Coty to Lose Gucci Beauty License Under €1.5 Billion L’Oréal Deal
COTY•Coty will lose the Gucci Beauty license to L’Oréal under a €1.5 billion deal, ending a partnership that generated roughly $1.0 billion in annual sales. Analysts forecast a 10% hit to consolidated revenues and have cut Coty price targets by an average 15%.
1. License Transition Terms
Coty’s five-year licensing agreement for Gucci Beauty, which generated roughly $1.0 billion in annual sales, will transfer fully to L’Oréal under a €1.5 billion upfront payment. The transition is slated to complete by January 2027, ending Coty’s production and distribution rights for the brand globally.
2. Revenue Impact on Coty
Analysts estimate the Gucci shift will reduce Coty’s consolidated revenues by approximately 10% and dent adjusted EBITDA by 8% in fiscal 2027. The loss removes a high-margin segment that accounted for almost 15% of Coty’s EBITDA last year.
3. Analyst Revisions and Price Targets
Following the deal announcement, several brokerages cut Coty price targets by an average of 15%, with the median target now $10. Analysts cited reduced cash flow and renewed skepticism on the strength of Coty’s brand pipeline to justify the downgrades.
4. Coty Strategic Response
Coty plans to accelerate launches of Burberry and Hugo Boss fragrances and expand direct-to-consumer channels to mitigate the Gucci shortfall. Management has also outlined €100 million in cost-savings initiatives as part of a broader restructuring.
