iaga, starting once existing contracts expire, including Gucci’s current arrangement with Coty, which runs until 2028. The transaction, expected to close in the first half of next year, will be L’Oréal’s largest luxury acquisition to date. The two companies also plan to launch a joint venture focused on wellness and longevity, an emerging luxury frontier that blends beauty, health and lifestyle experiences. Resetting under de Meo  The sale is a sharp reversal from Kering’s previous expansion into beauty and lifestyle under Pinault, whose family controls the luxury group.  De Meo is now moving swiftly to simplify the portfolio to restore investor confidence in Kering’s balance sheet and focus management attention on reigniting its flagship fashion houses.  “Luca de Meo arrived with a reputation for pragmatism, and he is already making the necessary decisions to get Kering’s cash flow back in order,” Mathew Dixon, partner at DHL, told Inside Retail. The group has struggled with slowing growth at Gucci, whose revenue fell 25 per cent year-on-year in the latest quarter, and a beauty division that posted a €60 million operating loss in the first half of this year. “Given the bigger challenges faced by Kering over the past few years, this deal feels like a good one for them. It raises finances that can service their debt and also focuses the group on its core business of selling clothes,” Dixon said.  The market seemed to agree: Kering shares rose 4.8 per cent after the announcement, while L’Oréal climbed 1.2 per cent. Analysts expect further restructuring as he works to stabilise Gucci and improve margins across Bottega Veneta, Balenciaga and Saint Laurent. De Meo has already hinted there may be more portfolio pruning to come, telling the Financial Times that “you’ll see others” and refusing to rule out a sale of Kering Eyewear. The group has also postponed plans to acquire Valentino and is exploring real estate divestments to bolster cash flow. “Kering Beauté was exciting when the fashion brands were performing. However, it became a millstone of distraction when the fashion division started faltering. Fragrance and beauty rely on the trickle-down of stardust from the mainline collections, and there simply isn’t enough of that currently. The CEO is absolutely right to reprioritize the teams and get fashion back on track,” the expert added.  L’Oréal’s biggest luxury acquisition yet The purchase marks L’Oréal’s largest acquisition to date, surpassing the US$2.5 billion deal for Australian skincare label Aesop in 2023. The French beauty group will integrate Creed into its L’Oréal Luxe division and leverage its global distribution and marketing muscle to expand the niche fragrance house’s reach. “Kering overpaid for Creed. Everyone was shocked at the cost of that deal, which was based purely on its potential. However, to scale Creed and build the likes of Bottega Veneta and Balenciaga into serious beauty players would require a lot more investment, which Kering simply doesn’t have,” Dixon said.  “L’Oréal, on the other hand, can use its existing platform and slot the brands straight in with immediate effect and economies of scale.” Creed, a heritage name in haute parfumerie with strong global recognition, fits neatly into L’Oréal’s growing portfolio of prestige fragrance brands. The group’s success with Yves Saint Laurent Beauté, acquired from Kering in 2008 for €1.15 billion, provides a clear precedent. YSL has since become one of L’Oréal’s fastest-growing global beauty labels, driven by blockbuster fragrances and cosmetics. “Overall, it is a win-win situation. Kering Beauté has achieved a very healthy multiple, well above what it is probably worth at the moment. L’Oréal have landed Creed, a historical niche fragrance brand and some big-name licenses in Bottega Veneta and Balenciaga and is backing itself to turn potential into a profitable revenue over the next five years,” Dixon concluded. Further reading: Kering agrees to sell beauty division to L’Oreal in partnership.