Paris (AFP) – The share price of Kering, the French luxury group that owns Gucci and other brands, jumped sharply Monday after it announced the $4.6-billion sale of its beauty products division to L’Oreal. Its shares soared more than five percent at the opening of Paris trading, following its announcement Sunday of the deal that would also give L’Oreal 50-year licences to develop and distribute products under Kering’s Gucci, Bottega Veneta and Balenciaga labels.
L’Oreal’s shares rose a modest 0.6 percent, in line with the 0.5 percent increase for the Paris CAC 40 index. Kering has been struggling financially for several years, and in July said its first-half profits had slipped by nearly half on a 16-percent drop in turnover. Proceeds of the sale of its beauty division, which includes its leading perfume brand Creed, will go to alleviate the 9.5 billion euros ($11 billion) in debts it has racked up.
Kering is to publish its third-quarter results on Wednesday. The announced sale to L’Oreal is subject to regulatory approval, and if it goes ahead payment is expected in the first half of 2026. L’Oreal would pick up the 50-year exclusive licences after Kering’s current licence with American company Coty expires in 2028.
Kering’s new CEO Luca de Meo, who took the helm just a month ago, has called the deal “a decisive step” for the French group. He is trying to turn around Kering’s fortunes, pulled down by difficulties at Gucci, which accounts for 44 percent of the group’s turnover and two-thirds of its operating profit.
© 2024 AFP
