Luxury goods offer a sentimental, status upgrade, especially for fixed assets like homes, cars or yachts. Once you have the money to afford this, you also end up upgrading your daily need items- luxury food, experiences and cosmetics. But what happens when there’s a sudden downfall in incomes? That’s when luxury brands like L’Oréal have more reasons to worry.
The brand has been one of the most recognised symbols of luxury for quite some time now. It is known for its innovative take on cosmetics, with its products being highly sought after not only for their quality but also for their aspirational value.
The challenge to address change
But that’s under threat now, especially with competitors breathing down their necks. The company, currently valued at €33 billion, has actively diversified its portfolio of brands through acquisitions over the years, including NYX Cosmetics, IT Cosmetics, the Japanese brand Takami, the Australian brand Aesop, and most recently, Kering Beauté.
With all its acquisitions over the years, L’Oréal currently owns 36 brands, maintaining a presence in all global markets. The company has spent €4 billion to acquire Kering Beauté, bringing brands such as Creed, Gucci, Balenciaga, and Bottega Veneta’s beauty divisions under L’Oréal’s umbrella. However, things will not be easy for L’Oréal, especially since it has to find a way to pay back more than €10 billion accrued till June 2025. This does not include the €3 billion L’Oréal is raising to pay for its Kering Beauté acquisition, its largest to date.
What it needs to do
The first challenge would be to maintain each brand’s individuality, especially since each one of them is positioned and targeted towards a unique aspiration. The company must utilise these brands to solidify its dominance in the sector, all while ensuring it reduces costs and enhances the efficiency of its supply chains without compromising on quality.
L’Oréal’s CEO Nicolas Heironimus has a set of fresh challenges to deal with- a slowdown in the key Chinese and North American markets and rising competition from sustainability-focused brands like Mamaearth and OneSkin, which are eating into its market share.
Passing the bad coin?
Kering’s former owner, Gucci, had set up its perfume business by acquiring Creed, one of its major brands, in order to cut reliance on the star brand Gucci, which accounts for most of its profits. Since its inception in 2023, the French conglomerate has struggled to ramp up the business, incurring a €60 million loss for the first half of 2025.
Even though this acquisition, which closed in October 2025, is widely regarded as a strategic deal by analysts, L’Oréal will need to figure out a way to sustain revenues and profits, especially as market conditions may or may not help the company meet its revenue targets.
Despite that, L’Oréal is on a strong footing, with the cosmetics and beauty brand reporting sales of € 32.80 billion for the first nine months of 2025, a 3.4% rise from the same period last year.
For L’Oréal’s CEO, the challenge to meet expectations couldn’t be more pronounced. The company’s acquisition-fuelled growth has helped it become what it is today, but the company now needs to meet expectations to deliver – on quality, brand reputation, sustainability and most importantly, growth.
