Jamie Matusow, Editor-in-Chief11.02.15
Update: Coty ranks at #13 on our latest report Top 20 Global Beauty Companies 2021.
New York, NY
www.coty.com
Beauty Sales: $4.4 billion
Key Personnel: Bart Becht, chairman and interim chief executive officer; Patrice de Talhouët, executive vice president and chief financial officer; Mario Reis, executive vice president, supply chain; Jean Mortier, president, global markets.
Major Products: Fragrances, color cosmetics and skin & body care brands including Adidas, Calvin Klein, Chloe, Davidoff, Marc Jacobs, OPI, Philosophy, Playboy, Rimmel, Sally Hansen, Bourjois, Bottega Veneta, Jennifer Lopez, Katy Perry, Guess, Halle Berry, Miu Miu.
New Products: Marc Jacobs Decadence fragrance, Miu Miu fragrance, Philosophy Mixed Berry Tart Trio, Philosophy Renewed Hope in a Jar, Reveal Calvin Klein Eternity Now for Men, Marc Jacobs Daisy Eau So Fresh Sorbet, Adidas 6-in-1 anti-perspirant, Bottega Veneta Knot fragrance, Sally Hansen Airbrush Sun Tanning Lotion, Sally Hansen Nail Rehab Nail Care, OPI Venice Collection.
Comments: It’s been a rough and tumble year at Coty as seasoned executives jumped ship—one even before he sat at his new desk. Brands including Miu Miu and Bourjois were added sporadically throughout the year, and then came a major agreement with P&G that could catapult what was once known as “the world’s largest fragrance company” to a whole new level in the beauty industry.
Coty identifies 10 of its holdings as power brands— Adidas, Calvin Klein, Chloe, Davidoff, Marc Jacobs, OPI, Philosophy, Playboy, Rimmel and Sally Hansen—among a slew of others, and has now signed a definitive agreement with P&G to merge 43 brands across fragrance, color cosmetics and hair color into Coty through a Reverse Morris Trust transaction. The $12.5 billion deal is slated to close next year. According to Coty’s chairman and interim chief executive officer Bart Becht, “We believe we will not just create a pure-play global leader in challenging the beauty industry with approximately $10 billion in revenues, but it will also offer material costs and cash savings, as well as longer-term enhanced growth opportunities.”
The P&G brands that will be merged with Coty include Wella Professionals, Sebastian Professional, Clairol Professional, Sassoon Professional, Nioxin, SP (System Professional), Koleston, Soft Color, Color Charm, Wellaton, Natural Instincts, Nice & Easy, VS Salonist, VS ProSeries Color, Londa/Kadus, Miss Clairol, L’image, Bellady, Blondor, Welloxon, Shockwaves, New Wave, Design, Silvikrin, Wellaflex, Forte, Wella Styling, Wella Trend, Balsam Color, Hugo Boss, Dolce & Gabbana, Gucci, Lacoste, bruno banani, Christina Aguilera, Escada, Gabriela Sabatini, James Bond 007, Mexx, Stella McCartney, Alexander McQueen, Max Factor and CoverGirl.
Industry analysts are batting around Coty’s move, which sounds like a daunting undertaking, but the global manufacturer has been trying to expand out of scents for years, especially with the plight of celebrity fragrance. Coty faces a number of challenges before the P&G deal becomes final next year and, in part, is relying on its Global Efficiency Program to reduce costs. Neither Coty nor P&G beauty brands have seen outstanding success in the past year or so.
For the fiscal year ended June 2015, Coty reported net revenues of $4.4 billion, which were flat like-for-like and down 3% as reported.
Becht commented, “We made meaningful progress on our strategy of driving revenue growth on power brands, while fueling profit growth behind efficiency programs.” He said, “During the year, power brand net revenue growth, while still modest, was in the low single digits like for like, driven by Marc Jacobs, Chloé, Sally Hansen, Rimmel and Philosophy.”
He acknowledged, “We still have work to do in returning Coty to top-line growth. But the strong progress in increased savings target for our Global Efficiency Program…should give us the flexibility to invest additional capital in our business and very gradually, reignite growth.”
For the year, 8% like-for-like growth in Color Cosmetics, driven by Sally Hansen and Rimmel, was offset by declines in Fragrances and Skin & Body Care. Fragrances declined 2% like-for-like due to a fall in celebrity brands and a lower level of new launch activity in select brands. Skin & Body Care declined 5% like-for-like, as a result of lower revenues from Adidas and Playboy brands, which offset any Philosophy gains.
By geographic region, there was 1% like-for-like growth in the Americas, but sales were flat in EMEA and Asia Pacific. Emerging markets grew 4% like-for-like during the year, accounting for 29% of net revenues in fiscal 2015 compared to 28% of net revenues in the prior year on a like-for-like basis.
News of Note
In October 2014, following the departure of CEO Michele Scannavini, Coty inked a deal with Chanel, to acquire the prestige brand’s masstige cosmetics holding, Bourjois.
In January 2015, Coty lost another executive, when Catherine Walsh, widely noted for bringing celebrity fragrance to the forefront in 2002 when she signed Jennifer Lopez and produced the star’s Glow fragrance, announced she would be leaving the beauty company after 14 years.
In April, prior to the P&G bid, Coty announced that a new CEO, Elio Leoni Sceti, would replace Michele Scannavini. Shortly thereafter, Coty said the transition would not be taking place afterall, and that Becht would remain chairman to lead the Coty-P&G beauty merger.
Marc Rey, who joined Coty as president of Coty Prestige U.S., and regional vice president of Coty Prestige North America in January of 2013 left the company in July, taking up new roots at Shiseido.
With a renewed penchant for prestige designer fragrances, Coty has upped the ante with innovative packaging. In September, the company launched the first fragrance for its newly acquired license for the Miu Miu brand, owned by Prada. The bottle’s light blue color, gold hardware, and red plastic adornment were inspired by the creative brand. The shape resembles vintage bottles and translates the purse-like elements of the brand’s matelassé bag.
Outlook for Fiscal 2016
Coty says it remains focused on growing its 10 power brands, and raising its Global Efficiency Program savings target by 35% or $70 million. In line with the P&G merger, Becht says the company’s focus will be on becoming a top beauty player, strengthening its presence in key markets and expanding into new ones.
New York, NY
www.coty.com
Beauty Sales: $4.4 billion
Key Personnel: Bart Becht, chairman and interim chief executive officer; Patrice de Talhouët, executive vice president and chief financial officer; Mario Reis, executive vice president, supply chain; Jean Mortier, president, global markets.
Major Products: Fragrances, color cosmetics and skin & body care brands including Adidas, Calvin Klein, Chloe, Davidoff, Marc Jacobs, OPI, Philosophy, Playboy, Rimmel, Sally Hansen, Bourjois, Bottega Veneta, Jennifer Lopez, Katy Perry, Guess, Halle Berry, Miu Miu.
New Products: Marc Jacobs Decadence fragrance, Miu Miu fragrance, Philosophy Mixed Berry Tart Trio, Philosophy Renewed Hope in a Jar, Reveal Calvin Klein Eternity Now for Men, Marc Jacobs Daisy Eau So Fresh Sorbet, Adidas 6-in-1 anti-perspirant, Bottega Veneta Knot fragrance, Sally Hansen Airbrush Sun Tanning Lotion, Sally Hansen Nail Rehab Nail Care, OPI Venice Collection.
Comments: It’s been a rough and tumble year at Coty as seasoned executives jumped ship—one even before he sat at his new desk. Brands including Miu Miu and Bourjois were added sporadically throughout the year, and then came a major agreement with P&G that could catapult what was once known as “the world’s largest fragrance company” to a whole new level in the beauty industry.
Coty’s package for the first Miu Miu fragrance resembles the designer brand’s matelassé handbag.
The P&G brands that will be merged with Coty include Wella Professionals, Sebastian Professional, Clairol Professional, Sassoon Professional, Nioxin, SP (System Professional), Koleston, Soft Color, Color Charm, Wellaton, Natural Instincts, Nice & Easy, VS Salonist, VS ProSeries Color, Londa/Kadus, Miss Clairol, L’image, Bellady, Blondor, Welloxon, Shockwaves, New Wave, Design, Silvikrin, Wellaflex, Forte, Wella Styling, Wella Trend, Balsam Color, Hugo Boss, Dolce & Gabbana, Gucci, Lacoste, bruno banani, Christina Aguilera, Escada, Gabriela Sabatini, James Bond 007, Mexx, Stella McCartney, Alexander McQueen, Max Factor and CoverGirl.
Industry analysts are batting around Coty’s move, which sounds like a daunting undertaking, but the global manufacturer has been trying to expand out of scents for years, especially with the plight of celebrity fragrance. Coty faces a number of challenges before the P&G deal becomes final next year and, in part, is relying on its Global Efficiency Program to reduce costs. Neither Coty nor P&G beauty brands have seen outstanding success in the past year or so.
For the fiscal year ended June 2015, Coty reported net revenues of $4.4 billion, which were flat like-for-like and down 3% as reported.
Becht commented, “We made meaningful progress on our strategy of driving revenue growth on power brands, while fueling profit growth behind efficiency programs.” He said, “During the year, power brand net revenue growth, while still modest, was in the low single digits like for like, driven by Marc Jacobs, Chloé, Sally Hansen, Rimmel and Philosophy.”
He acknowledged, “We still have work to do in returning Coty to top-line growth. But the strong progress in increased savings target for our Global Efficiency Program…should give us the flexibility to invest additional capital in our business and very gradually, reignite growth.”
For the year, 8% like-for-like growth in Color Cosmetics, driven by Sally Hansen and Rimmel, was offset by declines in Fragrances and Skin & Body Care. Fragrances declined 2% like-for-like due to a fall in celebrity brands and a lower level of new launch activity in select brands. Skin & Body Care declined 5% like-for-like, as a result of lower revenues from Adidas and Playboy brands, which offset any Philosophy gains.
By geographic region, there was 1% like-for-like growth in the Americas, but sales were flat in EMEA and Asia Pacific. Emerging markets grew 4% like-for-like during the year, accounting for 29% of net revenues in fiscal 2015 compared to 28% of net revenues in the prior year on a like-for-like basis.
News of Note
In October 2014, following the departure of CEO Michele Scannavini, Coty inked a deal with Chanel, to acquire the prestige brand’s masstige cosmetics holding, Bourjois.
In January 2015, Coty lost another executive, when Catherine Walsh, widely noted for bringing celebrity fragrance to the forefront in 2002 when she signed Jennifer Lopez and produced the star’s Glow fragrance, announced she would be leaving the beauty company after 14 years.
In April, prior to the P&G bid, Coty announced that a new CEO, Elio Leoni Sceti, would replace Michele Scannavini. Shortly thereafter, Coty said the transition would not be taking place afterall, and that Becht would remain chairman to lead the Coty-P&G beauty merger.
Marc Rey, who joined Coty as president of Coty Prestige U.S., and regional vice president of Coty Prestige North America in January of 2013 left the company in July, taking up new roots at Shiseido.
With a renewed penchant for prestige designer fragrances, Coty has upped the ante with innovative packaging. In September, the company launched the first fragrance for its newly acquired license for the Miu Miu brand, owned by Prada. The bottle’s light blue color, gold hardware, and red plastic adornment were inspired by the creative brand. The shape resembles vintage bottles and translates the purse-like elements of the brand’s matelassé bag.
Outlook for Fiscal 2016
Coty says it remains focused on growing its 10 power brands, and raising its Global Efficiency Program savings target by 35% or $70 million. In line with the P&G merger, Becht says the company’s focus will be on becoming a top beauty player, strengthening its presence in key markets and expanding into new ones.
