Kering sold its beauty arm to L’Oréal for €4B to cut debt and refocus on fashion, marking a major pivot under its new CEO.
Background: Kering is the French luxury giant behind Gucci, Balenciaga, and Bottega Veneta. Last year, it launched a beauty division after buying perfume maker Creed for €3.5 billion, as part of a plan to take on LVMH in the beauty space.
What happened: Just a year later, Kering’s new CEO has flipped the strategy, deciding to cut the company’s €9.5 billion debt. As part of that plan, Kering sold its entire beauty business to L’Oréal for €4 billion, including Creed and the long-term rights to develop perfumes and cosmetics for its luxury labels.
What else: This marks L’Oréal’s biggest acquisition ever, surpassing its $2.5 billion purchase of Aesop. The move also highlights a major strategic shift for Kering, as its new CEO steers the company back to its core strength: high-end fashion.
What's the key learning?
💡Business leaders need to place different bets depending on what the business needs most at the time. When times are good, you plant new seeds for growth. When things tighten, you pull back and protect the roots.
💡Kering’s previous CEO wanted to diversify into beauty when Gucci was booming to reduce reliance on luxury fashion. But since then:
💡With that, the new CEO is now selling non-core assets and refocusing on luxury fashion. It's a classic case of a company pulling back to strengthen before the next big move.
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