Coty Initiates Strategic Review of Consumer Beauty Assets
Global beauty company Coty Inc. has announced a major strategic realignment, reportedly launching a formal review of specific assets within its Consumer Beauty division. According to reports from September 30, 2025, the company will explore a full range of options for these businesses, including potential sales, spin-offs, or other strategic transactions.
The assets placed under review include Coty’s mass color cosmetics portfolio featuring brands such as CoverGirl, Rimmel, Sally Hansen and Max Factor, which sources indicate generate approximately $1.2 billion in annual revenue. The review also encompasses Coty’s distinct Brazil business, consisting of local brands that reportedly contribute close to $400 million in annual revenue.
Strategic Shift Toward Fragrance Leadership
Meanwhile, the remaining Coty entity intends to realign its business to bolster its leadership position in the global fragrance market. The report states the company will more closely integrate its Prestige Beauty and Mass Fragrance businesses, which together account for around 69% of total sales, to create what analysts suggest will be a unified “fragrance engine.”
This strategic pivot is reportedly aimed at driving sustainable, profitable growth by concentrating resources on Coty’s most successful business segments while exploring value-unlocking alternatives for its more challenged assets. The timing appears favorable, as the global luxury perfume market is forecast to grow from $52 billion in 2025 to $79.5 billion by 2030, representing a compound annual growth rate of 8.9%.
Deal Rationale and Market Pressures
According to the analysis, Coty has launched this strategic review because the financial performance of these Consumer Beauty assets has not kept pace with its Prestige division. Sources indicate these businesses are no longer aligned with the company’s sharpened focus on core fragrance operations.
More than a decade ago, Coty made a bold move by acquiring several mass market beauty brands from Procter & Gamble for $12.5 billion. However, this strategy reportedly began to falter as the mass beauty category faced rising competition from lower-cost online rivals and newer brands that quickly built strong digital followings. Market dynamics shifted significantly as consumer behavior changed, with drugstores destocking products amid tightening consumer spending.
Financial Performance Highlights Diverging Trajectories
The report reveals stark differences in performance between Coty’s divisions. Prestige fragrance sales reportedly grew at a compound annual growth rate of around 10% from fiscal year 2021 to 2025, while Consumer Beauty grew only 2% over the same period. Specifically, in fiscal year 2025, Consumer Beauty segment’s like-for-like revenue declined by 5% while Prestige fragrance remained flat year-over-year.
This underperformance reportedly led free cash flows to decline from $369.4 million in fiscal year 2024 to $277.6 million in fiscal year 2025. Financial leverage also increased from 3.2x to 3.5x, according to the analysis.
Corporate Restructuring and Leadership Changes
As part of the organizational redesign, Coty has appointed Gordon von Bretten, a current Board member, as President of the Consumer Beauty division. He will be responsible for driving mass cosmetics, mass skin and personal care businesses during this transitional period.
The company is reportedly being advised by Citibank on potential transaction options, including a corporate spin-off or divestment. The timeline for completion of the strategic review and any potential transaction has not yet been announced, with any resulting transaction subject to customary conditions including regulatory and final board approvals.
Market Context and Competitive Landscape
This strategic move comes amid significant shifts in the global beauty market, where fragrance compounds and prestige products are showing stronger growth potential than mass-market cosmetics. The decision aligns with the investment strategy of Coty’s controlling shareholder, JAB Holding Company, which is known for actively managing its portfolio companies through the divestment of noncore assets to improve value.
Industry observers note that this portfolio purification could bolster Coty’s capacity to realize synergies within its core operations, accelerate organic growth, and solidify its leadership position in its most defensible and profitable market categories. The move follows similar strategic reviews across the consumer goods sector as companies adapt to rapidly changing market conditions.
This news development occurs alongside other significant business announcements, including technology sector performance updates and market movements in related industries.
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