When Coty Loses the Gucci License — What Then?

Core Insights - Coty Inc. is set to lose the Gucci fragrance license in 2028 to L'Oréal, which has secured a 50-year exclusive license for Gucci's fragrance and beauty products [1][2] - Analysts predict that this loss could significantly impact Coty's financial performance, estimating a 12.5% dilution to total company EBITDA and a 14% dilution to the business excluding the Consumer Beauty assets currently for sale [3] Financial Impact - The Gucci license is estimated to represent approximately 10% of Coty's sales, equating to about $555 million, and around 12% of total adjusted EBITDA, approximately $121 million [5] - If Coty sells its Consumer brands, the Gucci license could account for a larger share, potentially around 14% of company sales and adjusted EBITDA [5] Strategic Considerations - Coty is currently focusing on balancing owned and licensed brands, with 76% of its portfolio being owned or under long-term licenses, while 14% of this is comprised of Gucci [6] - The expiration of the Gucci license poses challenges for Coty in maintaining its revenue and profitability, especially in the current business climate [6] Risk Assessment - Analysts from TD Securities estimate that the expiration of the Gucci license could lead to a negative earnings-per-share impact ranging from -4% to -19% annually for Coty [7]