Coty Inc. announced that its controlling shareholder, JAB Holdings, is initiating a leadership overhaul that will see Chairman Peter Harf and Chief Executive Officer Sue Nabi step down. The change is part of a broader strategic review aimed at turning around the company’s under‑performing mass‑market cosmetics brands and positioning Coty for long‑term growth.
The overhaul comes as Coty evaluates the future of its mass‑market portfolio, including potential divestitures of CoverGirl, Rimmel and Max Factor. JAB Holdings, which has steadily increased its stake to become the majority shareholder, is steering the company toward a focus on its more profitable prestige beauty and fragrance businesses. The review is intended to sharpen the brand mix, reduce operating costs and unlock value in high‑margin segments.
Coty’s most recent quarterly results, released for the first quarter of fiscal 2026, showed revenue of $1.58 billion—matching analyst expectations—and an earnings‑per‑share figure of $0.12, a $0.03 miss against the consensus of $0.15. The company posted a net loss of roughly $381 million for fiscal 2025, a sharp reversal from the $76 million net income reported in fiscal 2024. Gross margin expanded to 65.5% in Q1 FY2026, up 200 basis points from the 63.5% margin recorded in Q1 FY2025, driven by a stronger mix of prestige products and pricing power in the fragrance segment.
Segment data reveal that prestige beauty accounted for 65% of net revenue ($3.82 billion) while consumer beauty contributed 35% ($2.07 billion) in fiscal 2025. The consumer beauty segment, which includes the mass‑market brands under review, experienced a decline in sales, reflecting softer demand and increased competition. Coty also faces the impending loss of its Gucci fragrance license in 2028, which is expected to reduce revenue by about 9% of current sales. To offset these headwinds, the company is implementing its “All‑in to Win” cost‑saving program, targeting significant reductions in operating expenses across the organization.
CEO Sue Nabi emphasized that “Coty’s strategic progress is accelerating as we elevate Coty as a Prestige beauty company with an emphasis on fragrances and scenting across price points, complemented by capabilities in prestige cosmetics and skincare.” She added that the company is “unlocking material opportunities in ultra‑premium fragrances, mists and broader scenting.” Management signals confidence that the company will return to growth in the second half of fiscal 2026, but acknowledges that the transition period will involve uncertainty and ongoing operational challenges.
Investors have reacted to the leadership change and the company’s strategic pivot with caution. The announcement has highlighted the need for a clearer path to profitability, the importance of the prestige and fragrance segments, and the impact of the upcoming Gucci license loss. The market’s focus on these factors underscores the significance of the leadership overhaul for Coty’s future trajectory.
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