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LONDON – Burberry keeps hitting “reset.”

Nine months after it dropped its experiment to combine the roles of chief executive officer and chief creative officer under Christopher Bailey, the luxury company on Monday revealed it was giving up on going it alone in the beauty business and returning to a licensing model, this time with Coty Inc., which continues to build its premium offer.

The decision is a further unwinding of the business strategy put in place by Bailey’s predecessor as ceo, Angela Ahrendts, who terminated Burberry’s license with Inter Parfums SA and took the beauty business back in-house on April 1, 2013. The return to a licensed model comes as Bailey and incoming ceo Marco Gobbetti implement a strategy aimed at reshaping the group into a leaner – and more profitable – company in a mercurial climate for luxury. Royalty payments will start to flow as of October.

In the second half of the 2017-’18 fiscal year, Burberry will receive cash payments of 130 million pounds, or $163.5 million at current exchange, for the long-term exclusive global license and related transfer of the beauty business. It will also receive about 50 million pounds, or $62.5 million, in gross assets transferred to Coty, subject to inventory adjustments.

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Burberry emphasized that it would retain creative control over the consumer-facing aspects of the business, such as packaging, marketing materials and the look and feel of the collections.

Ironically, the deal will also mark the return to Burberry’s beauty business of Simona Cattaneo, who had been the company’s senior vice president of beauty. She quietly left Burberry for Coty in 2015 to be its luxury division’s chief marketing officer. Burberry replaced her with an internal team but she will once again oversee the brand’s beauty business once it is folded into Coty.

The company said it expects the agreement to be broadly neutral to adjusted profit before tax in the 2017-’18 “transition year” and accretive from fiscal 2018-’19. Cash proceeds, Burberry said, would be used for general corporate purposes.

Although Burberry had made some strides with beauty, it was clearly tough going it alone. Historically, it’s been rare for fashion brands to operate in-house beauty businesses well, since they are such particular activities to operate in terms of product development, launch schedules and distribution — to name a few of the many elements.

Hermès and Chanel are two houses that successfully run both fashion and beauty. Balmain is also taking a stab at it after terminating its fragrance license with Inter Parfums early and taking back the business.

In 2011, under a previous license with Inter Parfums SA, Burberry’s revenue from fragrances grew 20 percent to 221.7 million euros, or $308.7 million at average exchange, due to the launch of Burberry Body and the staying power of the brand’s historic lines, many of which have now been terminated.

In 2016, Burberry Beauty revenue was 203 million pounds, or $276 million. As reported, in the first half of the 2016-’17 fiscal year, which ended last week, beauty revenue was down 17 percent on an underlying basis, while at reported exchange it fell 7 percent to 76 million pounds, or $99.6 million.

In October 2016, when half-year results were reported, Burberry said the My Burberry and Mr. Burberry fragrances, the first juices to be launched by the in-house division, had performed well. The company blamed the decline on its efforts to clean up distribution.

Last year, Burberry downsized its points of sale in the U.K. — its largest market — to 35 from 3,000. The company has said there is more distribution-related rationalization to come in some countries on the Continent.

On Monday, Bailey called Coty “a world leader in luxury fragrance and makeup. 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.”

Julie Brown, Burberry’s newly arrived chief operating and financial officer, said in a telephone interview the partnership should enable Burberry to deliver the next phase of its beauty development, and position the business for future growth.

“What we wanted to do [by taking beauty in-house] was to regain control of the business and reposition the brand completely. Over the past four years, we believe we’ve successfully done that,” she said. “What we really wanted to do now was partner with a leading player in this field to accelerate the growth of the Burberry range.

“We can still control all the customer-facing elements of beauty, but we can make use of Coty’s expertise, their amazing distribution channel and the fact they’re the leading fragrance player in the world,” said Brown. “The two together should mean that we’re a lot more powerful than if we were on our own.”

John Smith, an executive director of Burberry, said in an interview that Burberry was proud of what it had done as an independent business, such as relaunching color cosmetics, making a success of the My Burberry and Mr. Burberry fragrances, and raising the positioning from mass to luxury.

“We’ve elevated the whole business to be more in line with the rest of the Burberry brand. So we’ve not only proven that we can launch award-winning, top-end fragrances, we’ve also done that in a way that’s very much in line with the rest of the brand,” he said.

Smith said Burberry was looking forward to having Coty’s distribution muscle behind it. The business, he said, will be driven in a way that has “huge global clout with wholesalers, rather more than we could have on our own as a relatively small player in this market. Coty is a $9 billion company and the world’s number-one in the sale of fragrance.”

The standalone beauty business had been a key pillar of Ahrendts’ strategy: She’d imagined that it could someday grow as big as that of Chanel or Christian Dior. At one point, there were even plans for a skin-care line, which is no longer an urgent strategic priority, according to Smith.

Coty executives said they see the Burberry license as a good fit. “The expansion of the luxury brands in our portfolio is one of Coty’s key strategies to gain growth,” Camillo Pane, the company’s ceo, told WWD. “This is why we are really proud to have such a beautiful, iconic luxury brand joining us.”

“Our strategy to build the Coty luxury division is very much” about elevating the offer, said Edgar Huber, president of Coty Luxury. “We already have a very premium portfolio, and now having Burberry coming in is even a step further.”

Coty’s other prestige fragrance brands include Gucci, Marc Jacobs, Hugo Boss, Balenciaga, Bottega Veneta and Miu Miu.

Pane called Burberry a symbol of British luxury and a powerful brand. “It has a worldwide relevance, and this will fit very well with our strategy of growing our Coty luxury portfolio and be part of strengthening our market leadership,” he said.

Burberry, according to Huber, “has big potential for us” in terms of future developments in product categories and regions. “It is a unique opportunity,” he said.

Huber explained Coty would bring Burberry its expertise in perfume development and distribution. “We have a very solid, go-to market structure across the globe. Burberry today is distributed in many parts of the world by distributors, while we have our own teams,” he said.

Pane added that Coty also has strong teams in color cosmetics. The executive said Burberry “will benefit a lot from our expertise, our scale and the ability of having full Coty teams in many geographies.”

Coty’s aim is to integrate Burberry beauty quickly and keep moving forward with the marketing calendar and innovation pipeline that have already been put in place. “We will continue to optimize and make these launches successful across the globe,” said Huber.

He said Coty’s fragrance projects are successful with fashion houses when the company works as a “complete, integrated unit. We really have constant exchanges in terms of product development – in all of the relevant business decisions.”

Analysts gave the Coty-Burberry tie-up a thumbs-up, although in late afternoon trading, Coty stock was down nearly 2 percent to $17.78.

“I think it is the right thing to do,” said Eva Quiroga, an analyst at Deutsche Bank. “While this means there is even more on Coty’s already busy plate, Burberry is a nice brand for them to have, since it is quite complementary with the rest of the portfolio – more focused on German, Italian and U.S. luxury – and with Gucci having gone into makeup, from perfumes, the further development of Burberry’s makeup offering should be well-managed.”

As reported, Pane earlier this year revealed a five-year plan centered on creating sustainable growth for Coty. The four-pillar strategy includes strengthening global brands, shifting resources to fuel growth in growing the brands with higher potential, stabilizing remaining brands, and continuing to expand the geographic reach of the brand portfolio.

Pane’s goals were unveiled in February, at the same time as Coty’s second-quarter earnings, which were bumped up by sales from the acquisition of 41 beauty brands from Procter & Gamble. Otherwise, revenue was down in all divisions except for Professional Beauty.

Coty’s luxury division posted $835 million in sales, a 7 percent dip in combined company year-over-year figures, but up 52 percent otherwise in the period.

The Coty deal also comes a year into a big austerity drive at Burberry, which has suffered from shifting tourist patterns, too much exposure to China and a past digital strategy (another key focus of Ahrendts’) that failed to convert its on-screen popularity into sales.

As reported, the company is looking to deliver annualized cost savings of at least 100 million pounds, or $125 million, by fiscal 2019, and has been modifying the way it does business, changing its focus from tourists to locals, slashing the number of product lines on offer and shifting to see-now, buy-now coed shows in a bid to keep up with the demands of the consumer.

It has recently launched a redesigned web site for desktop, with an enhanced browsing and purchasing experience, while a new app is in the works.

Analysts said the move came as a relief, and made sense given Burberry’s ongoing plans to slim down, save money and build up profitability.

Burberry shares closed up Monday by 0.8 percent to 17.37 pounds, or $21.67 at current exchange.

Luca Solca, managing partner at Exane BNP Paribas, had already suggested in a past report that Burberry sign a license with the likes of L’Oréal or Coty. On Monday, Solca said he welcomed Burberry’s choice of a “first class partner” to appropriately develop the beauty business.

“We never liked the idea of Burberry managing its beauty business directly, as beauty is an FMCG (fast-moving consumer-goods) business, where you win on the back of global reach. Burberry was a dwarf in the land of giants in this industry, and never had sufficient scale to run this business effectively and efficiently,” he said.

In a report titled “Burberry: ‘Beauty no longer a beast,’” Helen Brand of UBS said the bank sees the deal “as an incremental positive for the (Burberry) stock, as the beauty division has been underperforming and was likely a drag on management time. The stock remains our preferred turnaround name in European luxury.”

Brand argued that the market had been skeptical all along of Burberry’s decision to bring the fragrance business back in-house, at a cost of 144 million pounds, or the equivalent of $225 million at the time.

“It has underperformed expectations,” she said. Brand pointed out that Burberry’s previous license income from Inter Parfums was between 25 million pounds and 30 million pounds, or $39 million and $47 million.

That figure had fallen to less than 10 million pounds, or $14 million, of EBIT (earnings before interest and tax), as there was a larger than anticipated “cleanup” required, notably of the product’s distribution.

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