Nitheesh NH
Coty Inc.
Sector: Beauty Countries of operation: Australia, China, France, Germany, the UK, the US and around 125 other countries Key categories: Color cosmetics, fragrances, skin and body care Annual Metrics [caption id="attachment_151263" align="aligncenter" width="700"]
Fiscal year ends on June 30 of the same calendar year*TTM ended March 31, 2022[/caption] Summary Founded in 1904 and headquartered in New York City, Coty Inc. is a global beauty company that distributes, manufactures, markets and sells beauty products, including body products, color cosmetics, fragrances and skincare products in 131 countries. The company sells its products through department stores, direct-to-consumer (DTC) websites, duty-free shops, online retailers, perfumeries, prestige retailers and various third-party distributors. As of June 30, 2021, the company has approximately 11,430 full-time employees in over 36 countries. Brands owned by the company include Adidas, COVERGIRL, Max Factor, Nautica, Rimmel and Sally Hansen. Company Analysis Coresight Research insight: Coty’s current category mix is skewed toward color cosmetics, fragrance and skincare, spanning mass to luxury price points. Though impacted by the pandemic, Coty is in the midst of its “Turnaround Plan,” which started in 2019 (see more below), and is reaping the rewards—reflected in fiscal 2022’s operating performance, with double-digit sales growth and significant gross and operating margin expansion. Coty trails other global beauty companies in terms of its digital presence, though significant progress has been made on this front and Coty ended calendar year 2021 with e-commerce as a high-teen percentage of total sales, up about 1000 basis points (bps) from pre-pandemic levels. Attention to portfolio optimization is improving operational efficiency, allowing Coty to focus on growth opportunities across its portfolio and regionally, specifically in the US and China. Coty is a leading fragrance house in the US, holding the number two spot in both the prestige fragrance and mass cosmetics markets. Following pandemic-impacted fiscal 2021, when revenue declined by 1.9%, Coty’s business is now on a strong trajectory, reflecting industry premiumization trends, a renewed interest in color cosmetics and Coty’s turnaround strategy that has culled weaker SKUs and improved sales and operating efficiencies. Fiscal third-quarter results included 15% year-over-year sales growth—driven by a 25% lift in the Prestige cosmetics category—while the gross margin expansion of 240 bps is being channeled into demand creation. Asia-Pacific, Coty’s smallest region with 13% of sales, trailed consolidated sales growth as Covid-19-related restrictions in March stymied growth to 9% growth; meanwhile, the Americas and Europe, Middle East and Africa (EMEA) regions grew 17% and 16%, respectively. Growth opportunities continue in Prestige cosmetics, where Coty is under-penetrated, despite its ownership of Burberry makeup, Gucci Beauty and Kylie Cosmetics.
| Tailwinds | Headwinds |
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- Stabilize and grow its Consumer Beauty division
- Accelerate luxury fragrance development and establish Coty as a key player in prestige makeup
- Build a skincare portfolio across its Prestige and Consumer Beauty divisions
- Enhance e-commerce and direct-to-consumer (DTC) capabilities
- Expand in China through its Prestige division and select Consumer Beauty brands
- Establish Coty as an industry leader in sustainability
Source: Annual Report 2021[/caption]
Company Developments
| Date | Development |
| June 13, 2022 | Coty reaffirms its fourth fiscal quarter 2022 and fiscal 2022 (FY22) guidance. Coty continues to expect low-double-digit like-for-like (LFL) sales growth in the fourth quarter of 2022, with FY22 LFL sales growth at the upper end of its previous, low-to-mid teens guidance. Adjusted EBITDA is expected to be $900M in FY22, while adjusted EPS is on track to be $0.23–$0.27. |
| May 9, 2022 | Coty announces third quarter of fiscal 2022 results: sales rose 15% and adjusted EPS increased to $0.03 from $0.01. |
| April 12, 2022 | Calvin Klein Fragrances, a division of Coty, announces Calvin Klein CK Everyone Eau de Parfum is Cradle to Cradle Certified® Gold. |
| February 8, 2022 | Coty announces second quarter of fiscal 2022 results: sales increased 12% and adjusted EPS of $0.17 rose from $0.13. |
| February 1, 2022 | Coty starts production of first globally-distributed fragrances made using carbon-captured ethanol and stays ahead of schedule to integrate sustainable ethanol into the majority of its fragrance portfolio by 2023. |
| November 22, 2021 | Coty prices $500 million of Senior Secured Notes. |
| November 18, 2021 | Coty outlines long-term growth plan and updates progress on six strategic pillars during Coty Investor Day 2021. |
| November 17, 2021 | Coty releases 2021 Sustainability Report outlining progress from its “Beauty That Lasts” sustainability strategy, which is built on three pillars: “The Beauty of Our Products,” “The Beauty of Our Planet,” and “The Beauty of Our People.” |
| November 16, 2021 | Coty names Dr. Shimei Fan as Chief Scientific Officer. Dr. Fan formerly worked as SVP at Shiseido’s Americas Innovation Center. Dr. Fan will head Coty’s 500-person global R&D team, leading innovation and sustainability. |
| November 15, 2021 | COVERGIRL, a division of Coty, enters the skincare category with the launch of Clean Fresh Skincare, expanding Coty’s presence in the clean and vegan beauty market. |
| November 10, 2021 | Coty improves capital structure, with KKR converting the remainder of their convertible preferred shares into common shares. |
| November 8, 2021 | Coty announces first quarter results; sale rose 22% and adjusted EPS increased to $0.08 from $(0.01). |
| November 8, 2021 | Coty builds on previous transaction and agrees to sell additional partial stake in Wella to KKR in exchange for approximately 56% of the preferred Coty shares owned by KKR. |
| October 1, 2021 | Coty agrees to sell partial stake in Wella to KKR at a 50% valuation premium versus initial Wella sale in exchange for approximately half of the preferred Coty shares owned by KKR. |
| September 16, 2021 | Coty announces that the relaunch of Kylie Cosmetics has been extended to Canada, where it will be available exclusively at select Shoppers Drug Mart locations and online at ShoppersDrugMart.ca this fall. |
| August 26, 2021 | Coty announces that it will launch a local IPO of its Brazil business. The company plans to remain a controlling shareholder upon completion of the transaction. |
| July 22, 2021 | Coty announces that Constantin Sklavenitis has been appointed Chief Prestige Brands Officer, effective September 6, 2021. Sklavenitis will be overseeing all prestige brands, aiming to make Coty a key player in prestige makeup and expand in skincare. |
| July 12, 2021 | Coty announces that it will introduce a digitally enabled touch-less fragrance testing device for use at beauty retailers within the next 12 months. A pilot was launched in Europe in July a trial is planned for Asia later this year. |
| July 1, 2021 | Coty announces that it has relaunched Kylie Cosmetics, with new clean and vegan formulas, and refreshed packaging. The brand is now available globally through select brick-and-mortar stores and online, through a new site offering both Kylie’s cosmetics and skincare brands. |
| June 25, 2021 | Coty announces that Richard Jones will step down as Chief Supply Officer and Head of R&D on June 30, 2021. Coty will separate the role into two positions. |
| June 9, 2021 | Coty completes the issuance of €700 million of 3.875% senior secured notes due in 2026. The offering was increased to €700 million from €500 million due to very strong demand. |
| May 26, 2021 | Coty announces the appointment of Andrew Stanleick as CEO of Kylie Jenner Beauty Brands. Stanleick will also manage Kim Kardashian West’s business for Coty. He will focus on driving both brands’ global expansion and entry into new beauty categories. |
| April 16, 2021 | Coty completes the issuance of $900 million of 5.000% senior secured notes due in 2026. The offering was increased to $900 million from $750 million due to very strong demand. |
| January 22, 2021 | Coty announces that Stéphane Delbos will be promoted to New Chief Procurement Officer, effective February 1, 2021. |
| January 5, 2021 | Coty completes the purchase of a 20% stake in Kim Kardashian West’s business. Coty and Kardashian West will focus on entering new beauty categories and expanding globally beyond existing product lines. This includes the development of the celebrity’s skincare line, which remains on track for an expected launch in fiscal year 2022. |
| December 21, 2020 | Coty announces the appointment of new directors to its board: Anna Adeola Makanju and Mariasun Aramburuzabala Larregui. Paul S. Michaels stands down after completing a five-year term. The appointments result in Coty’s Board of Directors having a female majority. |
| December 9, 2020 | Coty promotes Laurent Mercier to Chief Financial Officer (CFO), effective February 15, 2021, succeeding Pierre-André Terisse. |
| December 2, 2020 | Coty announces that Stefano Curti will join the company as Chief Brands Officer, Consumer Beauty, and Alexis Vaganay will be promoted to Chief Commercial Officer, Consumer Beauty. |
| December 1, 2020 | Coty completes the sale of a majority stake in its Professional and Retail Hair business—including the Wella, Clairol, OPI and GHD brands—to KKR. As part of the transaction, Coty has received net cash proceeds of approximately $2.5 billion and will retain a 40% stake in the business. |
| October 21, 2020 | Coty appoints Isabelle Bonfanti as Chief Commercial Officer, Luxury, and Jean-Denis Mariani to the newly created role of Chief Digital Officer. |
| October 7, 2020 | Coty announces the launch of DTC flagship websites for Kylie Skin in Australia, France, Germany and the UK. |
| September 2, 2020 | Coty’s new CEO, Sue Y. Nabi, starts at the company. |
| July 2, 2020 | Coty announces that incoming CEO Sue Y. Nabi will lead its Executive Committee. Princess Anna of Bavaria is named Chief Corporate Affairs Officer and member of the Executive Committee. Chief Legal Officer and General Counsel Kristin Blazewicz is promoted to the Executive Committee. |
| June 29, 2020 | Coty and Kim Kardashian West announce that they have entered into a strategic transaction to further develop Kardashian West’s business globally. Together, Coty and Kardashian West will focus on entering new beauty categories and expanding globally beyond existing product lines. |
| June 1, 2020 | Coty announces that it has entered a definitive agreement with KKR on Wella. Partnership with KKR delivers immediate deleveraging via $1 billion direct investment and $2.5 billion net cash proceeds from the Wella transaction, lowering Coty’s net debt. |
| May 28, 2020 | Coty announces the appointment of Gordon von Bretten as Chief Transformation Officer. |
| May 22, 2020 | Coty announces the launch of Kylie Skin in Europe. |
| March 25, 2020 | Coty starts producing hydro-alcoholic gel hand sanitizer to help combat Covid-19. The products are free and are being distributed to medical and emergency services staff who are facing shortages. |
| February 28, 2020 | Coty announces management changes: Pierre Denis will succeed Pierre Laubies as CEO; Pierre-André Térisse is promoted to COO; Isabelle Parize and Justine Tan are elected Non-Executive Directors. |
| January 29, 2020 | Calvin Klein Fragrances, a division of Coty, introduces its first clean, environmentally conscious and gender-free fragrance, CK EVERYONE. |
| January 20, 2020 | Coty announces the appointment of Kristin Blazewicz as Chief Legal Officer and a member of the Executive Committee. |
| January 6, 2020 | Coty and Kylie Jenner announce that they have completed a transaction to create a long-term strategic partnership to jointly build and develop Kylie’s existing beauty business. |
| December 11, 2019 | Coty appoints Pascal Baltussen as Global Chief Procurement Officer and a member of the Executive Committee. |
| November 1, 2019 | Coty appoints Richard Jones as Global Chief Supply Officer and a member of the Executive Committee, effective November 1, 2019. |
| September 25, 2019 | Coty announces the appointment of Pierre Denis and Beatrice Ballini to its Board of Directors. |
| September 9, 2019 | Coty announces the introduction of a strengthened leadership organization for its supply chain, aiming to support its ongoing turnaround plan and future growth. |
| August 28, 2019 | Coty and Younique announce that they have reached a mutual decision to end their partnership. Coty will sell its controlling stake to Younique’s original founders upon regulatory clearance, as soon as practicable. |
| July 1, 2019 | Coty announces its “Turnaround Plan” to drive substantial improvement in Consumer Beauty while also further optimizing Luxury and Professional Beauty and focuses on three strategic pillars. |
| June 25, 2019 | Coty announces the appointment of Sophie Hanrot as Chief Human Resources Officer, effective July 1, 2019. |
| May 17, 2019 | Coty announces the appointment of Fiona Hughes as Chief Marketing Officer, Coty Consumer Beauty, and as a member of the Executive Committee, effective June 12, 2019. |
| May 1, 2019 | Coty announces that a tender offer by Cottage Holdco B.V., an affiliate of JAB Holding Company, to purchase up to 150 million shares of the company’s Class A common stock at $11.65 per share has been consummated. |
| January 11, 2019 | Coty announces the appointment of Pierre-André Terisse to Chief Financial Officer and a member of the Executive Committee, effective February 1, 2019. Additionally, CEO Pierre Laubies will assume leadership of the Consumer Beauty division’s strategic vision, supported by Gianni Pieraccioni. Pieraccioni has been appointed as Chief Operating Officer (COO), Consumer Beauty, and as a member of the Executive Committee, effective January 14, 2019. |
| January 7, 2019 | Coty reveals its Wella Professional Smart Mirror CES 2019, a mirror driven by augmented reality (AR) for use at salons. |
| December 6, 2018 | Coty launches its first at-home hair-color guide that works via Google Assistant on Google Home smart speakers and smartphones. The “Clairol Color Expert” guides users through the entire at-home hair color process, hands-free and voice activated. |
| November 23, 2018 | COVERGIRL, a division of Coty, opens a Times Square store on November 23, 2018. The store is an “experiential makeup playground” with a Google AI greeter called Olivia, and AR glam stations, where customers can virtually try on makeup. |
| November 12, 2018 | Coty announces the resignation of CEO Camillo Pane for family reasons, and the appointment of Pierre Laubies as the new CEO. |
- Sue Y. Nabi—CEO and Director
- Laurent Mercier—CFO
- Olga Levinzon—Vice President of Investor Relations
Source: Company reports/S&P Capital IQ