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By Sharon Terlep
Cosmetics and fragrance giant Coty Inc. said it would restructure its operations and take a $3 billion write-down on the multibillion-dollar beauty business it acquired nearly three years ago from Procter & Gamble Co.
Coty, whose products include OPI nail polish and CoverGirl makeup, said Monday it struck a deal with creditors to provide enough funding to carry out a restructuring plan that will downsize staffing and product offerings while reorganizing the business into distinct geographic units.
The company, which has struggled with weak sales and changed CEOs late last year, didn't say how many jobs would be affected. It expects to book $600 million in restructuring costs over several years.
"Clearly we are under performing, we want to close the performance gap." Coty CEO Pierre Laubies said in an interview. "The way to turn around is to start quickly and build progressively."
As part of the plan, Coty will move its headquarters from New York to Amsterdam, which is closer to the company's main markets and a, "cost efficient and tax stable location," Coty said in a statement.
Coty has been weighed down by the $12 billion purchase in 2016 of P&G beauty brands. The company has said the brands were in worse shape than Coty anticipated when agreeing to the deal and have continued to decline as consumers shift away from mass-market brands sold in drugstores.
The merger, completed in 2016, gave Coty more than 40 brands from P&G like CoverGirl, Max Factor and Clairol to better compete against other conglomerates.
While Coty's luxury and professional divisions have performed solidly, the consumer beauty unit, which comprised nearly half of Coty's revenue, has continued to decline. Camillo Pane resigned abruptly last fall as chief executive and was replaced by Mr. Laubies.
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(END) Dow Jones Newswires
July 01, 2019 08:33 ET (12:33 GMT)
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