On Sunday evening, L'Oreal Group announced its acquisition of Kering Beauty for €4 billion, marking the largest deal in the company's history. Less than 48 hours later, L'Oreal’s CEO Nicolas Hieronimus shared his insights on this transaction during a briefing to analysts and journalists concerning the company’s third-quarter and year-to-date performance.
As previously reported, the acquisition of Kering Beauty will enhance L'Oreal's Luxe division with several new brands and licenses, including the high-end niche fragrance brand The House of Creed, as well as beauty and fragrance licenses from Balenciaga and Bottega Veneta. The beauty and fragrance business of Gucci will also become part of L'Oreal once its current licensing agreement expires.
“I’m incredibly excited about this acquisition,” Hieronimus stated, adding that it not only strengthens L'Oreal's leading position in the high-end beauty segment but also reveals the significant potential of the four brands involved. “We have already proven we can scale licensed brands into ‘billion-euro brands’ with annual sales exceeding €1 billion.”
He cited Yves Saint Laurent as an example, noting that its beauty business now matches its fashion segment, generating nearly €3 billion in annual sales, placing it among the top five luxury beauty brands. Hieronimus believes that Gucci Beauty has the potential to reach the scale of Yves Saint Laurent at some point in the future. Additionally, the Prada beauty and fragrance business surpassed €500 million in sales after four years within L'Oreal’s Luxe division.
Hieronimus described Creed as a “very attractive brand” in the niche fragrance market, ranking among the top three, with products generally priced above €200. Niche fragrances are the fastest-growing segment within the overall fragrance category, which, in turn, is one of the leading growth areas in the beauty industry.
Regarding Balenciaga’s fragrance business, he noted, “Currently, our positioning in this segment relies solely on fragrances from our high-end couture brands, and our market presence and share are relatively limited. For us, this acquisition represents a significant step in this market. We plan to advance multiple brands simultaneously, as we believe this segment will continue to see rapid growth.”
Hieronimus emphasized that L'Oreal’s broad portfolio of brands—especially in high-end beauty—allows the group to offer expertise and negotiating power, facilitating collaborations between its brands and retailers.
When asked whether Gucci Beauty's licensing could potentially be transferred to L'Oreal earlier than 2028 (the current license is held by Coty and expires in 2028), he responded, “The Gucci license is owned by Kering Group,” adding that L'Oreal is unaware of any negotiations between Kering and Coty, and he does not feel it is appropriate to inquire about such issues. “We are patient and will wait for the right moment.”
“In the past, we have successfully acquired brand licenses from other major groups,” he noted. “The results have always been positive. These brands have stood the test of time, so I believe waiting a few more years will not have a significant impact.”
Hieronimus is looking forward to starting this “new chapter”: “I’m very pleased to be partnering with Kering to move this forward—Kering has been a trusted partner for us for 15 years.”
As part of the acquisition, L'Oreal and Kering will establish a 50:50 joint venture to explore commercial opportunities at the intersection of luxury, health, and longevity.
“It’s still too early to disclose details,” Hieronimus remarked. However, he added that the joint venture “has a clear goal: to meet the strong market demand for health, wellness, and longevity-related services and experiences.”
He referred to this joint venture as an “ambitious plan,” noting that both L'Oreal and Kering have already allocated resources for it.
Hieronimus stated, “We will contribute our expertise in skincare and longevity, as well as the long-term research results we have been conducting in longevity.” Additionally, L'Oreal will share its operational experience from another brand, Carita, which is a luxury beauty brand under L'Oreal.
He pointed out that Kering will bring in its expertise in the luxury product realm and its customer service experience, particularly for high-net-worth individuals.
For the third quarter ending September 30, L'Oreal Group achieved total sales of €10.33 billion, a year-on-year increase of 0.5% (reported basis). This growth is attributed to coordinated efforts across departments and regions, as well as sustained recovery in the North American and mainland Chinese markets. On a comparable basis, sales rose by 4.2%, which was 50 basis points below analysts' general expectations.
“We believe that the third-quarter performance, given the high market expectations, is worth noting,” wrote David Hayes, a stock analyst at Jefferies, in a report.
Excluding the impact of information technology (IT) transformation, sales grew by 4.9% year-on-year for the quarter. Sequentially, L'Oreal's adjusted sales growth rate has been accelerating: 2.6% in the first quarter and 3.7% in the second quarter.
In the first nine months of 2025, L'Oreal Group reported total sales of €32.81 billion. On a reported basis, this represents a year-on-year increase of 1.2%, whereas on a comparable basis, it grew by 3.4%.
Hieronimus also shared his outlook for the overall beauty market, estimating that global beauty market growth was slightly above 3% in the first nine months.
“The global beauty market remains vibrant,” he stated.
In highlighting key developments this year, Hieronimus emphasized the gradual recovery of L'Oreal’s two core markets, including mainland China—where L'Oreal's growth has outpaced the overall market. The beauty market in mainland China is estimated to have grown by 1% this year, with growth rates largely stable in the first half of 2025.
“Overall, the Chinese market has stabilized,” Hieronimus noted. However, the travel retail sector in the market has not yet shown significant improvement.
“While there has been slight improvement in travel retail, it remains in negative growth territory,” he mentioned, with the year-on-year decline in the Asian travel retail market being in single digits.
In the U.S., another key market for L'Oreal, Hieronimus pointed out that business growth has noticeably accelerated, with a year-on-year increase of approximately 3.9%. The Consumer Products Division recorded market share growth across various categories, achieving this for the first time since 2021. In contrast, the division's market performance lagged behind the overall market earlier this year.
“This proves that innovation truly is a ‘game-changer’ in the beauty industry,” Hieronimus remarked. The Beauty Stimulus Plan introduced by L'Oreal, aimed at accelerating the speed of product launches, contributed 170 basis points to the group’s overall growth in the third quarter.
He also emphasized the continued strong performance of the haircare and fragrance businesses, which now account for 30% of L'Oreal’s total sales.
“Moreover, the color cosmetics segment has rebounded, growing nearly three times faster than the overall market,” Hieronimus added.
He specifically mentioned the persistent vitality in the beauty e-commerce sector, estimating its growth rate to be double that of the overall beauty market.
“Our e-commerce business is currently growing at 12%,” Hieronimus stated. “We are increasing our investments in e-commerce, as this channel enables us to reach more new consumers.”
L'Oreal Group is confident and committed to maintaining faster growth than the overall beauty market, aiming for an increase in both sales and profits for the full year.
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