Coty Inc.: Coty terminates Gucci license early; lowering estimates

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Coty Inc.: Coty terminates Gucci license early; lowering estimates

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Coty Inc.

Coty terminates Gucci license early;

lowering estimates

Maintain Rating: UNDERPERFORM | PO: 1.50 USD | Price: 2.23 USD

Gucci license termination contributes to top-line woes 08 July 2026

On 7/7, Coty announced its agreement to transition the Gucci license back to Kering and Equity

operate the global license until at least June 30, 2027, ending the license agreement

approximately one year ahead of expiration. Under the agreement, Coty is to receive a

Key Changesconsideration of approximately $400m, with $250m cash at signing and an additional

$150m no later than September 30, 2027, of which up to $30m is contingent on certain (US$) Previous Current

criteria. Proceeds from the transaction are expected to support debt reduction, invest in 2028E Rev (m) 5,898.4 5,426.6

the core prestige fragrance and beauty portfolio, and address organizational 2027E EPS 0.43 0.35

optimization. We see the early termination of the license for Coty as a concern amid 2028E EPS 0.45 0.37

challenging top-line trends; we previously estimated the Gucci license (see report) to

contribute $500m in annual revenues. While we appreciate Coty’s efforts to build its Anna Lizzul

owned brands, they have not driven significant market share gains in their respective Research Analyst

BofAS

categories. +1 646 855 2569

anna.lizzul@bofa.com

Adjusting estimates for weaker outlook into F27 Peter T. Galbo, CFA

Research Analyst

We maintain our FQ4 estimates but lower F27 on a weaker outlook and reduce F28 BofAS

revenues on the Gucci license termination. Due to the timing of contracts, the impact to +1 646 743 0175 peter.galbo@bofa.com

FQ4 costs from the Middle East conflict is expected to be minimal but pushed out to