Kering cuts net debt as L’Oréal beauty deal reshapes first-half results
Kering’s €4 billion sale of Kering Beauté to L’Oréal has strengthened the luxury group’s balance sheet, with the transaction helping to reduce net debt by €4.7 billion during the first half of 2026.
The Gucci owner reported first-half revenue of €7.22 billion, up 1% on a comparable basis but down 3% as reported. Second-quarter revenue increased 2% comparably to €3.65 billion, marking a sequential improvement from the opening three months of the year.
Recurring operating income came to €921 million, and the related margin improved by 40 basis points to 12.8%. Net income attributable to the group reached €189 million.
“Kering delivered improved performance in the second quarter, with revenue returning to growth,” Luca de Meo, CEO of Kering, said in the group’s first-half results. "
"These first-half results demonstrate the positive impact of the decisive measures we have taken to reinforce the distinctiveness of our brands, simplify our organization and increase effectiveness across the Group," he added.
Beauty deal supports cash position
Kering ended June with net debt of €3.3 billion, down from €8 billion at the end of December 2025. Cash and cash equivalents stood at €8.5 billion, including €4 billion generated when the sale of Kering Beauté to L’Oréal completed on 31 March.
As previously reported by TheIndustry.beauty, the deal moved luxury fragrance house Creed to L’Oréal and put in place exclusive 50-year beauty and fragrance licences for Kering brands. The companies also intend to look at wellness and longevity opportunities through a joint venture.
First-half free cash flow from operations reached €2.6 billion for Kering. This included €300 million from the Gucci Beauty agreement and €497 million in net proceeds from property transactions. Excluding both items, free cash flow from operations was €1.8 billion.
Kering’s move from direct beauty ownership to a licensing-led structure is already affecting its finances. Under the partnership, L’Oréal gains responsibility for developing and distributing products, while Kering retains exposure to the category through its brands and royalty income.
Gucci Beauty transition brought forward
Gucci and L’Oréal signed their new 50-year exclusive beauty licence on 7 July, one year earlier than planned. It is expected to take effect in mid-2027, replacing the fashion house’s existing arrangement with Coty.
Coty will receive approximately $400 million for the early redemption of its licence rights, with $250 million due in 2026 and up to $150 million in 2027. Selected inventory will be purchased separately. L’Oréal will pay Kering transition costs equivalent to about 70% of the redemption and inventory costs.
Kering said the partnership should strengthen Gucci’s brand equity and global reach. The fashion house generated first-half revenue of €2.76 billion, down 5% comparably, although its second-quarter retail decline improved by seven percentage points from the first quarter.
Gucci’s second-quarter revenue declined 2% on a comparable basis to €1.41 billion. North America stayed its main growth engine, while Western Europe and Asia-Pacific were showing early signs of recovery. The Gucci Beauty transition will continue through at least June 2027, with Coty running the business before L’Oréal takes control.
