Following Coty, Beauty Giants Face Strategic Decisions

The American multinational Coty, a major player in the cosmetics industry, has announced a significant structural reorganization, marked by the potential elimination of more than 700 jobs worldwide. This decision is part of its ambitious transformation program, dubbed “All in to win,” which aims to strengthen the group's competitiveness in a beauty market undergoing profound changes.

Faced with a widespread slowdown in the sector, Coty intends to streamline its operating model by simplifying its processes and reducing its workforce. The group is now focusing on a strategic repositioning around its iconic brands, with the aim of reviving their appeal and further asserting their identity through a sustained innovation policy.

This repositioning comes at a time when the entire cosmetics industry is facing a complex environment, influenced by geopolitical uncertainties, the global economic slowdown, and rapidly changing consumer behaviors. Generation Z, in particular, is redefining purchasing habits under the growing influence of social media, driving short-lived trends and fueling the success of “dupes,” affordable alternatives to high-end products in both makeup and skincare.

The main markets—China, Europe, and the United States—are all feeling the effects of this new dynamic. Estée Lauder, another industry giant, saw its revenue decline by 2% in the previous fiscal year and recently suspended its forecasts for 2025, citing reduced visibility on the economic stabilization timeline. Analysts, who initially anticipated sales in the range of -1% to +2%, have since revised their projections downward.

L'Oréal, meanwhile, continues to show remarkable resilience. The French group posted sales of €11.73 billion in the first quarter of 2025, up 4.4% on a reported basis, exceeding FactSet consensus expectations. The Luxury segment performed particularly well, with a 7.3% increase in raw data and 5.8% on a comparable basis, reaching €4.092 billion. However, caution remains the watchword: Stifel recently lowered its growth forecasts for the 2025-2026 financial years due to mixed results in North America and China.

As for Kering, while the group posted a significant decline in revenue in the first quarter of 2025 (-14%), the beauty division was up. Kering Beauté generated revenue of €71 million at the end of March 2025, up 6% on a comparable basis, thanks to the development of Creed, which Kering acquired in 2023 for €3.5 billion. However, this acquisition is still far from delivering the expected results.

In this changing environment, the ability of established players to reinvent themselves while preserving their brand DNA is a major strategic challenge if they are to remain relevant to new generations of consumers.