Coty Appoints Markus Strobel as Executive Chairman and Interim CEO Amid Ongoing Turnaround Efforts

What happened

Coty has appointed Markus Strobel, a former Procter & Gamble executive with 33 years of experience in skin and personal care, as Executive Chairman and Interim CEO effective January 1, 2026. This leadership change comes as the company faces significant headwinds, including a 4% revenue decline in FY25, a net loss driven by impairments, and high leverage with net debt/EBITDA at 4.2x. Strobel's background in managing a multi-billion-dollar portfolio at P&G suggests he may bring operational expertise to Coty's restructuring, particularly for the loss-making Consumer Beauty segment. However, the DeepValue report highlights persistent risks such as tariff impacts, execution-sensitive cost actions, and the need for Prestige fragrance growth to convert into reported revenue. Overall, this move signals management's intent to address challenges, but Coty remains a speculative turnaround with unresolved financial and operational issues.

Implication

Investors should view this change as Coty's effort to stabilize leadership during a turbulent period, but it does not guarantee turnaround success. Strobel's experience could aid in refining strategies, especially for the struggling Consumer Beauty segment and cost reduction initiatives. However, the interim CEO role adds uncertainty, and core challenges like high debt and volatile earnings persist. Key monitoring points remain unchanged, including Prestige fragrance revenue conversion, balance sheet metrics, and outcomes of the Consumer Beauty strategic review. Until evidence of sustainable cash flow generation and debt reduction emerges, the stock warrants continued caution, aligning with the 'WAIT' recommendation.

Thesis delta

The appointment of Markus Strobel does not fundamentally shift the investment thesis, which remains contingent on execution and financial stabilization as outlined in the DeepValue report. It could serve as a positive catalyst if his leadership accelerates operational improvements and addresses Consumer Beauty losses, but investors should await evidence from watch items—such as Prestige trajectory and balance sheet health—before reconsidering the stance.