Coty Inc. might be considering selling brands CoverGirl, Max Factor and Rimmel London, but is there anyone out there to buy them?
On Tuesday, Coty revealed that it’s started a strategic review of its mass color cosmetics business and its operations in Brazil, assessing a full range of alternatives including partnerships, divestitures and spin-offs.
That puts the spotlight on Coty’s mass color cosmetics business, which has revenues of $1.2 billion and includes brands such as CoverGirl, Rimmel, Sally Hansen and Max Factor, as well as the $400 million business in Brazil.
Ashley Helgans, an analyst at Jefferies, said: “Given management’s negative outlook for the mass cosmetics category in FY26, the company calling out retailers’ aggressive inventory management, and Coty’s relative performance trends vs the segment, we see limited upside for the Consumer business next year should the business be retained.”
Industry sources were split on whether a buyer was already waiting in the wings.
One told WWD that the fact that mass fragrance has been moved into prestige and that Stefano Curti, Coty’s chief brands officer of consumer beauty, and Alexis Vaganay, chief commercial officer of consumer beauty, will step down, could indicate that a buyer is circling the brands.
However, another posited it won’t be an easy task to find a buyer for these brands, if that is the path Coty ultimately takes. Nevertheless, by publicly declaring it’s considering a sale, Coty may shake some potential buyers out of the woodwork, said the source.
“This is the one that you need to put a for-sale sign on, in case somebody is out there and you’re not thinking of them,” the source said. “There’s unlikely to be anybody so it’s really the one where hopefully somebody that you never thought of comes to knock on the door.”
A third source agreed with the sentiment, stating that the move was most likely about “shaking the tree.”
WWD previously reported in June that the company was in the very early stages of exploring deal options. At the time, a number of sources told WWD that Coty was exploring a sale in two parts. That would involve its Luxury division, counting brands such as Gucci, Burberry, Jil Sander and Hugo Boss, and its Consumer division, with mass brands including CoverGirl, Max Factor and Rimmel London.
Now, from its announcement Tuesday, the company appears to be doubling down on its prestige business, and combining mass and prestige fragrances. This will mean that Jean Holtzmann, chief brand officer, prestige, will now oversee Adidas, Bruno Banani, David Beckham, Leger, Nautica, Vera Wang and Mexx, in addition to prestige.
Still, that didn’t seem to do the trick for analysts.
Helgans, for one, believes reliance on fragrance is risky.
“Fragrance now accounts for 69 percent of Coty’s sales, up from 55 percent in 2019, further tying performance to a slowing category,” she wrote in a note. “Prestige fragrance grew just 2 percent like for like in FY25, with Q4 sell-out up low single digits but sell-in pressured by destocking and heavy promotions. Despite category strength, Coty has lost 340 basis points in global prestige share since 2017, highlighting structural challenges. Doubling down on fragrance as peers diversify looks reactive.”
Investors are taking a wait-and-see approach, trading the stock up 0.8 percent at $4.04.