Gucci owner Kering has agreed to sell its beauty business to L'Oreal for four billion euros ($A7.18 billion), as new CEO Luca de Meo moves to tackle the luxury group's high debt and refocus on its core fashion business.

Under the deal, French beauty giant L'Oreal will acquire Kering's fragrance line Creed, as well as rights to develop products under Kering's fashion labels Bottega Veneta and Balenciaga under a 50-year exclusive licence.

The sale is a major step towards reducing Kering's net debt, which stood at 9.5 billion euros ($A17.1 billion) at the end of June, adding to six billion euros ($A11 billion) in long-term lease liabilities, sparking investor concern.

The company has struggled to reverse declining growth at its largest brand Gucci, which was hit hard by slowing demand in

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