Coty Hit by David Beckham and Nautica Fragrance Lawsuits as Revenue Drops
Coty Faces Legal and Financial Challenges Amid Revenue Decline
By Alexander Marrow and Helen Reid
David Beckham and Nautica Lawsuits
LONDON, May 1 (Reuters) - Beauty brand Coty is facing a lawsuit from DB Ventures, the company behind former football star David Beckham’s eponymous fragrance, for what the lawsuit describes as flagrant material breaches of the license agreement, court documents show.
The legal action presents another setback for Coty's fragrance business, its top revenue driver.
Allegations Against Coty
DB Ventures said Coty had mismanaged the brand in allowing David Beckham fragances to allegedly be sold in gas stations.
"How could this possibly have happened? Desperation and greed," said the lawsuit, filed in New York on April 23, according to documents seen by Reuters.
Nautica's Legal Action
Coty faces a similar lawsuit from Nautica, which like DB Ventures is ultimately owned by U.S. conglomerate Authentic Brands, documents showed. The lawsuits are being reported here for the first time.
Impact on Coty's Fragrance Business
While Coty generates the bulk of its revenue from fragrances, that business is shrinking as the group is set to lose licences, most notably for Gucci's beauty business, and as competition from newer beauty brands and larger rivals such as L'Oréal intensifies.
Coty's shares have slumped 78% in the past year and the group has already warned of a sharp drop in third quarter results, due next Tuesday.
Nautica argued in its lawsuit that Coty's "flagrant and persistent violation" of the licence agreement had irreparably damaged its brand. Both lawsuits alleged that Coty was using unapproved distributors.
Coty and Authentic Brands Respond
In response to questions about the lawsuits, a Coty spokesperson said: “Coty does not comment on ongoing legal matters. The claims are without merit, and we will defend ourselves vigorously.”
Authentic Brands declined to comment.
Challenges for Interim CEO Markus Strobel
CHALLENGES FOR INTERIM CEO
Coty’s shares hit a record low in early April and interim CEO Markus Strobel, who replaced Sue Nabi in January when she stepped down after five years, faces a challenge to turn the CoverGirl owner round.
Financial Outlook and Brand Losses
In February, Coty withdrew its full-year guidance and warned that it expected third-quarter adjusted EBITDA to fall to $100-$110 million, well below analysts' average forecast of $201.6 million.
One of the biggest tasks will be to make up for the loss of the lucrative Gucci brand to L’Oreal, which analysts believe will happen in 2028.
Fragrance Licensing Changes
In addition, Authentic Brands said in January, before the lawsuits, that it had agreed to hand over the licensing of DB Ventures and Nautica fragrances to Interparfums when Coty’s contracts expire in April 2028 for DB Ventures and January 2030 for Nautica.
Sales Performance of Key Fragrance Brands
Annual sales of David Beckham fragrances increased 71.9% between 2023 and 2025 to $22.9 million, while Nautica sales were up 34.2% to $29.1 million, according to data from Global Fusion, Nielsen's market intelligence platform.
Interparfums declined to comment for this story.
Competitive Landscape and Strategic Review
The chairman of French cosmetics group L'Oreal last month dismissed its smaller rival, saying that Coty had no business model.
Strobel, a former Procter & Gamble veteran, is working to define a new strategy, pledging to allocate more funds to core brands as the company looks to revive sales. Coty has named Kylie Cosmetics and long-term licences with Burberry and Marc Jacobs as some of its best assets.
Coty launched a strategic review of its consumer cosmetics business in September, which it said would assess options including partnerships, divestitures and spin-offs for brands such as Rimmel and Max Factor.
(Reporting by Alexander Marrow and Helen Reid; additional reporting by Arriana McLymore in New York; Editing by Susan Fenton)
