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Coty to Boost Investment in Power Brands and Reorganization

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Coty (New York) has reorganized, announced plans to transfer management offices to London and is investing in top-performing brands like Sally Hansen, adidas and Rimmel amidst down sales. The company's first quarter 2016 net revenue totaled $1,112.3 million, a decline of 2% like-for-like, and 6% as reported.

Previously: P&G Brands Acquired by Coty

The merger of Coty and the P&G specialty beauty business, expected to be closed in the second half of 2016, has been structured under three new business units: Coty Luxury Division, Coty Consumer Beauty Division and Coty Professional Beauty.

The company has launched a division focused on fostering innovation and supporting digital initiatives impacting communication, sales execution and e-commerce.

Simultaneously, executive management offices will relocate to London, including those of Bart Becht, chairman and interim CEO, and CFO Patrice de Talhouët.

Further reading: Coty-Bourjois Cosmetics Deal Completed 

Other key appointments:

  • Chief global supply officer: Mario Reis
  • Chief legal officer and secretary: Jules Kaufman
  • Chief scientific officer: Ralph Macchio
  • Chief human resources officer: Sébastien Froidefond

Coty Luxury Division: Fragrance and Skin Care

This group will cover fragrance and skin care, primarily in the prestige channel. Edgar Huber, president Coty Luxury, will oversee the company's fragrance and skin care division from Paris. He has 25 years of industry experience, previously with L'Oréal and Lands’ End.

In the interim, Huber has succeeded Jean Mortier as president global markets. Mortier will stay with Coty through June 2016 as a special adviser to the CEO.

In the first quarter of the year, fragrance declined 8% like-for-like, "driven by difficult innovation comparisons in the prior-year period," according to the company, and pressure on Calvin Klein.

Adjusted operating income for fragrances decreased 10% to $108.9 million from $120.5 million in the prior-year period, resulting in a 19.9% adjusted operating income margin, an increase of 110 basis points versus the prior-year period.

Meanwhile, skin and body care declined 1% like-for-like, driven primarily by lower net revenues from Playboy and philosophy, and partially offset by like-for-like growth in adidas.

Adjusted operating income for skin and body care increased 26% to $6.8 million from $5.4 million in the prior-year period, resulting in a 3.9% adjusted operating income margin, an increase of 120 basis points compared to the prior-year period.

Coty Consumer Beauty Division

This division will focus on color cosmetics, retail hair coloring and styling products, and body care, primarily in the mass channel.

The group will be headed by Coty Consumer Beauty president Esi Eggleston Bracey. She previously lead the COVERGIRL and Max Factor businesses and has more than 24 years of experience. She will be based in New York.

As noted above, skin and body care declined 1% like-for-like in the latest period, driven primarily by lower net revenues from Playboy and philosophy, and partially offset by like-for-like growth in adidas.

Adjusted operating income for skin and body care increased 26% to $6.8 million from $5.4 million in the prior-year period, resulting in a 3.9% adjusted operating income margin, an increase of 120 basis points compared to the prior-year period.

At the same time, color cosmetics experienced 9% like-for-like growth in the first quarter, driven by Sally Hansen, Rimmel and OPI.

Adjusted operating income for color cosmetics increased 40% to $57.7 million from $41.2 million in the prior-year period, resulting in a 14.8% adjusted operating income margin, an increase of 280 basis points compared to the prior-year period.

Coty Professional Beauty

This division will focus on hair and nail care professionals and salon owners. The group will be run by Coty Professional Beauty president Sylvie Moreau, who previously served as executive vice president of P&G's Wella. She has 21 years of industry experience, including seven years at P&G's Salon Professional division. She will be based in Geneva.

Coty Growth and Digital

The company has also launched a division focused on fostering innovation and supporting digital initiatives impacting communication, sales execution and e-commerce.

The company's acquisition of Beamly will support this group, which will be headed by Camillo Pane, chief growth and digital officer. Pane spent more than 20 years at Reckitt Benckiser, before joining Coty.

First Quarter's Mixed Picture

Key first quarter figures:

  • Operating income: $81.7 million
  • Adjusted operating income: $173.4 million
  • Adjusted net income: $219.7 million
  • Adjusted net income totaled $219.7 million
  • Net income: $125.7 million

Asia Pacific

Asia Pacific net revenues grew 4% like-for-like, reflecting growth in Australia, Southeast Asia and regional exports.

Key growth brands in the region include power brands Calvin Klein, OPI, Rimmel and adidas.

Europe and the Middle East

Revenues decreased 3% in Europe and the Middle East, particularly due to deckines in the United Kingdom and travel retail. Some strength was experienced in Eastern European, Middle Eastern and German growth.

Key growth brands in the region include power brands Sally Hansen, Rimmel and adidas.

Americas

Americas net revenues decreased 3% like-for-like, reflecting moderate declines in the U.S., travel retail and a decrease in Brazil.

Key growth brands in the region include Sally Hansen and Rimmel.

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