Burberry Abandons In-House Strategy and Licenses Beauty Business to Coty

Executive Summary

• Burberry announced that it will once again license its makeup and fragrance brands, this time to Coty, following four years of in-house management. The move marks another major strategy reversal for the group.
• Under the deal, Coty will acquire the beauty business for £180 million and pay ongoing royalty payments. The exclusive licensing agreement will take effect in October 2017. Burberry will still maintain control over consumer-facing aspects such as packaging, marketing, and the creative look and feel of the collections.
• Analysts view the move favorably, as beauty is a highly competitive category and the Burberry beauty division was underperforming. Furthermore, the strategy falls in line with the company’s ongoing focus on cost cutting and profitability.