Coty is figuring out what life post-Gucci looks like.
On Wednesday, in its first earnings report since Kering announced that it would soon lose the rights to make Gucci beauty for L’Oréal, Coty reported a 6 percent drop in net revenue to $1.58 billion. While the larger 9 percent hit came from its longer-suffering mass consumer beauty unit, which includes Covergirl and Rimmel, its prestige arm, which houses Gucci, also declined by 4 percent.
While Coty has said that no one license partner comprises more than 10 percent of overall revenues, the Gucci brand carries weight with consumers. The license, set to expire in 2028, brings in around $500–$600 million for Coty annually.
Its loss couldn’t come at a more precipitous time for the company. Five weeks ago, it announced a strategic pivot with a view towards selling off its mass consumer business, including the likes of Bourjois and Sally Hansen, and doubling down on prestige categories and fragrance across the price spectrum “from $5 to $500.”
Chief executive Sue Nabi said in an accompanying statement that Coty is on track, as it moves to be a prestige-focused company with an emphasis on fragrance, cosmetics and skincare. She cited new launches, such as the relaunch of Marc Jacobs Beauty, and just-signed licenses like Marni and Etro, as strengthening its portfolio.
Becoming a dominant prestige player while grappling with the loss of a major brand will not be easy, especially as Coty is banking on fragrance for success as the category’s growth begins to cool.
A Masstige-Led Slowdown
Coty has already undergone a recent metamorphosis.
In 2020, it shed four hair care brands, including two it had previously acquired from Procter & Gamble, to focus on top-performing lines. The slimmed-down structure worked for a few years. Its popular portfolio of prestige fragrance licenses, which includes the likes of Hugo Boss and Burberry, were a hit with shoppers. Prestige fragrance saw 10 percent compound annual net revenue growth between its 2021 to 2025 fiscal years.
But its losses have begun to widen again. Most fragrance market growth is coming from either ultra-luxury brands like Amouage, or more affordable viral products like Sol de Janeiro, which helped popularise cheaper, lighter mists.
The prestige segment in the $150 range, where many licensed brands sit, is especially squeezed compared to masstige or ultra-luxury fragrances. Niche perfumes, like those from smaller brands including D.S. & Durga, Kayali and Byredo have also eaten away at fashion houses’ market share.
Coty’s Next Act
Even if the fragrance boom appears to have peaked, it remains a vast and dynamic market. Growth will be hard, but can be won: In Coty’s Wednesday earnings report, it noted its ultra-premium fragrances grew by 17 percent.
Expanding its licensed portfolio appears to be a key part of Coty’s plans to win in fragrance as it competes with L’Oréal, Puig, Interparfums and Estée Lauder, who are all vying for new names. In addition to the revival of Marc Jacobs Beauty in 2026, it will capitalise on new licenses from Marni and Etro; Swarovski will launch in 2027. It has also debuted its own brands: Infiniment Coty Paris and mass body spray brand Origen.
The company noted that new body spray launches for Calvin Klein, Kylie Cosmetics, Philosophy, Adidas and Nautica are boosting sales with strong margins. Amid the effects of tariffs and economic uncertainty on consumer sentiment, it has highlighted the concept of “treatonomics,” or consumers spending on affordable luxuries.
Progress will be slow. In the 2025 fiscal year ended in August, Coty’s overall growth turned negative, with total net revenue down 4 percent. The company doesn’t expect to return to growth until the second half of its 2026 fiscal year. The investment bank Barclays said in a note ahead of Coty’s earnings that it expects a return to growth in the next financial year instead.
Coty is hoping its strategy of attracting new fragrance licences with launching new labels will help make up for near-term losses.
“Owning brands is owning more of your own destiny and control,” said Oliver Chen, managing director at investment bank TD Cowen. But progress on completely new labels is always “incremental,” said Chen. “You have to build awareness.”
Daniela Morosini contributed reporting.
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