Markus Strobel outlines Coty’s strategic moves, including discussions on the Gucci license transfer, winding down Orveda operations, and repositioning CoverGirl for Gen X shoppers.Markus Strobel outlines Coty’s strategic moves, including discussions on the Gucci license transfer, winding down Orveda operations, and repositioning CoverGirl for Gen X shoppers.
When it comes to the Gucci license, everything is on the table, according to Coty interim chief executive officer Markus Strobel.
“When it comes to Gucci, yes, obviously we are open to everything — to an early exit. If it creates value for us, it needs to create value for us and for our shareholders. And if anything becomes clear and fixed. We will obviously notify the public as it’s based on our requirements,” he said during a post-earnings call with analysts when asked if he is still open to a disposal ahead of the license maturity.
In October, L’Oréal acquired the rights to enter into a 50-year exclusive license for the creation, development and distribution of fragrance and beauty products for Gucci, starting in 2028, when Coty’s license with Kering expires.
In February, L’Oréal CEO Nicolas Hieronimus said he would be happy to receive the brand sooner.
“As far as Gucci, it is really something that is being discussed between Kering and Coty, so I cannot comment on it,” said Hieronimus. “Would we be happy to have it sooner? It will take time to work on new projects and to refine the brand, so we will need some time, and we will be happy to get the brand sooner.”
Also on the call, Strobel revealed some key details of the group transitioning out of its ownership of Orveda, for which Coty acquired the license in 2021 under previous CEO Sue Nabi, who cofounded the brand. In February, Coty said it had terminated its license with Orveda.
Coty invested heavily in the brand — with multiple sources saying that tens of millions of dollars were spent. There were openings of numerous freestanding Orveda stores in prime locations, including in Paris, New York and Shanghai. But the brand is understood to have generated sales of only $5 million in 2024.
“We started transitioning out of Orveda in February. We are executing this at the moment, which means closing some of these big boutiques, some of them might be taken over by the previous licensor. We’re still working on that. We think we’re going to be out more or less completely by the end of this fiscal year. So come June, July, August, we should be out of that business and can reallocate some of that spending that we’re on this business on our core fragrance brands,” said Strobel.
A rep for Coty did not immediately respond to request for comment on which stores were closed, but sources told WWD the store on Madison Avenue in New York City appears to have been shuttered.
Strobel also detailed on the call how he was repositioning CoverGirl as a Gen X brand.
“I find it quite interesting when you look at CoverGirl and Sally Hansen. We had a lot of failed efforts in the last couple of years to position the brands where the brands don’t fit. I think at one point in time they tried to turn CoverGirl into the ultimate Gen Z brand. They didn’t really work because this was not credible for the consumer. And, each time when I go see a retailer in the U.S., but also in Europe, I would say, please, please, please, can anybody do something for Gen X? Because Gen X women have money, they’re ready to spend it, but nobody talks to them and nobody has an offering for them,” he said.
“[We’re] in the process of making the penultimate Gen X brand, and retailers really support us in this,” he said. “What this means, the way we’re going to market, you need to have a good mix of advocacy.”
Net revenuefor the third quarter ended March 31 came in at $1.28 billion, a decrease of 1 percent compared with a year ago. Coty’s like-for-like sales declined 7 percent in the quarter, including an estimated 1.4 percent negative impact from the Middle East, driven by the escalation of the conflict in the region.
