LOréal S.A.

French luxury group Kering has closed at least 217 stores over the past 18 months, with 84 net closures in the first half of 2026 alone, reducing its total store count to 1,635. The 84 net closures represent a 5% reduction of its directly operated stores as of December 31, 2025, and are part of the 100 targeted closures for the 2026 full year. The store rationalization comes as the company works to improve sales density and recover from a 46% drop in operating income, with revenue of €7.22 billion in the first half of 2026, down 3% on a reported basis but returning to growth in the second quarter. Kering also sold its beauty division to L'Oréal for $4.7 billion and acquired jewelry manufacturer Raselli Farco as part of a broader recovery strategy.

Chinese consumers are changing their spending habits in the luxury goods market, turning more to premium beauty products instead of buying handbags and luxury fashion brand items. Amid a slowing economy and consumer confidence that has yet to fully recover, major beauty companies like Estée Lauder and L'Oréal reported strong growth in high-end product sales in China this year, while luxury fashion makers such as Hermès and LVMH indicated that demand remains flat. Nicolas Hieronimus, CEO of L'Oréal, said that premium skincare and dermocosmetic products in China grew around 7 percent, with L'Oréal's luxury beauty division in China expanding 10 percent in the latest quarter. Data from Oliver Wyman and the World Duty Free Association found that 37 percent of high-spending Chinese consumers plan to increase their beauty product budgets next year, compared to just 4 percent who intend to buy more leather goods.

L'Oreal achieved a record operating margin of 21.3% in the first half of 2026, up 20 basis points, as adjusted like-for-like sales growth accelerated to 6.5%. Gross margin improved 10 basis points to 74.8%, while operating profit rose 6.8% to 5 billion euros. E-commerce sales surged 18% to 7.4 billion euros, and the Dermatological Beauty division posted 10.6% growth. The company expressed confidence in the second-half outlook, citing a strong innovation pipeline and expected recovery in North Asia and travel retail.

French cosmetics giant L'Oréal reported a 6.3% rise in like-for-like sales for the second quarter of 2026, beating analyst expectations of a 5.7% increase. Sales reached 11.6 billion euros, driven by strong demand for new haircare products and mascara. By region, Europe grew 6.7% and North America rose 5.9%, while the luxury division posted a 4.7% gain, missing forecasts, but recorded double-digit growth in China. However, the sluggish Chinese travel retail market continues to weigh on performance.

Kering has drawn fresh attention after Gucci signed a fifty-year exclusive beauty license with L’Oréal, shifting future fragrance and cosmetics development and distribution to the French beauty group. The deal arrives as Kering’s share price is under pressure, with a year-to-date decline of 19.30% and a three-year total shareholder return down 46.52%, though the one-year total shareholder return of 20.91% highlights volatile recovery efforts. Analysts’ consensus price target is €282.46 per share, implying about 13% upside from the last close of €245.80, but targets range from a bullish €360.00 to a bearish €175.00. In contrast, a Simply Wall St discounted cash flow model estimates a fair value of €237.37, suggesting the stock is slightly overvalued at current levels.

Coty has agreed to exit its Gucci beauty license one year early, securing a $400 million payment from Kering. The early termination allows L'Oreal to begin selling Gucci beauty products under a 50-year exclusive license starting July 2027, with L'Oreal covering about 70% of Coty's early redemption costs. Kering will also purchase some Gucci beauty inventory separately from the $400 million payment. Coty plans to use the proceeds to reduce debt and invest in its core prestige fragrance and beauty portfolio. The deal comes as Kering continues to review Gucci's fashion operations under new CEO Luca de Meo.

The global AI in cosmetics formulation market is projected to grow from $0.58 billion in 2025 to $1.6 billion by 2030, at a compound annual growth rate of 22.3%. This growth is driven by rising demand for personalized skincare, advanced data-driven techniques, and rapid product development. Key players include BASF SE, Unilever PLC, and L'Oreal S.A., with North America leading in market size and Asia-Pacific expected to be the fastest-growing region. Innovations such as Nouryon's AI-powered BeautyCreations portal and strategic moves like The Estee Lauder Companies' acquisition of DECIEM Beauty Group highlight industry trends toward enhanced personalization and efficiency.

The Giorgio Armani Group is expected to begin a stake sale process in September, in accordance with the late designer's will. Rothschild & Co. is expected to be the adviser, given partner Irving Bellotti's longtime relationship with Giorgio Armani and his board seat at the Giorgio Armani Foundation. The will allows an initial 15 percent stake to be sold within 18 months of its opening to LVMH, EssilorLuxottica, or L'Oréal, with a further 30 to 54.9 percent possible between the third and fifth years. A market source said the heirs may consider offering a 5 percent stake to each of the three groups to ensure transparency and allow them to evaluate the company before a larger offer. The foundation would retain a 30.1 percent stake to maintain control.

The Fourth China International Supply Chain Expo has opened its Healthy Life Chain section, drawing more than 100 leading companies across Medical Technology, Quality Living, and Heritage Wellness zones. Global players GE Healthcare and Siemens Healthineers are demonstrating full China-for-China R&D and manufacturing capabilities, while AstraZeneca features an AI-powered drug discovery platform. Chinese innovators including BGI with a human genome foundation model and Longwood Valley with a domestically produced orthopedic surgical robot are also taking center stage. In consumer health, Procter & Gamble, L'Oréal, Panasonic, and Starbucks are showcasing digital intelligence and sustainability in their supply chains, with Starbucks connecting directly to Yunnan coffee farms for full traceability. Chinese TCM brands such as Guangzhou Phar. Holdings, Xin Bao Tang, and Zhendong Pharmaceutical are accelerating global expansion and vertical integration of authentic herb supply chains, alongside AI-driven diagnostic tools like smart pulse-taking devices.

L'Oréal's chief innovation and prospective officer Delphine Viguier-Hovasse says artificial intelligence benefits established companies with decades of accumulated data more than it levels the playing field for startups. She notes that while AI makes it easier to create new beauty brands, many disappear within two years, whereas L'Oréal's 120-year history and massive proprietary datasets give it a dramatic advantage. The company reinvests 3% of turnover into research, amounting to €1.3 billion in 2025, and uses AI to slash molecule testing time from years to three months, enabling faster, cheaper experimentation. L'Oréal has built databases including a global atlas of skin color and wrinkles, and last year ran 40,000 stability tests and 44,000 consumer reaction tests, scale that Viguier-Hovasse says is unmanageable without AI. She emphasizes that innovation relies on a matrix organization, cross-functional collaboration, and a single KPI of gaining market share with new products, combined with early detection of weak signals like the longevity trend.

L’Oréal has signed an agreement to acquire a majority stake in Innovist, a leading digital-first Indian house of personal care brands. Founded in 2019 by Rohit Chawla, Sifat Khurana and Vimal Bhola, Innovist is behind popular brands such as Bare Anatomy and Chemist at Play, with products available through direct-to-consumer platforms, major e-commerce and quick commerce channels, and offline retail partnerships. The founding team will remain as minority shareholders and continue to operate the business in collaboration with L’Oréal India, with the brands joining L’Oréal’s Consumer Products Division. L’Oréal will begin consolidating Innovist sales upon closing and has secured rights to buy out the remaining minority shareholders in full. The transaction is expected to close in the next few months, subject to regulatory approvals and customary conditions.