Key Takeaways:
L’Oréal’s bet that premiumizing its portfolio could sustain its competitive edge is paying off.
The French beauty group is in its strongest position to date, helped by a decade-long strategic pivot toward luxury and dermatological beauty, mainly driven by targeted acquisitions under Chief Executive Nicolas Hieronimus. After taking the helm in May 2021 following a decades-long career at the company, his mergers and acquisitions strategy has nearly doubled sales in recent years, cementing L’Oréal’s position as the largest beauty player in the US, with a market share of roughly 13%, as well as making it the luxury beauty leader in North Asia.
“2025 was a defining year for L’Oréal: we delivered strong results regardless of the context, while profoundly transforming the group,” Hieronimus said after reporting the company’s annual earnings. “It’s been a record year in terms of acquisitions,” he added at the Consumer Analyst Group of New York (CAGNY) conference in Orlando last month, underscoring the scale of the group’s strategic transformation.
The market has responded favorably despite an initial sell-off last month in response to its fourth-quarter performance, which was weighed down by a troubled travel retail business in China and by less than 1% growth in its largest division, skincare. Shares have risen by roughly 15% over the past 12 months to a total market valuation of about €215 billion ($253.4 billion).
A clean-up of past missteps has brought greater clarity to L’Oréal’s growth strategy for investors, supported by marketing investment that remains well ahead of peers at 32% of sales, or €14.18 billion ($17.65 billion).
Earlier forays, including US skincare device brand Clarisonic, acquired in 2011 and shuttered in 2020, and British ethical beauty label The Body Shop, bought in 2006 and sold in 2017, have been firmly put to rest. More recently, the group divested US haircare brand Carol’s Daughter and reversed course on Swiss medical dermatology company Galderma. L’Oréal sold its 50% stake in Galderma to Nestlé in 2014 for an equity value of €2.6 billion, but has since spent more than double that amount rebuilding a stake in the company.
Over the past 24 months, L’Oréal’s portfolio has expanded to around 40 international brands, which Hieronimus now frames around two pillars: glamour and health. That expansion has been bolstered by key acquisitions such as Australian prestige beauty label Aesop, bought for $2.5 billion in 2023.
While L’Oréal has been active in prestige beauty for decades, dating back to its acquisition of Lancôme in 1964 and Yves Saint Laurent Beauté in 2008, the renewal of its long-term Armani beauty license in 2018 marked a clearer strategic turning point. The subsequent capture of the Prada and Valentino beauty licences from Spanish rival Puig, along with the acquisition of Mugler and Azzaro from Clarins Group, accelerated the company’s shift from a mass-beauty powerhouse to a luxury-led cosmetics group.
The realignment has been most evident in fragrance, where L’Oréal has deepened its ties with luxury fashion houses, including Prada-owned Miu Miu, after signing an agreement two years ago to develop its beauty line.
Recent major deals underscore the scale of that ambition. Early last year, the group took a 10% stake in Jacquemus alongside a long-term, exclusive beauty partnership before striking the largest deal in its history: a €4 billion ($4.7 billion) agreement with Kering to acquire niche fragrance house Creed. The transaction also included an option to take control of Gucci Beauty once Coty’s licence expires in June 2028, as well as the development of beauty lines for Bottega Veneta and Balenciaga, and a longevity partnership aimed at creating wellness experiences for high-net-worth consumers in hospitality settings. These moves will “clearly augment in a major way L’Oréal’s luxury leadership,” Hieronimus recently said.
At the same time, L’Oréal has doubled down on medical dermatology as consumers increasingly gravitate toward clinical and aesthetic treatments.
In August 2024, the group acquired a 10% stake in Galderma for around €2 billion ($2.32 billion) before lifting its holding to 20% at the end of last year for an additional roughly €4 billion ($4.65 billion). The transaction allows L’Oréal to protect its strategic position in the company while preventing an unwanted buyer or competitor from acquiring a stake in Galderma. It also suggests its influence could deepen further after Galderma’s board said it would consider nominating two nonindependent directors from L’Oréal at its 2026 annual general meeting.
Overall, the move move laid the groundwork for a renewed push into medical dermatology, particularly in the US, where more than 20% of consumers are using GLP-1 weight-loss drugs and around a quarter of women over 45 have either undergone or are considering aesthetic procedures, according to David Greenberg, L’Oréal USA’s Chairman.
L’Oréal’s medical aesthetics push has since broadened with the acquisition of a majority stake in British luxury skincare brand Medik8 and the purchase of South Korean dermocosmetics label Dr.G.
The recent acceleration in M&A is expected to bolster earnings in the coming years, echoing the impact of earlier strategic shifts. Securing the Valentino and Prada beauty licences alongside the expansion of skincare brands such as La Roche-Posay helped reduce the group’s reliance on its consumer division and reinforce its luxury and dermatological pillars.
In 2018, L’Oréal’s consumer products division—home to brands such as Fructis, Maybelline, and L’Oréal Paris—continued a decades-long dominance within the group, generating €12.03 billion ($14.77 billion) in revenue. That compared with €9.37 billion ($11 billion) for the luxury division, €3.26 billion ($3.84 billion) for professional products, and €2.28 billion ($2.64 billion) for what was then known as the active cosmetics category.
Just three years later, the mix looked markedly different. In 2021, the luxury division became L’Oréal’s largest business for the first time, with revenue of €12.35 billion ($14.55 billion), narrowly ahead of consumer products at €12.23 billion ($14.41 billion). Active cosmetics rose to €3.92 billion ($4.62 billion), rebranded as dermatological beauty two years later, while professional products generated €3.78 billion ($4.45 billion).
The group’s latest results underline how far L’Oréal’s M&A strategy has altered the balance of its earnings, even as consumer brands remain among its strongest performers.
Barclays’ Head of European Consumer Staples Research Warren Ackerman believes that while L’Oréal has reshaped its portfolio responding to a premiumization of beauty, a balance needs to be struck.
“Right now, affordability is still the number-one concern for consumers, and so premiumization has to come with science-based benefits,” Ackerman told BeautyMatter. “Consumers are no longer willing to pay up unless the products are unmissably superior to competitive products, especially younger consumers.”
L’Oréal’s latest earnings reflect that tension. In 2025, consumer products generated €16.09 billion ($18.99 billion) in revenue, followed closely by luxury at €15.60 billion ($19.38 billion), dermatological beauty at €7.20 billion ($8.48 billion), and professional products at €5.16 billion ($6.08 billion), supported by the recent acquisition of US hair-styling brand Color Wow.
By growth, haircare was L’Oréal’s standout performer in 2025, rising 13% on a like-for-like basis and contributing 18% of the group’s revenue. Fragrance followed, up 10% and accounting for 15% of sales. Makeup delivered a more modest growth of 3%, making up for 19% of revenue. Hair color lagged, increasing just 0.6% and making up 8% of total sales.
Skincare trailed the pack, growing just 0.4% despite accounting for 37% of total revenue, as L’Oréal has struggled to deliver sufficient innovation in products that “look good, smell good, and feel good,” even when they don’t offer transformational results, Ackerman said. Still, he added that L’Oréal is pushing hard on innovation under its so-called Beauty Stimulus Plan, put in place in 2024.
Looking ahead for 2026, Ackerman said improving the performance of Lancôme and Helena Rubinstein on the higher-end side, and Garnier on the mass side, will be critical to the company.
“If skincare returns to mid-single-digit growth, and performance in hair and fragrance holds, L’Oréal could outpace the market, growing between 5% and 6% versus an industry forecast of 4.5% this year.”
L’Oréal’s success against competition responds to its willingness to experiment, says Allison Collins, co-founder and Managing Director at The Consumer Collective.
“Standing still would be the bigger long-term risk,” she said.
In that regard, the deal that has most caught Collins’ attention is Galderma, as medical aesthetics like injectables move into the mainstream in North America and North Asia, reshaping how consumers think about skincare.
“Historically, there’s been a separation between people who do beauty and people who do aesthetics,” Collins said. “They live in the same world, but there hadn’t really been a total merging of those worlds—until now.”
Galderma’s owners were quick to capitalize on that shift, positioning the company to “become the undisputed dermatology powerhouse,” according to CEO Flemming Ørnskov.
A consortium led by private equity firm EQT took the company public on the SIX Swiss Exchange in March 2024 at a valuation of about CHF36 billion ($46.6 billion). It is now valued at roughly CHF50 billion ($64.7 billion) after recording a 17% increase in annual sales to $5.21 billion, growing double-digits in both international markets and the US.
L'Oréal's portfolio overhaul reflects a broader industry shift.
Beauty groups across the sector are reconfiguring their assets as consumer preferences evolve. Coty is reassessing its consumer division, which houses brands such as Rimmel London, CoverGirl, and Max Factor, while Estée Lauder has signaled it is weighing brand divestments alongside selective acquisitions to sharpen its competitive position.
While specific deals among the largest beauty groups have yet to materialize, the strategic rethink comes as valuations begin to recover and previously pressured categories, including skincare, regain momentum, said Julia Wilson, Deal Advisory and Strategy Lead for Beauty at consulting firm KPMG.
Sun care, facial skincare, and medical brands are likely to remain top acquisition targets “as long as they can demonstrate efficacy to consumers,” Wilson said.
Against that backdrop, M&A remains central to L’Oréal’s future in an increasingly competitive market, with unresolved questions lingering over assets such as Armani Beauty, licensed to the group since the late 1980s and secured through 2050.
L’Oréal has built remarkably few brands organically—just L’Oréal Paris, L’Oréal Professionnel, and Kérastase. Much of the world’s largest beauty empire has been built through the art of buying and investing.