Key Takeaways:

• Nabi, who has led Coty since September 2020, recently told top employees she would stay in the top job for five more years, according to a person familiar with the matter.
• The potential shake-up comes as Coty’s shares have more than halved this year and the company reviews its consumer business.
• The upheaval also follows the looming loss of the Gucci fragrance licence after L’Oréal struck a deal with Kering.

Coty’s controlling shareholder JAB Holding is working on a leadership shake-up that would see Chairman Peter Harf step down and could be followed by the departure of Chief Executive Sue Nabi, according to the Financial Times.

JAB expects the replacement of Harf, who earlier this year retired as Chairman and Managing Director of the Reimann family–owned German investment group, to appoint a new CEO, effectively replacing Nabi, the FT reported Friday.

The prospect of Nabi’s exit likely comes as a surprise to the executive. Nabi recently told top Coty employees that she would remain in the top job for another five years, according to a person familiar with the matter.

Nabi took over as CEO of the New York- and Paris-listed beauty group in September 2020, replacing Peter Harf, who had stepped in as Interim CEO after a series of short-tenured CEOs.

Before that, she spent 20 years at L'Oréal in senior roles including Worldwide President of Lancôme. She is also the founder of luxury skincare brand Orveda, which has operated  under a licensing agreement with Coty since November 2021.

Under Nabi’s tenure, Coty benefited from a broader post-pandemic beauty boom, but its stock has lost over half its value since the beginning of the year and is trading at $3.22 a share with a market capitalization of $2.82 billion.

The reported incoming overhaul at the top of Coty comes about two months after L’Oréal signed a deal with Kering that included the option to license Gucci’s fragrance business as part of a €4 billion ($4.70 billion) agreement. Gucci accounted for about $500 million in revenue for Coty, according to Bank of America.

In the quarter ended September 30 and reported in November, Coty posted a 6% decline in revenue to $1.58 billion.

Two months earlier, the company disclosed that it had launched a comprehensive strategic review of its mass color cosmetics business—which includes CoverGirl, Rimmel, and Max Factor and generates about $1.2 billion in annual sales—as well as its Brazil operations, which drove sales of around $400 million in the fiscal year ended June 30. Coty is also in the process of merging its mass and prestige fragrance businesses as part of its restructuring.

At the time, the company also said the changes would result in the departures of Stefano Curti, Chief Brands Officer of Consumer Beauty, and Alexis Vaganay, Chief Commercial Officer of Consumer Beauty.