For the first time in a long time, Coty Inc. is getting a leader with experience in the beauty industry.
Pierre Denis, the former chief executive officer of Jimmy Choo, will join the company this summer as ceo, replacing current head Pierre Laubies, Coty announced in late February. He brings experience in luxury and in beauty — something the most recent rounds of Coty executives have sorely lacked — and is tasked with accelerating sales, which other executives have tried to do and failed.
He has the backing of Peter Harf, Coty chairman, who told WWD that he feels Denis has the right skill set — meaning beauty and luxury experience — to drive Coty forward and grow the company.
“Pierre Denis has vast global luxury, cosmetic and fragrance experience including in Asia. He is the rare, seasoned beauty executive who is not only a good licensor and licensee, but who also connects with and understands designers. He’s got the whole nine yards,” Harf said.
Harf is also the founder and managing partner of JAB, which owns 60 percent of Coty. The organization has drawn criticism for applying the strategy it has used in the food and beverage industry — financially aggregating businesses to find cost synergies — to the beauty sphere.
One industry source noted that in order to really generate sales, Denis will need to deviate from that strategy, and “focus on consumer demand generation for the brands — innovation and marketing — rather than on saving costs.”
Denis’ arrival came as a surprise to employees and Wall Street, though his appointment as a Coty board member in October should perhaps have been an indicator. The plan, according to a source with knowledge of the situation, was never to have Laubies in place for a long time, but rather to have him tackle the turnaround — organization simplification, leverage reduction, etc. — and then hand the reins to someone else who would boost revenues.
Coty chief financial and chief operating officer Pierre-André Térisse likened the executive switch to a relay race, with Laubies handling the first leg. “What we need for this second part of the race is to have somebody with experience of beauty, luxury, Asia, digital, and Pierre Denis absolutely has this,” Terisse said.
Hiring a growth-oriented leader is a tactic Coty has tried before, back when former chairman and interim ceo Bart Becht was in charge. In 2016, Becht planned to oversee the integration of 41 P&G beauty brands, while then-ceo Camillo Pane, hailed as someone with “an excellent track record of accelerating growth,” would drive sales gains.
It did not work out so well.
The beauty brands Coty bought from P&G, especially in the division that houses Cover Girl and Clairol, were in much worse shape than imagined, suffering from a general lack of attention and shelf space losses. Coupled with supply chain problems that led to steep sales drops in 2018. Pane was out, and so was Becht, who left JAB entirely.
Pane and Becht were both consumer packaged goods experts, not beauty experts.
Today, Harf acknowledges the sectors are different: “Cosmetics is a different ball game than fast-moving consumer goods. It has a much higher rate of innovation, so it’s critical to continually bring new products to the market,” Harf said. In addition to bringing in Denis, Coty has added a board member with beauty experience — Isabelle Parize, the former Douglas ceo, who also has fragrance experience.
The end of the Becht-Pane era is when Laubies and Térisse stepped in, formulating a turnaround plan and selling off assets acquired under Becht. Younique, a direct-seller with next to nothing in common, business-model wise, with Coty’s existing operations, was first. Next up are the Professional and Brazilian operations. Industry sources said Henkel and private equity firm KKR are among the finalists in the auction process.
At the same time as Laubies and Térisse enacted the turnaround plan, Harf orchestrated an unusual joint venture with Kylie Cosmetics, the fast-growing makeup and skin-care business of Kylie Jenner. As majority owner, Coty is technically in control, but Jenner and her social media following are described as the “motor” of the brand.
Denis will start after the professional division is sold, and the company he will walk into is markedly different than the one JAB-backed Becht worked to build with the P&G deal.
Kylie, which just hired Christoph Honnefelder as ceo, has the potential to go global, which could drive growth, but Denis is still inheriting a brand portfolio with some sizable problems. In February 2019, Coty revealed it was taking a $965 million non-cash impairment charge related to the consumer division and Cover Girl and Clairol trademarks. Coty sales dipped by 6.6 percent, to $2.3 billion in the quarter ended Dec. 31, hurt by the slumping Consumer segment.
That division has struggled before and during Coty ownership, and brands have lost shelf space and relevance. A Cover Girl re-brand has required further re-branding. The luxury segment has fared better, but still has issues, including Gucci owner Kering publicly vocalizing that the beauty operation — run by Coty — hasn’t met expectations.
Coty insiders are hoping that Denis, who has experience with designers and licensing agreements, will be able to smooth things over. One source noted that the current plan is for Denis, 55, to stay in place for a while — longer at least than the past few ceo’s — and establish a more stable working environment for employees.
“A leader who talks the same language, knows the same people, knows the industry, knows the processes is certainly going to make things easier and to accelerate the decision process and to make everybody converge to want the same goal,” Térisse said.
Harf described Denis as “a culture-builder who is fiercely protective of his people and the company.”
Denis joins as the fourth Coty ceo in five years, a level of executive turnover that rivals that of Revlon, which had five different ceo’s between 2013 and 2018, when Debbie Perelman took the helm. Swift executive turnover can cause alarm for employees, experts say, and Coty has certainly seen its fair share of departures across all levels of the business, adding another layer of instability.
Shella Abe, partner at recruiting firm True Search, said frequent ceo changes can stress employees out, especially when mixed with market competition, M&A and the “daily grind of a volatile world.”
“These stresses are very real to the employee, and are dramatically exacerbated when there isn’t a steady and convincing presence at the top,” Abe said. “Habitual turnover in the office of the ceo negatively impacts a company’s performance, because there is no sustained rhyme or reason to how roadmaps are constructed and decisions are made. In many situations, you as an employee don’t know where you need to go or how you will get there because your leadership keeps changing and as a result, changing directions. Many employees will simply freeze and bottom-line results suffer.”
Subhed: Coty’s Revolving Door
Since announcing the acquisition of 41 beauty brands from Procter & Gamble for $12.5 billion in 2015, Coty has had four ceo’s:
Pierre Denis: Summer 2020 – ?
Pierre Laubies: November 2018 – Summer 2020
Camillo Pane: July 2016 – November 2018
*Elio Leoni Sceti: Announced April 2015; retracted June 2015
Bart Becht: September 2014 – July 2016
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