The playbook for Giorgio Armani could change now that L’Oréal has a blooming partnership with Kering.
As previously reported, news broke Sunday night that Kering Beauty is being sold to L’Oréal for 4 billion euros. Concurrently, Kering and L’Oréal are forming a long-term strategic partnership in beauty and wellness.
Might this partnership expand into fashion? Only time will tell. But it could make good sense when it comes to Armani.
Wills of the late designer Giorgio Armani, who died on Sept. 4 at age 91, opened the possibility of L’Oréal, LVMH Moët Hennessy Louis Vuitton and EssilorLuxottica as potential buyers of his namesake company.
L’Oréal and EssilorLuxottica are licensees for fragrance and beauty, and eyewear, respectively.
“I continue to expect L’Oréal and EssilorLuxottica as the most probable acquirors of their respective Armani businesses,” said Luca Solca, an analyst at Bernstein. “With apparel and leather goods likely licensed to a third party long-term — same as Estée Lauder has done with Tom Ford.
“I wonder if in this context Kering could be the third-party licensee,” Solca continued. “Having said that, Kering is more likely to concentrate on getting its core business back on an even keel.”
Armani’s two wills, dated March 15 and April 5, were made public Sept. 12. After 12 months from their opening and within 18 months at the most, an initial 15 percent of his company could be sold to either L’Oréal, LVMH or Essilor Luxottica, they stipulate. Armani did not rule out other companies, as long as they are operating in the world of fashion and luxury, and of equal standing.
The same buyer would have the right to purchase a 30 percent to 54.9 percent stake in Armani between the third and fifth years, or in five years and within eight to consider a public listing in Italy as a priority or on other markets of equal standing.
Following even a potential listing, the Armani Foundation would keep a 30.1 percent stake of the group to ensure its control.
Sì Passione
Courtesy Photo
L’Oréal generally sticks with its core competency of beauty, but has ventured into fashion in the past — first with Lanvin, which it owned between 1994 and 2001, and more recently with Mugler, which became part of the French giant’s portfolio as part of the deal when it acquired the Mugler brands and Azzaro fragrances from Groupe Clarins in 2020.
Most recently, in early February, L’Oréal joined forces with Jacquemus, linking a long-term beauty license and taking a 10 percent stake in the fashion business.
Fashion and beauty are very different animals, even if they share some brand DNA, so it is considered unlikely L’Oréal would want to run Armani fashion itself.
No doubt, L’Oréal desires to keep the Armani fragrance and beauty license past 2050. That’s where the partnership with Kering could come in. And in the late ’90s, rumors swirled for years that Gucci wanted to buy Armani, although a deal never materialized.
The Armani fragrance and beauty license is a jewel in the crown of L’Oréal’s Luxe division, where it has been a “billionaire” brand since 2017. Blockbuster Armani products such as Sì fragrances and Maestro foundation have attracted A-list brand ambassadors like actress Cate Blanchett and Hanni, the lead singer of NewJeans, who helped transform Armani beauty into a sustainable, global powerhouse.
In March 2018, L’Oréal and Armani renewed that license until 2025, after having worked together since 1988. It was among Armani’s first licenses.
At the time of the renewal, Giorgio Armani said in a statement that “over the years our mutual trust has constantly generated excellent results.”
Kering, for its part, could merit from adding at least one more powerful fashion holding at this time when it’s struggling to turn around its star Gucci brand. Gucci has Demna as a new designer, which energized buyers with his debut display there at the recent Milan Fashion Week in September. But a turnaround at Gucci will take time.
Meanwhile, Kering’s newly appointed chief executive officer Luca de Meo has sprung into action to revive the ailing company. The Kering Beauty announcement — coming just one month after his official arrival — was a surprise to the beauty and fashion industries. But financial analysts have lauded the move.
The Kering Beauty deal will be a windfall for Kering, whose net debt amounted to 9.5 billion euros on June 30. However, whether Kering would want to make a major acquisition like Armani remains to be seen.
HSBC cited 2024 filings that show Armani generated 2.3 billion euros in sales from fashion and about 3.4 billion euros overall. The bank extrapolated that the fragrance and beauty business brought in upward of approximately 1.5 billion euros and the eyewear, licensed to EssilorLuxottica, with a smaller contribution.
News of L’Oréal’s acquisition of Kering Beauty — its biggest to date — comes less than two years after the group purchased Aesop — now its second-largest deal — which closed on April 3, 2023. That operation valued the Australian premium cosmetics brand at more than $2.5 billion.
On June 30, L’Oréal’s financial debt — current and non-current inclusive — was 8.8 billion euros, while its cash and cash equivalents amounted to 4.8 billion euros.
“Mr. Armani over the years went on the record that he did not want to sell to the French,” said one source who requested anonymity. “This is why his will was surprising, but perhaps it was an opportunistic choice.”
Indeed, the bourse appears to be “the most logical” solution for several observers, although one source said this implied “a cultural change” within the company.
Another source wondered why Armani changed his mind. “Banks have been chomping at the bit to get a cut of the deal,” the source said. “They must have whispered in Mr. Armani’s ears for years.”
The potential deals emerging from the wills are a bit of a Rubik’s Cube. “If L’Oréal acquired Armani, inevitably the other categories would be licensed out,” another source said. “The same would apply if EssilorLuxottica bought the company. L’Oréal and EssilorLuxottica could also team up and avoid losing their licenses, and they would only have to find an apparel manufacturer.”
If L’Oréal were to team with Kering on a stake in Armani, it might resemble the pairing of the Estée Lauder Cos. with Ermenegildo Zegna Group on Tom Ford.
Backstage at Giorgio Armani spring 2026 at Milan Fashion Week.
Jonathan Daniel Pryce/WWD
Zegna ventured into new territory by producing and distributing all of Ford’s men’s and women’s fashion and accessories. When the deal was announced, the plan was for Zegna to also produce the brand’s underwear, fine jewelry, childrenswear, textiles and home design products.
Zegna was no stranger to Tom Ford, as has it has been producing its menswear since around 2006. Acquiring Tom Ford’s fashion operations was seen as a way to create synergies for Zegna, which also owned a 15 percent stake in the company, allowing it to strengthen its womenswear segment.
In November 2022, the Estée Lauder Cos. acquired Tom Ford, with Zegna and Marcolin SpA entering long-term licensing agreements for Tom Ford Fashion and Tom Ford eyewear, respectively. The move marked the beauty giant’s first venture into the fashion world and its biggest deal, having paid $2.3 billion for the activity.
The Estée Lauder Cos. outbid Kering, which had been reported as a front-runner for Tom Ford.
LVMH has the vertical structure enabling it to run both Armani fashion and beauty, should it choose. It also has the funds available to make such an acquisition.
“We don’t think this makes sense for several reasons,” wrote Erwan Rambourg, global head of luxury and consumer at HSBC, in a note released Sept. 22. “First, LVMH rarely owns minority stakes in companies. And if they were to build on that stake, they would be left to deal with L’Oréal on the beauty part until 2050.
“Second, the core Armani ready-to-wear brand is complex, not meaningful in terms of sale at the LVMH level [a ninth of LV’s sales] and not accretive at 17 percent EBITDA margin in 2024,” he continued. “Third…we believe LVMH is in a phase of managing fewer brands better rather than adding to its portfolio of about 90 assets.”
In its third quarter ended Sept. 30, LVMH’s key fashion and leather goods division performed better than expected. It posted a 2 percent organic sales decline versus a consensus forecast for a 4 percent drop to 8.5 billion euros, with Vuitton and Dior both seeing significant improvement with local customers in China. Other brands in the division include Céline, Givenchy, Loewe, Marc Jacobs and Pucci.
EssilorLuxottica could definitely be a contender for Armani, too. The company’s lucrative eyewear license with the brand — one it’s likely not to want to give up — was renewed a couple of years ago for another 15 years, to run until 2038.
The partnership between the fashion group and the eyewear powerhouse dates back to 1988, when Giorgio Armani teamed up with the late Luxottica founder and visionary entrepreneur Leonardo Del Vecchio to develop branded glasses, marking the evolution of the item as fashion accessory.
At the time, the two parties signed an initial 14-year licensing agreement. Luxottica then lost the license to Safilo SpA in 2003, but the original tie-up was eventually restored with the deal effective in 2013.
Giorgio Armani felt personally close to EssilorLuxottica and to Del Vecchio.
“During the course of my career I have always built long-term collaborations and agreements with trusted partners,” Giorgio Armani said in a statement released Sept. 14, 2022. “The relationship with EssilorLuxottica has been a cornerstone of my path, born from personal and professional esteem, which has led to challenging choices. Such an important renewal is the confirmation of a mutual loyalty that makes me proud and that will lead to further, important innovations.”
EssilorLuxottica is no stranger to fashion. In July 2024 it made a surprise $1.5 billion deal for Supreme in cash. At the time it wasn’t shocking that the brand was sold, since the fashion brand’s owner VF Corp. at the time was looking to trim its portfolio. But the fact the buyer was the eyewear giant raised a few eyebrows.
EssilorLuxottica chairman and CEO Francesco Milleri and Paul du Saillant, group deputy CEO, said at the time the deal fit into their strategy.
“It perfectly aligns with our innovation and development journey, offering us a direct connection to new audiences, languages and creativity,” they said then. “With its unique brand identity, fully direct commercial approach and customer experience — a model we will work to preserve — Supreme will have its own space within our house brand portfolio and complement our licensed portfolio as well. They will be well-positioned to leverage our group’s expertise, capabilities and operating platform.”
The eyewear giant, with 2024 sales of 26.5 billion euros in 2024, could afford Armani. However, one source underscored how the group appears to be more committed to developing its med-tech segment through a slew of M&A operations, acquiring, for example, Automation & Robotics, a Belgium-based company that designs and manufactures automated systems for quality control of optical lenses, or ophthalmology platform Optegra, which operates a network of more than 70 eye hospitals and diagnostic facilities across Europe under the Optegra, Lexum and Iris brands. There’s also the Espansione Group, which specializes in the design and manufacturing of noninvasive medical devices. Of course, these all took place before the opening of Armani’s will.
Since the designer’s death, the Armani Group has so far acted in continuity, unveiling the exhibition and the designer’s namesake spring show as he had planned, staging it at Milan’s Pinacoteca di Brera, and appointing Giuseppe Marsocci as its CEO, the first to succeed Armani. Marsocci has been an executive of the fashion group for 23 years. Leo Dell’Orco, Armani’s longtime partner in charge of the men’s division, was named chairman of the board.
L’Oréal, LVMH and EsselorLuxottica have all shared praise for Armani. Other suitors could be in the wings.
“Everybody wants Armani,” one industry expert said.
