Coty Inc. (NYSE: COTY) has launched a sweeping review of its consumer beauty business that could lead to the divestment of mass-market staples including CoverGirl and Rimmel. The announcement, made on September 30, 2025, underscores the New York-based company’s sharpened focus on fragrances, a category that has been driving profitability and investor confidence even as mass color cosmetics face pressure from digital challengers and shifting consumer habits.
The review comes at a time when Coty’s fragrance division contributes nearly 70 percent of its group revenue, while its consumer beauty arm—once the cornerstone of its mass appeal—has been struggling to maintain growth momentum. Shares of Coty rose close to 3 percent in early trading following the disclosure, a signal that investors welcomed the potential rebalancing of the portfolio toward higher-margin categories.
Why is Coty considering the sale of CoverGirl and Rimmel at this point in its turnaround strategy?
Coty’s consumer beauty unit houses CoverGirl, Rimmel, Sally Hansen, and Max Factor, brands that carry decades of recognition but have seen their market share eroded by indie startups and influencer-driven entrants. The division reported a 5 percent like-for-like sales decline in the twelve months ended June 30, reflecting both category headwinds and intensified competition in drugstore channels.
By contrast, Coty’s prestige and mass fragrance lines delivered growth between 2 and 9 percent in the same period. The divergence in performance has made it increasingly difficult for Coty to justify continued investment in legacy mass cosmetics when fragrance offers stronger margins and premium pricing power. Chief Executive Officer Sue Nabi has emphasized that aligning the company’s strategy with its strengths will unlock scale efficiencies and allow Coty to compete more directly with giants such as LVMH and Estée Lauder Companies.
How does the consumer beauty review connect with Coty’s broader corporate history of divestments?
The contemplated exit from CoverGirl and Rimmel would not be Coty’s first retrenchment. In 2020, the company scaled back its professional hair and nail division by divesting a controlling stake in Wella to private equity, retaining only a minority interest. That decision freed resources for fragrance and prestige beauty, marking the beginning of Coty’s repositioning under a turnaround plan.
The current strategic review suggests Coty sees little synergy between consumer color cosmetics and the luxury-leaning fragrance and skincare portfolios it has been building. Analysts suggest the review could culminate in a sale, a spin-off, or strategic partnerships. The company has also signaled that its Brazilian consumer beauty business, which generates roughly $400 million annually, is part of the evaluation.
How is Coty’s leadership reshaping governance and strategy as it reviews CoverGirl and Rimmel divestment options?
Coty has tapped board member Gordon von Bretten, formerly its Chief Transformation Officer, to lead the consumer beauty division during the review. Reporting directly to Sue Nabi, von Bretten is tasked with exploring all options to maximize shareholder value from the segment. His appointment signals Coty’s intent to ensure the process is anchored in both operational discipline and transformation experience.
By installing a seasoned executive with prior turnaround credentials, Coty is assuring investors that the review will not be a symbolic exercise but a serious path toward reshaping its business mix. Governance analysts note that the direct reporting line to Nabi also underscores the strategic priority Coty attaches to this decision.
What does the fragrance business offer that mass color cosmetics cannot deliver in today’s beauty landscape?
The fragrance market has shown resilience through cycles of inflation and retail disruption. Consumers often trade up for scents associated with luxury, aspiration, or emotional connection. Coty’s portfolio spans prestige brands licensed from fashion houses such as Gucci and Burberry as well as mass fragrances with broad reach.
In fragrance, Coty enjoys pricing power, brand stickiness, and a runway for innovation through line extensions and limited-edition launches. Gross margins are materially higher than those achievable in drugstore color cosmetics, where price wars and private-label encroachment erode profitability.
For Coty, doubling down on fragrance is not just about riding a profitable category; it also cements its position as a global leader in a market where scale and licensing agreements create a moat against smaller entrants.
How are financial markets and institutional investors reacting to Coty’s potential exit from CoverGirl and Rimmel?
Equity markets responded positively to Coty’s announcement, with shares advancing nearly 3 percent on the day. Analysts described the move as a necessary realignment that could free resources for reinvestment in fragrance and skincare innovation. Sell-side research desks have pointed out that Coty’s valuation multiple lags peers because of exposure to lower-growth mass cosmetics, and a divestment could help narrow the gap.
Institutional investors have long pressed Coty to focus on categories that offer both scale and differentiation. While CoverGirl and Rimmel remain household names, their appeal has waned with younger consumers who prefer digitally native brands that align with lifestyle identities. By signaling willingness to part with these icons, Coty is demonstrating flexibility that may improve long-term investor sentiment.
What challenges and risks does Coty face if it divests legacy beauty brands?
Despite market enthusiasm, the road ahead is not without complications. CoverGirl and Rimmel still carry brand equity, especially in North America, Europe, and emerging markets where distribution footprints are entrenched. Finding buyers willing to pay full value in a crowded beauty M&A market could prove challenging.
Integration risks loom for potential acquirers. A company acquiring CoverGirl or Rimmel would need to invest in revitalization campaigns and possibly digital-first strategies to reconnect with younger consumers. For Coty, the execution risk lies in managing transition arrangements, particularly with retail partners, while ensuring its remaining portfolio maintains shelf presence and promotional momentum.
There is also a strategic question: by exiting consumer beauty, Coty could limit its diversification and increase reliance on fragrance cycles. Should fragrance trends weaken, Coty would be more exposed to volatility. However, executives argue that fragrance’s structural margins justify the concentration.
How does this move fit within global beauty industry dynamics in 2025?
The beauty sector in 2025 is increasingly bifurcated between luxury prestige and digitally driven indie brands. Mass cosmetics players have been squeezed, with traditional drugstore names losing ground. At the same time, premium skincare and fragrance have outperformed, buoyed by aspirational consumers and strong gifting culture.
Coty’s decision mirrors industry currents. Rival Estée Lauder has focused heavily on prestige skincare and fragrance, while Procter & Gamble exited most color cosmetics years ago. L’Oréal has balanced both luxury and mass but invested aggressively in digital channels and innovation pipelines. Coty’s pivot places it closer to the prestige-driven segment of the industry, betting that the middle ground is less rewarding.
What is the outlook for Coty if the strategic review leads to major divestments?
If Coty successfully exits its consumer beauty brands, it will likely deploy proceeds to strengthen its balance sheet, reduce debt, and reinvest in fragrance innovation. Analysts expect Coty to prioritize expansion in Asia-Pacific, where demand for prestige fragrance continues to rise, and to increase marketing spend behind its luxury licenses.
In the near term, investors will be watching for details: which brands are prioritized for divestment, how valuations compare with book value, and whether Coty opts for outright sales or spin-offs. The timeline for execution is also a factor, as lengthy processes could create uncertainty.
In the long term, the success of Coty’s transformation will hinge on whether it can consolidate its identity as a fragrance powerhouse while maintaining enough diversification to withstand consumer shifts.
Is Coty’s fragrance-first strategy sustainable for the next decade?
From an expert perspective, Coty’s pivot reflects a pragmatic understanding of where value is being created in global beauty. Fragrance not only delivers higher margins but also benefits from emotional resonance with consumers, enabling Coty to differentiate in ways mass cosmetics cannot.
Yet sustainability of this strategy depends on Coty’s ability to continually innovate, secure attractive licensing deals, and defend its brands against rivals with larger marketing war chests. The decision to explore divestments signals discipline, but execution will be critical. If Coty can balance operational focus with bold innovation, its fragrance-first strategy could be sustainable well into the next decade.
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