Coty Inc.’s first trading day got off to a lukewarm start on Thursday.

This story first appeared in the June 14, 2013 issue of WWD. Subscribe Today.

Making its debut against the backdrop of a robust stock market, Coty’s shares — initially priced at $17.50 — had dropped to $16.90 by late morning, but began to rebound throughout the day to close at $17.36 on Thursday, or down 0.8 percent, on the New York Stock Exchange. The closing stock price values Coty at roughly $6.94 billion.

Investors may be taking a wait-and-see approach to the company, which has seen a slowdown in top-line growth so far this year. Organic sales are up 2 percent year-to-date for fiscal 2013, compared with 8 percent in fiscal 2012, noted Linda Bolton Weiser, an analyst at B. Riley & Co. “There is healthy interest out there, but [potential investors] want to see a better performance. It’s a bit of a ‘show me’ situation,” said Weiser.

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Coty’s chief executive officer, Michele Scannavini, celebrated the company’s initial public offering by ringing the opening bell at the New York Stock Exchange on Thursday, standing alongside the firm’s executive team and designer Vera Wang, whose fragrances are produced by Coty.

“It was a defining moment for us,” Scannavini told WWD, following the bell ringing. “We worked so hard over the last year to get there.”

Scannavini said the IPO will not materially impact the company or its modus operandi. “The people are the same as before. The business is the same as before, and the challenges and successes are the same as before,” said Scannavini. “Our priority is to grow in-line or better than the market and to expand the operating margin. We want to defend or increase market share.”

In terms of category focus, he said Coty will continue to work to build all three of its businesses — fragrance, which accounts for the bulk of its sales, cosmetics and skin care. “We believe there are opportunities to grow each of them.” He did note that as little as six years ago, fragrance accounted for 70 percent of the business. Today, it’s 53 percent. “We are evolving the portfolio.”

Over the last decade in particular, Coty has worked to round out its portfolio by acquiring a number of color cosmetics and skin-care brands. In recent years, the company spent $2.14 billion to buy TJoy, Dr. Scheller, OPI and Philosophy. Potential investors have zeroed in on its struggling Philosophy brand, which has built its business in the specialty channel and via TV retailing. Coty acquired Philosophy for $929.7 million in cash in 2011, but a year later took $515 million in impairment charges to adjust the value of the trademark and account for the impact of weaker-than-expected sales and a slower international rollout than anticipated.

“We are very happy with the brand. It has a unique and special position in the U.S. skin-care market,” said Scannavini, who noted the U.S. accounts for 93 percent of Philosophy’s sales. The aim, he added, is to bolster international sales with “a slow build,” particularly across Anglo-Saxon countries or markets with strong preferences for U.S. brands. For instance, he said Philosophy has recently entered the U.K. and the Netherlands, and entered Asia in Singapore, Taiwan and South Korea. “We will be very selective in expanding,” said Scannavini. Asked if the brand’s whimsical natural will play well in Asia, where consumers gravitate toward more serious concepts, he said the brand will test in certain markets to see how it performs.

The company as a whole is looking to expand its international footprint. “We are increasing our focus on emerging markets and investing to increase our capabilities in those markets. We are rebalancing our business from consolidated, developed countries to emerging markets,” said Scannavini.

After the close of market on Wednesday, Coty priced its shares at $17.50, at the midpoint of its forecasted range of $16.50 to $18.50, and raised nearly $1 billion.

Coty will not receive any proceeds from the offering; all the money will go to selling shareholders, namely Joh. A. Benckiser GmbH, Berkshire Partners and Rhone Capital. These three shareholders continue to control 97.7 percent of the company’s voting rights and approximately 81.1 percent of the total equity ownership.

For Coty, the day marked the end of several years of shifting strategies to enter the public markets.

In May 2012, Coty resumed work on its IPO after its failed attempted to acquire the struggling direct seller Avon Products Inc. with a bid of $10.7 billion. The following month it filed the initial paperwork for an IPO with the Securities and Exchange Commission. But an unanticipated ceo change delayed the process, pushing the IPO into this year, said industry sources. In July, Bernd Beetz, the mastermind of Coty’s current business strategy, stepped down and was replaced by Scannavini, who was formerly president of Coty Prestige.

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