Coty wants prestige, not price wars
Coty wants prestige, not price wars; it is ditching the mass market to go full glam! Mass hashtag#beauty may be recession-proof, but it’s also margin-weak, therefore Coty wants its portfolio as tight as its packaging, that is why in a world where Gen Z buys either CHANEL or E.L.F. BEAUTY, it’s middle-shelf makeover is long overdue💄
In this new world, being everything to everyone is out and being aspirational, Instagrammable, and trending on TikTok is in.
We were quoted this morning about this by Reuters reporters Savyata Mishra and Alex Marrow in their article, “Coty explores sale of hashtag#CoverGirl, hashtag#Rimmel as it pivots to hashtag#fragrances.”
QUOTED EXCERPT
“Coty is signaling it’s done playing drugstore beauty pageant and wants to sit exclusively at the prestige beauty table with LVMH and Estée Lauder as dinner companions, not competitors,” said Michael Ashley Schulman, partner and CIO at Running Point Capital Advisors.
ALSO QUOTED in the article, CEO Sue Nabi.
ADDITIONAL THOUGHTS
Coty realizes what the market has known for over a yar, that the company needs a makeover especially since its sales have been so dependent on physical mass retailers and drug stores that have had declining popularity. The hope is that a focus on fragrances will help the company smell and perform better🍃
It’s a classic brand glow-up attempt going from CoverGirl to couture.
A sale or spin off of mass brands like CoverGirl/Rimmel would clean up the P&L creating richer margin mix, less promo grind, and could free cash to de-lever a >$4B debt stack, but scale loss with retailers, stranded costs, and tax friction are execution risks.
Strategically, this move echoes a broader beauty sector reality where consumers, especially Gen Z, oscillate between $6 e.l.f. dupes and $60 Dior splurges, leaving the mushy middle behind like last season’s trends.
In this new world, being everything to everyone is out and being aspirational, Instagrammable, and trending on TikTok is in.
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