In an astonishing twist in the beauty industry, L'Oréal is set to take over Kering’s beauty portfolio, including the prestigious fragrance maker Creed, which Kering acquired just this year for a staggering $3.8 billion. This news, revealed on Sunday, is more than just business; it signals a major shift in the luxury beauty landscape.

But what does this mean for the fashion world? This acquisition isn't just about fragrances; it encompasses the rights to craft beauty lines for Kering's high-fashion brands, including the much-coveted Gucci beauty line, once its current agreement with Coty runs out in 2028. Both companies are thrilled, proclaiming a “50-50 joint venture” aimed at exploring exciting opportunities in beauty and wellness.

Kering’s chief executive, Luca de Meo, expressed his enthusiasm, stating, “Joining forces with the global leader in beauty, we will accelerate the development of fragrance and cosmetics for our major Houses.” He believes this move will help them harness the immense long-term potential of their brands, just as L’Oréal has successfully done with Yves Saint Laurent Beauté since 2008.

The Wall Street Journal broke the news of this deal on Saturday, and it has sent ripples through the luxury market. Under this new agreement, L'Oréal will enjoy exclusive rights to produce beauty products for both Kering houses and Gucci, solidifying its influence in the sector for the next 50 years.

Kering's journey into becoming a multi-sector conglomerate has faced hurdles. Despite launching its beauty division in 2023 and appointing Raffaella Corneggia to lead this initiative, past efforts haven’t thrived as expected. With the luxury market hitting rough patches and brands like Gucci and Alexander McQueen seeing significant losses, the decision to partner with L'Oréal could offer a lifeline.

As part of this landmark deal, L'Oréal will also contribute $4.6 billion in cash along with royalty arrangements for Kering’s licensed brands, marking a significant financial commitment. The deal is anticipated to close in the first half of 2026, paving the way for a new era in luxury beauty.