 2025, indicating a shift from rapid growth to a more challenging phase [12][14] - Kering Group's recent strategic partnership with L'Oréal, involving a €4 billion acquisition of its beauty business, reflects a broader trend of luxury brands adjusting their beauty portfolios [8][12] Group 4: Financial Performance - LVMH's financial report for 2024 shows a 2% decline in total revenue, with the perfumes and cosmetics segment experiencing a 2% growth [9] - In contrast, Kering's beauty business has seen a significant strategic shift, with L'Oréal's third-quarter same-store sales growth at only 4.2%, below analyst expectations [12][13]

Core Points - Kering Group has agreed to sell its beauty division to L'Oréal for €4 billion, approximately ¥33.2 billion, to address debt issues and refocus on its core fashion business [1][2] - The deal marks L'Oréal's largest acquisition to date and is expected to be completed in the first half of 2026 [1] - The agreement includes the acquisition of the Creed fragrance brand and a 50-year exclusive license for Kering's brands Gucci, Bottega Veneta, and Balenciaga for fragrance and beauty product development, production, and distribution [1] Financial Context - Kering's net debt stood at €9.5 billion, approximately ¥79 billion, as of June 30, with an additional €6 billion, about ¥49.9 billion, in long-term lease liabilities [2] - The company's revenue declined by 16% year-on-year in the first half of the year, and net profit fell by 46%, with Gucci's growth struggling to reverse, increasing pressure on the group [2] - Luca de Meo, the newly appointed CEO of Kering, has committed to measures including business rationalization and potential restructuring to reduce the group's debt [2]

Core Insights - Kering Group and L'Oréal Group have announced a long-term strategic partnership in the luxury beauty and health sector, involving L'Oréal's acquisition of the Creed brand and licensing agreements for Kering's renowned brands, with a total deal value of €4 billion (approximately ¥33.2 billion) [1][4][6] Group 1: Strategic Partnership Details - The partnership includes Kering selling its beauty business, including the Creed brand, to L'Oréal, along with a 50-year licensing agreement for Kering's iconic perfume stores [5][6] - Creed, a historic perfume brand founded in 1760, was acquired by Kering for €3.5 billion just four months prior to this new deal [5][6] - L'Oréal will also gain exclusive rights to develop, produce, and distribute Gucci's beauty products, as well as create and distribute fragrances for Bottega Veneta and Balenciaga under a separate 50-year licensing agreement [6][7] Group 2: Financial Context and Implications - Kering is under pressure from both debt and performance issues, with a reported 62% decline in net profit and a net debt of €9.5 billion as of June 2025 [7][8] - The sale of Creed and other businesses is seen as a way for Kering to alleviate financial pressure and refocus on its core strengths [7][8] - L'Oréal's acquisition of Creed is part of its broader ambition to become a major player in the fast-growing high-end perfume market, following several strategic acquisitions in recent years [7][8][11] Group 3: Market Position and Future Outlook - L'Oréal's recent acquisitions, including Aesop for $2.525 billion (approximately ¥17 billion), highlight its aggressive expansion strategy in the luxury beauty sector [8][11] - The partnership is expected to solidify L'Oréal's position as the world's largest luxury beauty company and explore new opportunities in the health sector [11][12]

Core Insights - The deal represents an initial strategy by Kering's new CEO, Luca de Meo, aimed at revitalizing the company's performance in the luxury market [1] Company Summary - Kering is taking proactive steps under new leadership to enhance its position and financial health within the luxury sector [1]

Core Viewpoint - L'Oréal Group is set to establish a long-term strategic partnership with Kering Group in the high-end beauty and health sector, involving the acquisition of the Creed brand and licensing agreements for several luxury brands' beauty and fragrance products [1] Group 1: Acquisition Details - The agreement includes the acquisition of the Creed brand and licensing for Kering's iconic brands such as Bottega Veneta and Balenciaga for a duration of 50 years [1] - Gucci will join the partnership after the conclusion of its licensing agreement with Coty Group [1] - The total value of the agreement is estimated at 40 billion euros, with the transaction expected to be completed in the first half of 2026 and paid in cash [1]

Core Viewpoint - Kering Group announced an agreement with L'Oréal Group for the sale of its beauty division for €4 billion, marking a significant strategic shift for Kering [1] Group 1: Transaction Details - L'Oréal will acquire Kering's beauty business, which includes the Creed brand and a 50-year license for several luxury brands such as Bottega Veneta and Balenciaga [1] - Gucci will join the agreement after the expiration of its licensing period with Coty Group [1] - The transaction will be a cash payment and is expected to be completed in the first half of 2026 [1] Group 2: Financial Performance - Kering's beauty division reported annual revenue of €323 million for 2024, primarily driven by the Creed brand [1]

Core Insights - The fragrance category is experiencing growth challenges but has a strong outlook due to its expansion into new markets and sectors [1] - L'Oréal's potential acquisition of Kering Beauty could significantly enhance its perfume portfolio, which has been a major growth driver in the beauty market [2][5] - The deal could reshape the beauty market landscape and lead to unexpected mergers among companies and brands [3] Group 1: L'Oréal and Kering Beauty Acquisition - A $4 billion sale of Kering's beauty unit to L'Oréal is nearing completion, which could be a transformative move in the beauty industry [5] - The acquisition would allow L'Oréal to add luxury brands like Bottega Veneta, Balenciaga, and Creed to its portfolio, enhancing its competitive position [6][7] - Kering's divestiture of its beauty division is part of a broader strategy to address financial struggles and reinvest in its core brands [4][20] Group 2: Market Implications - The acquisition could intensify competition in the fragrance market, particularly against Coty Inc. and Estée Lauder [9][10] - Kering's financial difficulties, including a significant debt load of €9.5 billion, are influencing its decision to sell its beauty division [21][23] - The fragrance market is projected to generate $62.11 billion in sales this year, indicating a highly fragmented and competitive landscape [8] Group 3: Kering's Strategic Moves - Kering Beauty's sales increased by 9% in the first half of the year, driven by strong performance from Creed fragrances [27] - The company has been focusing on relaunching its fragrance lines and exploring new market opportunities, particularly in Asia [28] - Kering's previous acquisition of Creed for €3.5 billion has raised concerns about value destruction and the sustainability of its beauty strategy [30][31]