Coty宣布与开云达成Gucci Beauty许可提前过渡协议

Coty Inc (COTY.N) COTY Announces Agreement With Kering for Early Transition of GucciBeauty License CITI'S TAKE This afternoon COTY announced an agreement to transition the GucciBeauty license back to Kering early for ~$400M in total consideration,consisting of $250M in cash received at signing and an additional $150Mpayable no later than 9/30/27 (of which up to $30M is contingent oncertain criteria). The transition accelerates the end of the license by ~1year, with COTY continuing to operate Gucci Beauty through at least6/30/27. Recall in October 2025, Kering announced a long-term strategicpartnership with L’Oreal giving it a 50-year exclusive license for thecreation, development, and distribution of fragrance and beauty productsfor Gucci after expiration of the license with COTY (see our note here: CotyInc (COTY.N) - Implications from Kering Long-Term Partnership withL'Oréal). COTY plans to use transaction proceeds to repay debt, forreinvestment in the core prestige fragrance & beauty portfolio, and fororganizational optimization, with estimated cash taxes ~$30M. Filippo Falorni, CFAAC+1-212-816-3743filippo.falorni@citi.com Early Transition of Gucci Beauty License: This afternoon COTY announced anagreement to transition the Gucci Beauty license back to Kering early for ~$400M intotal consideration, consisting of $250M in cash received at signing and anadditional $150M payable no later than 9/30/27 (of which up to $30M is contingenton certain criteria). COTY will also sell Kering an amount of Gucci Beauty inventory.We believe the transition accelerates the end of the license by ~1 year, with COTYcontinuing to operate Gucci Beauty through at least 6/30/27. The loss of the Guccibeauty license comes as no surprise as Kering had announced in October 2025 thatit had entered a long-term strategic partnership with L’Oreal giving it a 50-yearexclusive license for the creation, development, and distribution of fragrance andbeauty products for Gucci after expiration of the license with COTY. We view thenews of COTY getting ~$400M in total proceeds from the brand as a positive givenCOTY was going to lose the license anyway a year later. Separately, in January 2026IPAR announced it will be taking over the Nautica license (starting 1/1/30) and theDavid Beckham license (starting 4/1/28) from COTY (see our note here: Coty Inc(COTY.N) - IPAR Announced License Agreements with Nautica & David Beckham).Outside these three brands, virtually none of COTY’s license portfolio has a durationof less than 6 years. Financial Impact: Since acquiring the license in 2016, COTY has grown Gucci Beautyrevenues by more than 60% since 2019, and we estimate the brand represents ~10%of total company sales, with an above-average EBITDA margin of ~23%. Weestimate that the loss of the license represents an ~$0.10 headwind to COTY’s FY28EPS net of the interest cost savings from the debt paydown (see our analysis andassumptions below, including a sensitivity table). We expect the transaction will See Appendix A-1 for Analyst Certification, Important Disclosures and Research Analyst Affiliations likely result in some stranded costs, though we anticipate COTY will attempt to eliminate some of these costs in FY28.Despite the EPS dilution, we think the cash proceeds from this transaction will help create some flexibility in the businesswith COTY planning to use the proceeds to repay debt, for reinvestment in the core prestige fragrance and beauty portfolio,and for organizational optimization. We expect COTY will work to offset dilution by overdriving its core plans and will look toadd new licenses to the portfolio, with the company having previously outlined plans to add 1–2 new licenses per year andtargeting more than ~$300M in sales contribution from new brands by FY29. Coty Inc Valuation We set our target price at $2.80 based on a target ~6.5x EV/EBITDA multiple on our FY27 EBITDA estimate of ~$834M, basedon peers. Risks This stock is High Risk based upon our quantitative model, but assigning a High Risk rating is not supported by otherqualitative factors such as the organic sales growth turnaround initiated under prior CEO Sue Nabi on which interim CEOMarkus Strobel is working to reaccelerate, COTY’s gross and operating margin improvements, and a lower debt leverage. As aresult, a High Risk rating has not been applied. Better or worse macro conditions could drive upside/downside to our estimates and price target. COTY could benefit in theconsumer beauty business from trade-down but at lower margins vs. luxury. We also see increased/decreasedcompetition/promotional activity in consumer beauty as a risk, potentially reversing some of the progress in the business. If the impact on the company from any of these factors proves to be greater than we anticipate, the stock will likely havedifficulty achieving our financial and price targets. Conversely, if any of these factors proves to have less of an effect than weanticipate, the stock cou