Ayesha Curry

Coty Inc. has sold or terminated 14 brands to complete a planned portfolio rationalization, and is making progress on Cover Girl, according to chief executive officer Camillo Pane.

“We are not giving the full, exact list of 14 brands,” Pane told WWD when asked specifically which lines were sold or discontinued. “What is important is that this is behind us.”

Some of the deals — like Cutex, and the Guess and Jennifer Lopez fragrances licenses, were already completed. Coty said Cerruti and Playboy were sold to Designer Parfums, which also bought the Jennifer Lopez license. The brands made up about 6 percent of the Coty consumer division’s revenues, not including sales from Younique.

Coty’s consumer division, which had owned most of the brands that were part of the rationalization, posted a 3 percent increase in sales, to just more than $1 billion from $988.6 million. The division posted a 1.2 percent decline on an organic sales basis, which the company said was because U.S. brands hadn’t yet benefited fully from relaunch efforts. Coty is also undergoing pricing shifts in Brazil in order to improve profitability.

The company recently relaunched Cover Girl, Clairol and Max Factor.

You May Also Like

Cover Girl is “seeing early signs in stabilization,” Pane told Wall Street analysts Wednesday. “The brand has gone from dramatic double-digit declines prior to the launch to low-single-digit declines in March and April.” 

Cover Girl recently launched True Blend Match Made Foundation, which has 40 shades. “In prestige there are a few brands that have reached 40 shades, but in the mass market this is not common,” Pane said.

The relaunch of Clairol is “going to take a little bit longer,” Pane said on the Wall Street call. “We have been seeing positive momentum in both Nice ‘n Easy and Root Touch Up. Although we are still declining…we are not declining as much as we were declining before the relaunch.”

Max Factor has also brought new products to market, including some that specifically target Chinese consumers, a growing part of Coty’s business. The brand introduced Brightening and Whitening Foundation in the market, for example, and Max Factor is one of the six brand’s Coty set up shop for on Tmall.

“We are now looking at insights, trends and product development which is tailor-made to Chinese consumers,” Pane said. “This is something that is new for Coty. This is something that was not happening either in Coty legacy or P&G.” Coty is planning to launch more brands on Tmall in the next 12 months, he added.

Chinese consumers, similar to U.S. ones, shop across channels, Pane said. “I don’t think there is a specific segmentation that says mass brands will not work in China,” Pane said. “On the contrary, we have started with Max Factor and Bourjois.”

China also served the business’ luxury division well. The division posted a 19 percent increase in sales, to $752.5 million from $634.6 million. Numbers were boosted by sales of Tiffany & Co.’s fragrance, as well as Gucci Bloom, CK One and Chloé Nomade. Burberry, a recent acquisition for Coty, contributed 5.7 percent. Marc Jacobs Daisy Love is also “showing early promise,” Pane said.

The company’s professional division posted a 10 percent uptick in sales, to $448.5 million, from $408.9 million. The increase was driven by higher sales from OPI, which recently underwent a restage of its gel nail polish, as well as strength in traditional polish. Wella Professionals Wellaplex product launch has also done well, the company said.

For the fiscal third quarter, Coty’s net revenues were $2.22 billion, up 9.4 percent from the prior-year period. Coty posted a net less of $77 million, an improvement from a loss of $164.2 million in the prior-year period.

For the nine month period ended March 31, Coty posted $7.1 billion in sales, a 31.2 percent increase from the prior year. Net income was $12.5 million, up from a $117.4 million loss in the year-ago period.

At the same time as Coty focuses on stabilizing and continued integration of the businesses it bought from Procter & Gamble, the business is ramping up its focus on innovation and digital, Pane said, and is working to move faster.

He ticked off Cover Girl’s True Blend Match Made Foundation, as well as Max Factor’s Brightening and Whitening Foundation for China as key points of innovation, but added that digital innovation is another area he’s focused on. Coty has recently launched a skill for the Amazon Echo Show for its consumer division, a shoppable application for Cover Girl in partnership with Walmart, and an application on the Galaxy S9 phone that allows users to virtually try on and shop for Cover Girl directly from the phone, plus Facebook-based try on apps for Rimmel and Bourjois.

“If you ask me, do we need to do more? Of course, we’ve got to do more,” Pane said. “Especially in consumer beauty.”

There, Coty needs to move faster, Pane said, and has already put in place a program to address that concern. “We need to be faster to market and we need to develop more programs around trends,” he said. “We are and have already revamped the innovation process for what we call fast beauty to try to be much, much faster to market.”

But going fast — which often includes outsourcing innovation — isn’t the company’s only focus. “This is not a market where we can only win by being on trend or by being inspired by what we see in prestige or by anticipating trends,” Pane said. “This is also a market in which we’ve got to deliver strong experience.”

He called out the new Cover Girl foundation as a true Coty innovation.

“That’s not trendy, fast beauty, relying on external suppliers-type of innovation…this is in-house,” Pane said. “We’re working on other innovations in the eye category or in the lip category which are truly superior from a customer experience point of view.”

Looking forward, Pane said he expects China to continue to be important, as well as Brazil, the Middle East and Mexico, which he called a “pocket of growth.” Coty has been able to grow its share in the hair color market, there.

“The Middle East continues to be a very important market for beauty in general, and for Coty,” Pane added. Bourjois is doing well there, he said, and Max Factor has “stepped up” its performance after its relaunch.

load comments
blog comments powered by Disqus