Coty Weighs Beauty Shake-Up With Possible Sale of Wella, Clairol -- WSJ
October 22 2019 - 3:02AM
Dow Jones News
By Sharon Terlep and Patrick Thomas
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (October 22, 2019).
Cosmetics maker Coty Inc. is looking to sell its hair-care and
professional beauty businesses, a collection of brands that account
for nearly a third of its annual revenue.
The makeup and fragrance seller, controlled by European
investment firm JAB Ltd., said Monday it is exploring strategic
alternatives for more than a dozen brands including Wella and
Clairol hair products, and OPI nail polish. Coty also will look to
sell its Brazil unit.
The businesses are expected to generate revenues of about $2.7
billion in 2019. Several of the brands were acquired in 2016 when
Coty bought much of Procter & Gamble Co.'s beauty business.
Coty reported total revenue fell 8% to $8.65 billion for the fiscal
year ended June 30.
The move comes less than a year after Chief Executive Officer
Pierre Laubies replaced CEO Camillo Pane, architect of the $12
billion deal with P&G that doubled Coty's size. Since the deal,
Coty has struggled with falling sales and integration issues.
Mr. Laubies has said Coty was overly focused on meeting
quarterly targets and didn't take the steps needed to shore up the
business after the P&G deal proved more problematic than
expected. The deal included aging consumer beauty brands such as
CoverGirl and MaxFactor, which have fallen out of favor as shoppers
switch to higher-end and niche brands.
Selling the businesses won't address the bigger issues facing
Coty, Wells Fargo analyst Joe Lachky said. While calling the move a
good one on Coty's part, Mr. Lachky said the company has yet to
reverse the decline of consumer beauty brands that account for
roughly half Coty's business.
Coty said earlier this year it would restructure its operations
and take a $3 billion write-down on the roughly 40 brands acquired
from P&G. In August, Coty cut ties with Younique, a
social-media-driven cosmetics company it took control of in
2017.
Coty said the proceeds from any potential deal would be used to
pay down its debt and return cash to shareholders.
Shares of the company were up about 14% to $11.54 in Monday
afternoon trading. Before Monday's announcement, Coty shares had
lost half their value since the P&G deal closed.
Write to Sharon Terlep at sharon.terlep@wsj.com and Patrick
Thomas at Patrick.Thomas@wsj.com
(END) Dow Jones Newswires
October 22, 2019 02:47 ET (06:47 GMT)
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