Core Insights - The departure of former CEO Sue Nabi from Coty has sparked significant discussion, particularly regarding the company's failure to meet its 2021 growth commitments, resulting in a more than 50% decline in stock price by 2025 [1][5][8] - Nabi's tenure was marked by high compensation, with her total pay reaching 1.98 billion yuan in FY2021 and 1.04 billion yuan in FY2023, making her the highest-paid CEO in the beauty industry [1][17] Performance Highlights - During Nabi's leadership, Coty achieved a compound annual growth rate of 9% over five years and launched successful products like Burberry Goddess, while also driving rapid growth for Lancôme in China [3][12] - However, the company's financial performance in FY2025 showed a net revenue of 5.893 billion USD (approximately 41.12 billion yuan), a 4% decline year-over-year, and a net loss of 381.1 million USD (approximately 2.66 billion yuan) [8][15] Strategic Failures - An investor highlighted that many of Coty's strategic goals set in 2021, including achieving a 10% revenue share from the Chinese market and a 10% revenue target for skincare, were not met, with actual figures falling significantly short [7][8] - The company's reliance on high-end fragrance licensing, which accounted for nearly 60% of net revenue in FY2025, poses a risk, especially with the loss of Gucci's beauty license to L'Oréal [18][19] Leadership Transition - Markus Strobel took over as the interim CEO on January 1, 2023, following Nabi's departure, amid concerns over the company's performance and strategic direction [10][21] - The market reacted negatively to the leadership change, with Coty's stock price dropping 3.5% on the announcement day, reflecting investor skepticism about the company's future [21]

Core Viewpoint - Coty Group is undergoing a significant leadership restructuring as its major shareholder, JAB Holdings, aims to address ongoing performance pressures and seek a turnaround after a prolonged period of underperformance in the capital markets [1][3]. Group 1: Leadership Changes - Current Chairman Peter Harf is expected to resign, followed by CEO Sue Nabi, which has led to a 3% drop in Coty's stock price [1]. - The leadership changes are seen as a decisive move to reverse losses and transform the company amid financial challenges [1][3]. Group 2: Financial Performance - Coty Group's stock price has fallen approximately 55% over the past year, with its market value decreasing from around $10 billion (approximately 70.55 billion RMB) two years ago to $2.9 billion (approximately 20.46 billion RMB) currently [3]. - The company has reported a series of disappointing earnings, attributing the decline to a slowdown in the overall market, which has significantly impacted investor confidence [3]. Group 3: Business Challenges - Coty faces major uncertainties in its core business, particularly regarding its partnership with Kering and its brand Gucci, as Kering has announced a €4 billion (approximately 33.13 billion RMB) deal to sell its beauty division to L'Oréal, which will affect Coty's exclusive rights to Gucci beauty products starting in 2028 [3][5]. - Gucci beauty products account for about 9% of Coty's total revenue, making this transition critical for the company's financial health [3]. Group 4: Strategic Adjustments - In response to declining sales and financial pressure, Coty is considering divesting its mass cosmetics business, which includes brands like Max Factor, Rimmel, and Cover Girl, while attempting to merge its mass and premium fragrance businesses [5]. - New product launches, such as the Origen and Infiniment Coty fragrance lines, have not met sales expectations, indicating challenges in expanding new business lines [5]. Group 5: Historical Context - Coty has struggled to establish a competitive edge against industry giants like L'Oréal and Estée Lauder since its IPO in 2013, facing difficulties in integrating a $12.5 billion (approximately 88.19 billion RMB) acquisition of Procter & Gamble's beauty business [7]. - CEO Sue Nabi, who took over in 2020, was expected to bring stability after a period of frequent leadership changes, but investor patience is waning due to the company's poor performance under her leadership [7].

Core Insights - The beauty industry is experiencing a resurgence in the fragrance sector, with major brands and local companies expanding their offerings [2][3] - Interparfums has signed a fragrance licensing agreement with Longchamp, with the first fragrance expected to launch in 2027 [2] - The market is witnessing a trend of cross-industry brands entering the fragrance space, indicating a shift in consumer preferences towards emotional and everyday use of fragrances [8][10] Industry Developments - Interparfums is set to fully manage the Longchamp fragrance line, which will include the creation, development, production, and sales of the brand's perfumes [2] - Coty has launched a new mass-market fragrance brand, Origen, targeting the U.S. market with a focus on storytelling through scents [5] - TSG Consumer has acquired the independent fragrance brand Phlur, which emphasizes emotional resonance and affordability [7] Market Trends - The global fragrance market is projected to grow steadily, with estimates suggesting it will exceed $79.3 billion by 2027, driven by the demand for self-care and emotional healing [8][9] - The fragrance market is expanding at a compound annual growth rate of over 3%, with the Chinese market showing significant growth potential despite low penetration rates [9] - Fragrances are increasingly seen as everyday emotional consumption items rather than luxury goods, with younger consumers seeking emotional connections through scent [9][10] Financial Performance - Puig's latest half-year report indicates that its fragrance and fashion division generated €1.685 billion in revenue, accounting for over 70% of total revenue, with an 8.6% year-on-year growth [8] - The fragrance industry boasts a gross margin of approximately 70%, with low raw material costs and high product turnover rates contributing to its profitability [9]