Imagine a beauty giant, once a powerhouse in the industry, now struggling to regain its footing after a series of missteps. This is the story of Coty, a company that went from a triumphant public debut to a stock price plummeting over a decade. But what exactly went wrong? And can they turn it around?
When Coty went public in 2013, its initial public offering was a major event, with shares priced at $17.50. Fast forward to today, and the company’s stock has dwindled to a mere $2.51, battered by questionable decisions, constant leadership changes, and a multibillion-dollar acquisition that failed to deliver. But here's where it gets controversial: Was it a series of unfortunate events, or were deeper systemic issues at play?
All eyes are now on Markus Strobel, the former Procter & Gamble executive who took the helm as executive chairman and interim CEO of Coty in January. Strobel has been candid about the challenges, unveiling a turnaround plan called “Coty Curated,” which focuses on sharper priorities, targeted investments, and improved execution. He emphasizes transparency and a commitment to consumer demand, stating, “We’re going to concentrate our resources where they matter most.” But is this enough to restore investor confidence?
And this is the part most people miss: Despite Strobel’s reassurances, analysts remain skeptical. Barclays analyst Lauren Lieberman noted the company’s past disconnect with its challenges, while Robert Ottenstein of Evercore questioned whether operational efficiencies can coexist with the creativity needed to compete in the beauty market. Sydney Wagner of Jefferies added that the turnaround plan, though activated, faces hurdles like slowing fragrance growth and underperforming mass beauty brands.
To understand Coty’s struggles, we must rewind to 2016, when the company acquired 41 beauty brands from Procter & Gamble for $11.6 billion. Here’s the bold truth: Many argue this deal was Coty’s downfall. The acquisition, engineered by then-interim CEO Bart Becht, saddled the company with $1.9 billion in debt and brands like CoverGirl and Clairol that were already losing appeal. The integration was rocky, and retailers began dropping these brands once they were no longer under the P&G umbrella.
Becht’s leadership itself was criticized for commoditizing beauty and dismantling the culture that once made Coty successful. “It’s one of the biggest apocalypses of the rise and fall of a [beauty] company in such a short period of time,” said an industry source. The revolving door of CEOs—eight since 2010—only added to the chaos.
Sue Nabi’s tenure as CEO, which began in 2020, was marked by ambitious moves, including a $600 million partnership with Kylie Jenner’s brands and a focus on niche projects like Infiniment Coty Paris. However, these ventures failed to deliver commercially. Here’s a thought-provoking question: Did Nabi’s vision for “undefining beauty” align with market demands, or was it too abstract for a company in crisis?
Adding insult to injury, Coty recently lost its crown jewel—the Gucci license—to L’Oréal, which signed a 50-year partnership with Gucci’s parent company, Kering. This loss, coupled with rumors of divestitures, raises questions about Coty’s long-term viability.
So, what now? Strobel’s leadership offers a glimmer of hope, but investors crave stability. “They need to figure out something more permanent,” said Susan Anderson of Canaccord Genuity. While Coty’s fragrance business remains strong, revitalizing brands like CoverGirl will take time. The big question remains: Can Coty reclaim its former glory, or is it destined to be a cautionary tale in the beauty industry?
What do you think? Is Coty’s turnaround plan enough, or does the company need a more radical shift? Share your thoughts in the comments—let’s spark a debate!
