Why L’Oréal's bid stops at Armani Beauty, avoiding the wider empire

The death of Giorgio Armani earlier this month has triggered speculation over the future of his fashion, beauty and lifestyle empire. While the designer’s will named three potential acquirers - LVMH, EssilorLuxottica and L’Oréal - reports suggest the latter is set to focus its interest squarely on Armani’s high-performing beauty business.

Giorgio Armani, who was still in control of his fashion and beauty empire, died at the age of 91 last month, leaving speculation as to who would take the reins. But, according to BoF, L'Oréal has set its sights on the beauty portion of the profitable business.

L’Oréal already holds a licence, running until 2050, to develop Armani fragrances, skincare and make-up. The brand is one of the crown jewels in L’Oréal Luxe’s portfolio, with HSBC analysts estimating it delivered €1.5 billion (£1.3 billion) in sales in 2023 - roughly 10% of the division and 3.45% of total group revenue. Armani Beauty sits alongside L’Oréal’s other blockbuster licences such as YSL Beauty and Valentino Beauty, helping to power double-digit growth across its luxury segment.

For L’Oréal, converting Armani from a long-term licence into outright ownership would secure a revenue driver, eliminating future risk around rights renewal while opening the door to deeper brand-building. It would also mirror moves by rivals such as Estée Lauder’s full acquisition of Tom Ford last year.

By contrast, Armani’s fashion, homeware and accessories businesses are less strategically aligned with L’Oréal, whose focus remains firmly on beauty. Luxury conglomerate LVMH and eyewear powerhouse EssilorLuxottica are seen as stronger contenders for those divisions, given their scale and expertise in those sectors.

The staged sale outlined in Armani’s will - beginning with a 15% stake within 18 months, followed by a further 30-54.9% over the next five years - leaves room for a split outcome, with different buyers taking control of different parts of the empire.

If successful, the deal would strengthen L’Oréal Luxe’s hold on the prestige fragrance and beauty category at a time when licensed designer brands continue to see sales growth. Armani Beauty’s stable global bestsellers, such as its Illuminous Silk foundation, ensure it is not only a sentimental legacy of the late designer but one of the most commercially attractive parts of his business.