Gucci owner Kering has sold its beauty arm to L’Oreal for £3.5billion as its new boss battles to revive its fortunes.
Shares in the fashion group rose after it said it will sell its fragrance line Creed where bottles of perfume can cost as much as £350.
The deal also includes the rights for perfume and beauty products under its Gucci brand – whose Flora perfume is advertised by Miley Cyrus – as well as labels Bottega Veneta and Balenciaga.
The 50-year exclusive licence deal will begin once Kering’s current agreement with Coty for Gucci perfumes expires in 2028.
The division will join a stable of beauty brands owned by French giant L’Oreal, including Garnier, Maybelline and Essie. It also already owns the licenses for fragrances under luxury brands Armani, Yves Saint Laurent and Valentino.
It comes as Kering’s new chief executive Luca de Meo faces an uphill battle to revive fortunes at the group.
Gucci’s Flora perfume is advertised by Miley Cyrus
The firm is one of the luxury groups hardest hit by an industry downturn as shoppers lose their appetite for high-end goods.
Sales over the first six months of 2025 plunged 16pc to £6.5billion as the business struggled with dwindling demand in the US and China.
But Mr de Meo hopes to turn the business around by focusing on its clothes and accessories. It is the first time someone outside the billionaire Pinault family has taken the reins at the company.
And the sale to L’Oreal will help ease its huge debt pile, which hit £8.25billion in June.
Kering bought Creed, which originated as a London tailoring business in 1760, in 2023 for £3billion.
Analysts at Bernstein said the sale was ‘a bitter but necessary medicine’.
Shares in Kering rose 3pc while L’Oreal was up just 0.5pc.
It comes as retailers have said fragrance sales are booming, with John Lewis reporting that Gen Z are flocking to buy expensive scents.
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