Kering announced on Tuesday that Gucci and L'Oréal have agreed to a 50-year exclusive beauty license, bringing the handover forward by a year relative to the prior schedule.
The new licensing deal follows Kering's October 19, 2025 announcement of a Beauty and Wellness alliance with L'Oréal. The agreement is expected to become effective in mid-2027, subject to obtaining regulatory approvals and the formal redemption of Gucci's existing beauty license with Coty.
As part of the changes, Gucci and Coty have agreed to accelerate the redemption date for their current beauty license by one year. The original Coty license arrangement had been scheduled to run until June 30, 2028.
Coty will receive approximately $400 million as compensation for the early redemption of its existing license rights. Those cash payments are expected to be delivered over 2026 - with $250 million scheduled in that year - and in 2027 - with up to $150 million payable in that year. In addition to the cash consideration, selected inventories will be acquired as part of the transition process on top of the $400 million payment.
Under the transition terms, L'Oréal will reimburse Kering for transition-related costs amounting to approximately 70% of the early redemption costs and inventories, as consideration for facilitating an orderly transfer of the existing license agreement.
Reacting to the announcement, Luca de Meo, CEO of Kering, said: "Today's agreement creates value for Gucci, L'Oréal and Coty alike. It accelerates the transition, enabling Gucci and L'Oréal to begin shaping the next chapter of Gucci Beauty a year earlier than planned."
The timing of the new license's activation and the completion of the financial and inventory transfers remain contingent on regulatory clearance and the agreed redemption mechanics between Gucci and Coty. Cash flow from the early redemption will be realized across 2026 and 2027 according to the payment schedule described above.
Summary
The parties have executed a 50-year exclusive beauty license for Gucci with L'Oréal, advancing the effective date by one year to mid-2027 subject to approvals and the early termination of the existing Coty agreement. Coty will receive about $400 million for early redemption, paid across 2026 and 2027, and selected inventories will be transferred as part of the transition. L'Oréal will cover roughly 70% of Kering's transition costs tied to the early redemption and inventories.
- Key points
- The license is exclusive and spans 50 years, with effect expected mid-2027 pending regulatory approvals.
- Coty will obtain approximately $400 million for early redemption, with $250 million in 2026 and up to $150 million in 2027, plus selected inventories.
- L'Oréal will reimburse Kering for about 70% of the early redemption costs and inventories to support an orderly transition.
- Risks and uncertainties
- The transaction remains subject to regulatory approvals, which could delay or condition the timing of the license becoming effective - impacting the beauty and luxury sectors.
- The orderly redemption of the Coty license and the transfer of selected inventories are required for the transition; timing or valuation issues in that process could affect cash flows and inventory positions - relevant to consumer goods and cosmetics supply chains.
- Scheduled cash payments are spread across 2026 and 2027; the timing and realization of those payments are material to Coty's near-term cash flow outlook.