Why Did Coty Offload Wella From Its Portfolio?

• Coty is entitled to receive 45% of any proceeds from a future sale and IPO of Wella.
• Coty said the sale completes a programme launched in 2020 to streamline its operations and realise the full value of Wella. 
• Coty said it will use the majority of Wella’s upfront cash proceeds to pay down its short-term and long-term debt.

Beauty company Coty (COTY) has sold its remaining 25.8% stake in Wella to private equity firm KKR for an upfront cash payment of $775 million, while retaining the right to receive 45% of proceeds from Wella’s future sale or IPO. 

Coty said the sale of Wella completes the program initiated in 2020 to simplify Coty’s portfolio and operations, while realising the full value of its Wella business.

“This transaction marks a pivotal milestone for Coty – both in our transformation and in our long-running deleveraging commitment," said Laurent Mercier, Coty CFO. 

Declining Sales, Rising Debt

Coty has been facing pressure from declining sales and profits as higher inflation and uncertainty about the health of the U.S. economy have prompted consumers to cut back on discretionary spending on fragrance and beauty products.

Coty said it will use the majority of Wella’s upfront cash proceeds to pay down its short-term and long-term debt. In the first quarter ended Sept. 30, 2025, of its fiscal year 2026, Coty’s total debt increased by nearly 2% to $4.07 billion compared to the same period last year.

Coty anticipates that proceeds from the Wella transaction, together with expected free cash flow of over $350 million in the first half of FY26, will reduce its financial net leverage to about 3x by the end of calendar year 2025.

Its adjusted profit of $0.12 per share in the first quarter (Q1) of fiscal year 2026 was below analyst expectations of $0.15 per share, according to Fiscal.ai. The company delivered net sales of $1.58 billion, down 6% from the year-ago period but in line with analyst projections.

Earlier, it had also launched a strategic review of other beauty brands, such as Rimmel and CoverGirl, to streamline its operations and shift its focus to the fragrance segment.

How Did Stocktwits Users React?

Retail sentiment on Stocktwits for COTY trended in “neutral” territory amid “extremely low” message volume.

Shares in Coty have fallen more than 50% so far this year. 

For updates and corrections, email newsroom[at]stocktwits[dot]com.
 

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