Sue Nabi is a CEO 2.0.
The Algeria-born, French engineer by training with an advanced master’s degree in marketing management has been channeling her laser-sharp brand-building skills and holistic vision of diversity to accomplish what no chief executive officer has managed in years: jumpstart Coty Inc.’s turnaround. And that’s despite the coronavirus pandemic.
The numbers speak for themselves. In the second quarter of its fiscal year ended Dec. 31, the multinational posted its sixth consecutive quarter “on par or above expectations,” Nabi said at the time.
For the six months to Dec. 31, Coty registered sales of $2.95 billion, up 16 percent versus the same prior-year period. Net income was $492.6 million, an improvement against the $27.3 million loss in first-half fiscal 2020-21. The company also reduced its debt by more than a half-billion dollars and targeted about two-times leverage exiting calendar year 2025.
The sales growth can be attributed to numerous factors, including the about-turn of Cover Girl, the rebound of Coty’s consumer business and the repositioning of the group’s luxury division in three key categories — fragrance, makeup and skin care, rather than solely on fragrance.
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Meanwhile, Coty stock keeps rising. On July 2, 2020, the day Peter Harf, the founding partner of JAB, Coty’s majority owner, announced Nabi’s appointment, Coty stock closed at $4.45. Fast forward to March 15, 2022, and it ended the day at $8.46.
For Nabi, it’s just the beginning. Her goal is nothing less than total transformation, on everything from Coty’s stock price to its corporate culture.
“A healthy company grows ahead of the market,” said the executive, sitting in a conference room in Coty’s Amsterdam headquarters. “After that, I really would like Coty to stand for a forward-thinking company, with the most passionate experts.”
While that might sound like boilerplate CEO-speak, Nabi is in a come-from-behind position. Coty, a longtime leader in fragrance, has struggled since it bought 41 beauty brands from Procter & Gamble in 2016 in an effort to become a top-five beauty company. Many were not in the best of shape, and Coty executives had a difficult time fixing them. Some, like the professional hair care brands, were not part of the group’s core competency and ended up being sold. At top management levels, executives struggled to keep their jobs, and there became a revolving door of CEOs lacking beauty experience.
Nabi is not of that ilk. A L’Oréal veteran who steered brands such as Lancôme and L’Oréal Paris to new heights, and more recently launched her own luxury, sustainable skin care brand Orveda, she personifies a new era for Coty.
With the mind-set of a seasoned executive and entrepreneur, Nabi has taken a global and local approach to growth, all guided by a remarkable finesse for brand-building. She’s developed a reputation as an agile leader, ready to lead the group’s reinvention during a period of upheaval in the company itself and society at large.
“I’m trying to infuse in the culture that change is normal,” Nabi said. “A lot of big corporations don’t love change, because change means moving from your comfort zone, changing the way you work, the priorities — sometime after just one year, etcetera, but that’s the world of today. And tomorrow, we need to adapt.
“Change is normal,” she continued. “It’s not something that can happen only when you are in difficulty.”
The executive is well-versed in transformation. She herself has lived a life of change, while catapulting up the corporate ladder. Today, Nabi is the only serving transgender CEO of a major multinational fragrance and cosmetics corporation worldwide.
Stephanie Wissink, an analyst at Jefferies, called Nabi “an icon for the next generation of what CEOs can be. You already see it in what has happened in the culture, the language, the permissioning, the possibilities within Coty,” she said. “There is definitely a different vibe.
“There is this element of facing the odds and believing you can overcome,” Wissink continued. “This is just in Sue’s spirit — and that is not something that needs to be spoken, but is something that is inherently desirable in a corporate culture, especially in a competitive culture, where you can’t take wins for granted. You always need to act like the underdog, even when you are the leader.”
Indeed, Nabi sees the beauty business overall as being too complacent and drives the Coty teams to look at the world through a different lens. “The industry has become much too reliant on trends, rather than creating trends,” she said. “If you do something different, which is to say: I’m going to tell you a story you’ve never heard, use an ingredient you’ve never seen, demonstrate that this is the best in the beauty industry, surround myself with the best people — be it spokespeople, scientists, influencers — who are going to say ‘This is different from the rest,’ then it’s a very different story, and you can create value.
“The world of beauty is about being different,” added Nabi. “If you look different, do different things — language, product presentation — then you can command the price you want because you are unique. Uniqueness has no price.”
In an industry rife with imitation, it’s a mind-set that stands out. “She definitely comes with all you’d expect from a leader, but in terms of vision and courage — Sue is definitely off the chart,” said Anne Raphaël, senior adviser at Boyden.
Even before Nabi’s first day as CEO on Sept. 1, 2020, she intuited the turnaround of Cover Girl to be the key barometer to proving Coty’s health. It’s a brand that Nabi knew well from her days heading up L’Oréal Paris and Maybelline New York at L’Oréal.
“It was an asset that was not only strong, but one of the most relevant given the times we are in — specifically in the middle of a pandemic,” she said. “Clean beauty means healthy beauty. It’s larger than green or anything else.”
Nabi recalled Cover Girl’s pioneering of the “skinification” of cosmetics with Simply Ageless, breakthrough advertising with Ellen DeGeneres, its cutting-edge molded mascara brushes and its invention of non-transfer lip color. Then, Cover Girl lost its traction.
“It was a surprise, because for me this brand had everything to be successful,” said Nabi, who after studying the data from the past decade, quickly understood what went wrong. It was something she’d seen in other brands.
Looking through Cover Girl’s advertising, Nabi could pinpoint which competitor the brand had focused on. Products ranged from Gothic, dark makeup to pop colors.
“That’s not the way you build a brand,” she said. “You can do this as collections to animate a brand. It’s the difference between the sun and planets. The sun is who you are, the planets are things you can play with. There, the planets became the sun, and each year, there was a new planet taking the place of the sun. So people got lost.”
The sun-and-planets story infuses Coty now, informing brand-building at Cover Girl and beyond.
“If it’s a collection of products, then you’re dead — because this is not going to last,” said Nabi, adding brand messaging also needs to be clear. So Cover Girl was repositioned as “the healthy makeup authority of the American market,” she said.
“It doesn’t mean that we can’t do anything else, but it means this is the sun of your solar system,” Nabi continued. “Same thing with Rimmel. I want people to say: ‘This is the brand that’s going to make me free from standards, from classical looks. If I use Rimmel, I’m here to disrupt the game.’
“The moment you say this to your teams, everything becomes easy: Who would be a good spokesperson, what advertising should look like and even the words they’re going to use to name their products,” she said.
Nabi, who often refers to the fashion industry, with which she has deep ties, noted luxury brands don’t say “I’m a maker of bags” or “a maker of scarves.”
“They give a vision of the world — some around travel, others around being futuristic or talking to urban culture. That’s exactly the way I’m trying to redefine Coty’s brands,” she said.
Designer Giambattista Valli, whom Nabi got to know after approaching him as an adviser for the development of Lancôme’s blockbuster scent La Vie Est Belle, said they instantly clicked. “Sue’s clear vision and open-mindedness gave us the perfect platform to develop projects that were the organic result of a perfectly balanced team effort and the symbiosis of our different sets of skills,” Valli said. “Her talent is not only limited to her business knowledge and intuitions, but expands to a unique aesthetic sense that she instills throughout her work and that has gained her the respect and admiration of the highest authorities in the fields of fashion and luxury.
“She is also a person of honorable values; she is a champion for equality and diversity, spreading a message of inclusivity and reality to all people, and she is a strong supporter of sustainability in all aspects of a business,” Valli said. “The support and the respect she pays to the talented teams she builds are outstanding.”
Despite the considerable success at Coty thus far, Nabi still has plenty of challenges. The company needs to continue reducing its heavy debt, which by the end of the second quarter had fallen to $4.45 billion. Other issues include maintaining Cover Girl’s strong momentum, monetizing Coty’s $800 million investment in Kylie Jenner and Kim Kardashian’s namesake beauty brands, solidifying its relationships with key licensees such as Gucci and successfully comping the prestige division’s strong results.
Coty also has some considerable catch-up to do in the digital and sustainability fronts, and its business in China is extremely underdeveloped compared to many of its peers. There’s also the issue of stabilizing staffing, which has seen some churn. In the recent past, for instance, Coty’s three regional heads — Andrew Stanleick, Marco Ficarelli and Simone Dominici — left the group.
Meanwhile, new leaders have signed on, including Anna Adeola Makanju, global policy manager for content regulation at Facebook, who in December 2020 joined Coty’s board of directors that’s now made more than half of women. Makanju said she was drawn to “Sue and the impressive management team around her.”
“The last few years have been very challenging for Coty, but Sue’s confidence, creativity, understanding of the industry, of the products and seemingly limitless energy, have gotten people genuinely excited about the future,” Makanju said. When I ask people who have joined Coty recently, often leaving comfortable roles elsewhere, why they are at Coty, they invariably tell me that working with Sue was one of their top considerations. There is no one like her in this industry.”
Despite the challenges, signs of positive evolutions at Coty are manifest. By the end of the company’s fiscal first-half 2021-22, its Consumer Beauty division grew its market share on a worldwide basis for the first time in five years. In addition to Cover Girl, Nabi and her team have been repositioning other legacy brands in the branch. Max Factor became “the brand that takes you from ordinary to extraordinary,” Nabi said. Two years ago, its advertising was more about the girl next door with buttoned-up looks. Today, Max Factor is fronted by actress Priyanka Chopra Jonas.
Bourjois is being brought back to its roots, too. “Having a brand in the portfolio that has a French heritage, so colorful and luxurious, is an asset in the world of today, where a lot of Asians, Americans and Latin Americans are dreaming of France and Paris, specifically, since they have not been able to travel there for years,” Nabi said.
She described Sally Hansen as a “jewel in the portfolio” that’s not just a nail varnish-maker, but also as a professional solution provider.
She called Adidas a “beautiful brand” with “huge potential” and a unique vision of the world that syncs with trends of today and tomorrow. “People realize that being fit, training, taking care of themselves from head to toe is super important, specifically during and after this hopefully behind us pandemic,” Nabi said. “So when people realize this, suddenly there are some brands whose mission is very clear. One of them is clearly Adidas.”
That clarity and conviction for brand-building is another key strength of Nabi’s. “The biggest contribution I’ve seen Sue bring is going back to what is the purpose of the brand, like a real entrepreneur,” said Stefano Curti, chief brands officer, Consumer Beauty at Coty. “A lot of what went wrong in the past — I believe the brands were evolved in a way that was not in line with [their] essence, of what consumers remembered of these brands.”
The work being done is to “awaken memory structures” of Coty’s heritage brands. “This has really been the start of the relaunch of our brand equities,” he said. Curti said Nabi “leads with a purpose [and] by example. She’s not a distant leader. People are willing and able to voice opinions with her. There is nothing taboo.”
He also described her as a “deep beauty expert,” with an in-depth knowledge of Coty and competitors’ products. “She has an intimate knowledge of consumers, of beauty trends,” he said.
In terms of the prestige side of the business, which consists of brands also including Calvin Klein, Hugo Boss, Marc Jacob and Miu Miu, Nabi’s big bet has been to expand beyond its central competency of fragrance and while expanding deeper into skin care and makeup, too.
The goal is to capitalize on the existing portfolio to play in high-growth areas of the business. “Since Sue arrived, skin care has become a key category [and] a strategic vector of growth for Coty,” said Caroline Andreotti, the group’s executive vice president global travel retail. “If you want to be a big player, you have to be in skin care.”
Skin care is the top category in travel retail overall, generating 65 percent of beauty sales in the channel for 2020. For Coty, the business is significantly underdeveloped. The aim is for skin care to become at least 10 percent of its travel retail mix in the next three years, with a portfolio that consists of Lancaster, a leader in sun care; Orveda, and Kylie and KKW Beauty.
It’s a huge category in Asia, too, representing representing 72 percent of all beauty revenues in 2020.
So no surprise that Nabi’s first trip as CEO was to Monaco, Lancaster’s birthplace. The executive was “mind-blown” by what the brand continues to accomplish in sun care, but its skin care products hadn’t been well taken care of. Hainan Island, a tax-free haven bustling with beauty savvy Chinese travelers during the pandemic, was chosen to be the test bed for Lancaster’s potential to broaden into being a sun care plus skin care brand.
Coty opened several counters starting in 2021, such as in Dufry Haikou, CDFG and Lagardère. Lancaster was relaunched with a full lineup of skin and sun care products, and a new merchandising concept that shines a light on the brand’s history and regenerative medicine technology. “It’s been an outstanding reaction,” said Nabi, who said Lancaster’s reboot was executed in a startup fashion, with her working with small teams on a daily basis.
“We are now confident that we can operate a skin care brand that is competitive on the Chinese market,” she said, adding Lancaster’s success in Hainan is opening doors for the brand in mainland China.
Orveda, which surfs the fast-growing super-premium skin care category, will go there, too. When Nabi was creating that brand in 2017, she tested its formulations and scents in China. Once Nabi sees a brand succeed while tested in a highly competitive environment, Coty can deploy it elsewhere.
The next frontier of Coty’s skin care portfolio is Philosophy, especially in terms of strengthening its business in the U.S. Nabi hopes to restore the brand’s position as an indie leader. Kylie and KKW Beauty are also playing deeper in skin care. The latter launched earlier this year, while Coty execs have been working with Kardashian on her brand’s next phase of innovation and its advancement across categories. The new product formulas are said to be more modern and innovative, with new-look elevated, sustainable packaging. KKW skin care is due to launch in the fourth quarter of this year.
In terms of prestige color cosmetics, Nabi posits Coty has three brands encompassing all visions of usage. There’s Gucci, Coty’s main global brand that channels the fashion brand’s ethos into makeup. That color cosmetics business is now bigger than that of Gucci fragrances in China.
Pre-Nabi, Gucci president and CEO was critical of Coty’s stewardship of the brand, but she seems to have righted the relationship. Since she came on board, the house of Gucci has not been publicly critical about how its fragrance and beauty business is being run.
Part of the turnaround stemmed from the lipsticks with packaging designed by Gucci creative director Alessandro Michele, which dropped in May 2019. Within a month, the brand sold more than 1 million of those. The Gucci fragrance business picked up steam, as well, not least with its campaigns, created with the designer, which were more inclusive in nature. Gucci executives declined to comment for this story.
Reflecting on Gucci’s success, Nabi harkened back to her central tenet of innovation and differentiation. “Suddenly, you have a brand that stands out from the crowd,” Nabi said. “Same thing with Burberry. Being different has become more important than ever. Fitting into the crowd was maybe the motto for the last five or seven years, but now more and more, it’s make your difference visible — shout it, in fact.”
That ethos is also being applied to Kylie Cosmetics, which Coty paid $600 million to acquire in November 2019. For Coty, the deal granted access to Gen Z and for Kylie Cosmetics, Coty brought global potential.
Coty has subsequently worked with Jenner to update her brand’s cosmetics products to be vegan, cruelty-free and with clean formulas. Kylie Cosmetics was relaunched in July 2021. Then in September 2021, the Kylie Baby line was introduced.
The strategy for the Kylie brand has three priorities: building strong “glam” pillars; strengthening its global presence, and putting in overdrive its social influence. Coty is also leveraging the brand’s omnichannel reach with the goal of making it into a worldwide megabrand. Kylie is building on its success in the U.S. to stretch across Europe, Australia and soon Brazil.
Coty’s fragrance business has surged along with the segment at large during the health crisis.
“It’s multirouted — it is a big market in Europe, has boomed in the U.S., is starting in China and going to be back in travel retail when people resume work travel,” Nabi said. “We strongly believe that calendar ’22 is the year of fragrance comeback in Europe.”
Gucci, Burberry, Chloé, Hugo Boss, Calvin Klein, Tiffany, Lacoste and Marc Jacob are among the brands expected to be key drivers.
“The richness of the portfolio makes us able to build global icons and local heroes,” Nabi said. “It’s not because you are more into a region that you cannot become a global icon.”
Chloé’s perfume business is based on its signature scent portfolio and the ultra-premium Atelier des Fleurs. The latter led the brand’s triple-digit sell-out, according to an industry source.
Chloé CEO Riccardo Bellini said: “Coty has been an amazing business partner, but also an amazing brand and strategic partner. In a way, we did together this process of truly rethinking the brand, strongly sharpening, overall, the brand message and ensuring a coherent alignment across our brand message and the way [that] was brought [to life] into the fragrance business.
“That’s what I can define [as] what I saw coming from Sue,” he continued. “The result of Sue’s leadership is a clear, much stronger focus in terms of business priorities…[and] a strong injection of energy and ambition into the brand.”
Nabi said overall, Coty is now taking full advantage of its fragrance know-how and technologies, which have formerly been underused. The group inherited many fragrance-related patents in acquiring P&G brands, such as one related to Hugo Boss linked to long-lasting perfumes.
“These are things we’re going to valorize across the board,” she said.
Nabi instigated key performance indicators for perfume testing and advertising, rather than leaving them to one person that makes the risk for failure high. That’s the strategy she put in place for Lancôme’s La Vie Est Belle.
Another focus will be on producing fragrances that are scientifically proven to have a well-being effect. Gucci Flora Gorgeous Gardenia influences people’s moods, so it is an early example of that.
Constantin Sklavenitis, chief prestige brands officer at Coty, said it is a dream working with Nabi — literally.
“She’s very inspiring, and to work with someone inspiring is the most important thing, especially in beauty, which is all about creating dreams,” he said. “She makes you believe everything or anything is possible. She helps remove barriers. There is a vision of: We can make it.”
Sklavenitis called Nabi a good listener, too, and likes that she passes on a big picture, then is hands-on to help executives achieve it.
“It’s probably also her background of engineer and marketer. She has both these abilities, which is unique,” he continued, adding Nabi also has a facility with numbers and an extremely good memory, plus is at ease in discussions about logistics, supply chain, finance or marketing.
“She has a long-term vision, but also looks at brands through the brand equity side first,” Sklavenitis said. “The product innovation has to fit [its] DNA.”
Nabi often reads consumer insight studies and understands trends from speaking, as well, with experts and being out in the field.
“This pushes us to do the same, and it’s very important,” Sklavenitis said. “She loves beauty. When you love what you do, you bring people along with you.”
Geographically, the U.S. and Asia are primary focal points for Coty’s future development. Analysts agree that China represents an immense opportunity. Compared to the leading global beauty companies, Coty’s business there is underdeveloped, and one of Nabi’s key initiatives is to jumpstart growth there.
“Coty Prestige is a bit of a sleeping giant,” Wissink said. “It is a portfolio of highly desirable brand assets that has awoken and realized over the last five to six years the way to grow prestige is to open up travel retail, d-to-c and China. They looked at the portfolio, and Sue said: ‘Where is d-to-c? Where is China? Where is travel retail?’
“They are almost playing catch-up with the mega drivers,” added Wissink.
Coty is starting to put in place its portfolio in China, where Nabi noted that brands including Gucci and Chloé Atelier des Fleurs are selling well. “It’s a fast-paced, evolving market. I’ve never seen a market where people are changing so much in terms of tastes so quickly,” she said. “Therefore, we need to have our antennas working perfectly to measure the slightest move. Our job is to make sure that we are perfectly in sync with any slight weak signal that starts [so we] will be at the beginning of something bigger.”
Success in North America is crucial; over the past six quarters the region has been a key contributor to the group’s success.
“It is clearly an area where the company is investing for the future and getting back the growth in return,” Nabi said.
Retailers are starting to laud Coty’s efforts. “Coty is an important strategic partner for Sephora globally, and under Sue’s leadership, we look forward to creating more differentiated programs across their portfolio together,” said Artemis Patrick, global chief merchandising officer, Sephora, who added Gucci is a brand within Coty’s portfolio that’s resonated well with the retailer’s consumers.
“This is a result of the strong partnership between our teams in creating joint marketing plans, fueled by truly differentiated product and content,” she said.
“Coty has always been a very strong beauty company, with a wide variety of great brands. However, since Sue’s arrival, we have definitely seen an even stronger focus on how the brands show up to our joint customers,” agreed Jamie Kerruish, Boots beauty director. “Sue has ensured a sharp focus on what the brands stand for, how they can delight their customers and — critically — the investment in those brands to ensure a strong reach and clear, powerful communication.”
He noted that at around the same time as Nabi’s arrival at Coty was the launch of Boots Media Group, which provides Boots and its suppliers with tools to reach its customers via personalized and targeted communications.
“We have found that Coty has become even more driven in its approach to digital — both e-commerce and digital advertising,” Kerruish said. “We have a really strong relationship with our partners at Coty, and are delivering excellent results and activities together.”
Nabi is driving the company’s digital efforts also, first by cascading out knowledge gleaned from Kylie and KKW Beauty, and also via strategic partnerships. In late September 2021, Coty announced its multichannel agreement with Perfect Corp. to embed augmented reality and artificial intelligence experiences into the group’s brands’ digital marketing toolkits.
Simultaneously, Coty is working more closely with key e-retail partners. Last year, for instance, Cover Girl partnered with Amazon’s series “Making the Cut,” which boosted the brand’s sell-out on the platform. During the holidays, Coty partnered with Zalando in Germany on an exclusive fragrance finder and a gifting campaign that generated more than 22 million impressions.
“A key part of the job of the digital team, but also the commercial team, is to really make sure where people are shopping today, our brands are in front of them,” Nabi said. “These are all the tools that we’re putting in place to make our digital muscle adapted to the way people are shopping today and tomorrow.”
Nabi has also focused her efforts on sustainability. “Sustainability is all about making sure our brands — and therefore the company — is seen as a force for good in the world of today and of tomorrow,” she said. “It’s not only an important element in terms of taking care of the planet, of people’s mental health and skin health. It’s also making sure the next generation of talents see Coty as a destination, and that’s starting to be the case.”
As for what she’s not focused on: acquisitions.
“We have today 99 percent of what’s needed to deliver the growth trajectory, the profitability trajectory, the deleveraging of the company,” Nabi said. “Nothing is missing. My focus is: How far can I go with what I have in-house? We have such a large number of brands that we can tackle any trend, any new need and any price positioning. I don’t see anything that’s shaping the world of today in the beauty industry that couldn’t be tackled with our current portfolio of brands.”
She believes two types of brands will be successful in the future: those able to premiumize and, on the lower end of the price chain, those that are super cool.
“It cannot be you are successful because you are affordable,” Nabi said.
She agrees with analysts’ assessments that Coty stock points only skyward. Nabi sees no reason the company wouldn’t have a valuation equivalent to others.
“There is a clear path,” she said, pointing to milestones that have been set and highlighting the company already beat expectations for 2021. Coty continues to target leverage of about four times exiting the 2022 calendar year and approximately two times closing calendar year 2025.
“We’ll do it, because the company is doing much better,” Nabi said. “When I joined Coty, I had discussions around so many topics. I said: ‘Please, leave me with my unique obsession, which is to grow sales, gain market share. All the rest is going to be a consequence of these two matters.
“Coty is back, our brands are back, and we are gaining market share,” she continued. “We are over-taking a lot of brands [and] companies around the world. It’s the same in sports [as in] the beauty industry: Winning is the best recipe to create success, because success attracts success.”
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