Coty subsidiary sues Kering and Gucci over beauty license – reports

A subsidiary of beauty giant Coty has reportedly taken fashion group Kering to court in the UK over issues linked to the recently-announced loss of its beauty license.

HFC Prestige International Operations Switzerland Sàrl apparently filed the lawsuit on 20 October against Gucci America Inc, Guccio Gucci SpA, and Kering SA.

Coty hold’s the Gucci beauty and fragrance license that’s due to expire in 2028 but it was announced last month that Kering’s beauty business rights for 50 years are being sold to L’Oréal for €4 billion ($4.7 billion). That business also includes Creed and other beauty licenses such as Bottega Veneta and Balenciaga, while L’Oréal already has the rights to Yves Saint Laurent’s cosmetics and fragrances.

Reports, the first of which was in WWD, said the case focuses on general commercial contracts and arrangements, but no details are available just yet.

In announcing the L’Oréal deal, Kering has said that existing contractual obligations with Coty would be honoured and Coty’s CEO had also said that the company will operate the Gucci business “until the last hour of the contract”. 

In the absence of specific details about the lawsuit, there has been plenty of speculation over exactly what the issues are. But the main speculation has focused on what impact the license termination might have on Coty and whether the license may end early, despite the two companies’ insistence that it won’t.

Gucci product sales account for around 8% of Coty’s total 11% of its profits, according to analyst firm Evercore ISI.