Burberry signs beauty licensing agreement with Coty

Burberry has signed a £180m deal with beauty giant Coty for the worldwide licensing rights for its beauty and fragrance.

The exclusive licensing agreement takes effect from October, subject to regulatory approval, and according to a statement released by Burberry, will leverage the strengths of each partner.

"We are delighted to partner with Coty, a world leader in luxury fragrance and make-up. Working with a global partner of their scale and expertise will help drive the next phase of Burberry Beauty's development and position this business for future growth," said Burberry chief executive and chief creative officer Christopher Bailey.

The deal will see Burberry receive £130m upfront for the long-term exclusive global licence and related transfer of the Beauty business, and circa £50m for assets transferring (which is subject to inventory adjustments) totalling circa £180m. In addition it will receive ongoing royalty payments.

"[...] the combination of the upfront payments and ongoing royalties is financially attractive and is expected to provide an accretive impact to our earnings from FY 2018/19," Bailey added.

Burberry has had direct control of its beauty business for the past four years and during that time has launched fragrances  My Burberry and Mr Burberry and redeveloped and relaunched its make-up range. Under the agreement Burberry will retain creative control while Coty will lend its "deep beauty industry expertise and first-class global distribution".

"We are proud to welcome Burberry as a strategic partner of Coty.  We look forward to growing further Burberry's luxury beauty products using Coty's world-class expertise in developing and bringing to market beauty brands," said Coty CEO Camillo Pane.