Core Viewpoint - A wave of brand sell-offs is sweeping through the beauty industry, driven by major companies facing performance pressures and a need to restructure their brand portfolios [2][3][6]. Group 1: Brand Sell-Offs - Coty is reportedly exploring the sale of several brands, including Gucci and Burberry, amidst market speculation [2]. - Kenvue, a spinoff from Johnson & Johnson, is also rumored to be considering the sale of its skin health and beauty division, with an estimated transaction value exceeding $500 million (approximately 3.59 billion RMB) [2]. - Natura & Co has been linked to ongoing rumors about selling Avon since last year, highlighting a broader trend of divestitures among beauty giants [2][3]. Group 2: Market Reactions - Despite the sell-off rumors, Coty's stock surged by 13% in a single day, reaching a three-month high, indicating a positive market reaction to the restructuring news [3]. - The performance pressures faced by these companies are evident, with Coty's mass beauty segment reporting a 9% decline in net revenue to $470 million (approximately 3.4 billion RMB) in Q3 of fiscal 2025 [8]. Group 3: Industry Trends - The beauty industry is experiencing a significant contraction, with Kenvue's skin health and beauty division reporting a 7.3% year-over-year sales decline in Q1 2025, the largest drop among its business segments [6]. - The Chinese market is reshaping the competitive landscape, with domestic brands capturing a growing market share, accounting for 55.2% of total sales in 2024, up 2.9 percentage points year-over-year [11][24]. Group 4: Strategic Shifts - Major beauty companies are shifting from aggressive acquisition strategies to a focus on efficiency and value, as evidenced by their divestiture of underperforming brands [19][21]. - The trend reflects a broader industry consensus that emphasizes streamlining brand portfolios and concentrating on core assets to enhance competitiveness [19][26]. Group 5: Future Outlook - The ongoing sell-off trend is expected to continue as companies adapt to the compressed industry cycle and intensifying competition [26]. - The future of the beauty industry will likely revolve around establishing competitive advantages in areas such as cutting-edge biotechnology, unique ingredients, and robust consumer data operations [26].

Core Viewpoint - Coty Group is actively seeking buyers or considering a split sale of its high-end and mass beauty divisions, with negotiations still in early stages. The potential transaction may take the form of a split rather than a complete sale, with strategic partnerships or mergers being more likely than traditional acquisitions [4]. Financial Performance - For the third quarter of fiscal year 2025, Coty Group reported net revenue of $1.2991 billion, a year-on-year decline of 6.24%, and a loss of $402 million. For the first three quarters of fiscal year 2025, net revenue was $4.6405 billion, down 2.4%, with a loss of $280.9 million [5]. - The financial struggles indicate that the news of potential sales is not unfounded, as many international beauty brands are facing cash flow pressures, including Coty [5]. Brand Portfolio and Risks - Coty Group's high-end beauty division includes brands like Burberry, while its mass beauty division includes Covergirl, Max Factor, and Rimmel. The company faces risks of losing licensing rights for several brands, such as Miu Miu, which will end its contract with Coty in 2024 [4][6]. - The high-end beauty division generates over 60% of Coty's revenue, with Gucci being a significant contributor. However, the licensing agreement for Gucci is set to expire in 2028, and the parent company, Kering, has indicated intentions to reclaim the brand [6]. Strategic Adjustments - Experts suggest that losing Gucci will impact Coty's brand structure and performance in the high-end market. However, Coty is expected to make strategic adjustments to seek more competitive and promising brands to maintain its market position [7]. - Coty is also attempting to mitigate risks by launching its own fragrance brand, Infiniment Coty Paris, which is seen as a significant initiative to create a new era in fragrances and scents [7].