In a strategic shift, British fashion house Burberry has entered into a long-term licensing agreement with Coty Inc. for its Burberry Beauty luxury fragrances, cosmetics and skincare. Under the agreement, Coty will develop, manufacture and distribute the full range of Burberry Beauty products globally.
Coty will pay £130M in cash for the long-term exclusive global license.
In FY 2015/16 Burberry Beauty revenue was £203M, as disclosed in Burberry’s annual results.
The deal is expected to close in calendar Q4 2017, subject to customary regulatory approvals. Coty will buy approximately £50M of inventory from Burberry upon completion of the deal.
The Burberry Beauty business will be managed within Coty’s Luxury division headquartered in Paris. Other brands in the division include Gucci, Marc Jacobs, Hugo Boss, Calvin Klein, Alexander McQueen, Bottega Venetta and Balenciaga, and the philosophy, Lancaster and Gucci cosmetics and skin care brands.
“This strategic partnership combines Burberry’s British heritage of innovation, craftsmanship and design with Coty’s expertise and leadership in luxury beauty products,” said the companies in a statement.
In 2012, Burberry took its fragrance and cosmetics business inhouse, after many years of working with Inter Parfums. Subsequently, Burberry partnered with Shiseido’s Beauté Prestige International for distribution in France, Spain and the US, plus travel retail in Europe and select Asia Pacific markets.
“Working with a global partner of Coty’s scale and expertise will help drive the next phase of Burberry Beauty’s development and position this business for growth,” said Christopher Bailey, Burberry CEO & Chief Creative.