Kering, the French luxury group that owns brands such as Gucci, Bottega Veneta, and Balenciaga, has announced on the 19th (local time) that it will sell its beauty business to the French cosmetics company L’Oréal for 4 billion euros (approximately 6.6 trillion KRW).
According to Reuters, through this deal, L’Oréal will acquire Kering’s perfume brand ‘Creed’ and gain the rights to develop beauty products under Kering’s brands Bottega Veneta and Balenciaga for 50 years under an exclusive license.
The sale of Kering’s beauty business is seen as a measure to reduce its net debt, which stood at 9.5 billion euros (approximately 15.7 trillion KRW) as of the end of June, according to Reuters.
Kering has been struggling due to the poor performance of its flagship brand, Gucci. In its July earnings report, Kering disclosed that its net profit for the first half of the year had plummeted 46% year-on-year to 474 million euros. Gucci’s revenue fell 26% to 3 billion euros compared to the previous year, suffering from decreased demand in its key market, China.
The beauty business sale marks the first strategic move by the newly appointed CEO, Luca de Meo, according to Bloomberg. Luca de Meo, who was credited with revitalizing the French automobile company Renault, has been brought in as a ‘savior’ for Kering. In a statement, CEO de Meo expressed his ambition to expand in the beauty sector and realize long-term potential by partnering with a global leader in the field to accelerate the development of perfumes and cosmetics for major brands, as reported by Bloomberg.