By Samantha Conti
with contributions from Allison Collins
 on February 28, 2020
Pierre Denis

LONDON — Pierre Laubies is out, and Pierre Denis is in as chief executive officer of Coty Inc.

Denis, who is currently ceo of Jimmy Choo, will be making the leap from footwear to fragrance, Coty’s chairman Peter Harf confirmed early Friday. Denis will replace Laubies, who took over the role in November 2018, and will be the third Coty ceo in as many years.

Coty, which announced a series of management and board changes on Friday, said Denis would take up his role this summer upon the conclusion of a strategic review under way. In another change, Pierre-André Térisse, chief financial officer of Coty, will add the role of chief operating officer. Isabelle Parize and Justine Tan have been named non-executive directors of the Coty board, effective Feb. 27.

“Pierre Denis brings a wealth of cosmetics and luxury experience in developed and developing markets, including in Asia, and I have admired his work for many years,” Harf said. “Pierre will work closely with Pierre-André Térisse, who intimately knows the company’s operations and finances, to ensure that Coty is well-positioned to capture myriad growth opportunities and accelerate top-line performance.”

Harf added that Denis’ “extensive sector experience” would be invaluable to accelerating top-line growth across Coty’s core categories: fragrances, cosmetics and skin care. He will assume responsibility for the marketing, sales, human resources, research and development and legal organizations.

Denis is no stranger to Coty — or to Harf: Last October, Denis joined the board of the fragrance house, which has seen a revolving door of top management since its ill-fated acquisition of a slew of consumer brands from Procter & Gamble in 2016. Harf is also chairman of JAB, the majority owner of the publicly listed Coty, and the former owner of Jimmy Choo.

Denis is a smart, cool-headed leader who has been working toward turning Choo into a $1 billion brand under new owners Capri Holdings. “We want to be a global accessories brand,” he told WWD in an interview last year. As a leader, he’s an all-rounder, having helped to take the company public on the London Stock Exchange in 2014 under JAB, and guiding on marketing and product.

During that same interview last year, Denis said sneakers changed the entire dynamic of the shoe market, and Choo moved with the times. “Had we stuck with the pointy toe, we would have been in trouble,” he said, adding that pivot helped the brand pick up younger customers, particularly in Asia.

On Friday, Harf also paid tribute to Laubies, saying he had done much in his short tenure: “In less than 18 months, Pierre Laubies and his team have implemented a number of strategic initiatives to position the company for sustainable growth and long-term success. I would like to thank Pierre for his decisive contributions to Coty.”

Laubies stepped up the execution of consumer brands, streamlined the organization and supply chain, and improved free cash-flow, allowing the company to deliver on its financial targets, Coty said. Laubies also initiated the strategic review of the professional and associated hair businesses and, through the partnership with Kylie Beauty, began the company’s expansion into key growth segments.

Wall Street analysts were generally surprised by the shift, noting that Laubies has been in place for just over a year.

“Phase one of the turnaround is complete, and now they’re going to focus on improving sales growth and this person Pierre Denis is the person to do this,” said Stifel analyst Mark Astrachan, who voiced concern around Coty’s turnaround efforts. “I don’t think they’ve demonstrated consistency in improving results or executing the turnaround…it remains to be seen whether this company can really improve.”

“JAB seems to try to find the right fit for someone who can turnaround the business, and they don’t seem to have found that yet,” Astrachan added, talking about the frequent executive changes at the Coty.

Wells Fargo analyst Joe Lachky noted that while Laubies has helped to “bring an element of stability back to Coty’s financial performance…we can’t help but view this as an incremental negative as a ceo transition in the midst of so much organization change brings additional uncertainty to the story.”

Denis has been the ceo of Jimmy Choo since 2012, but also has extensive beauty industry experience. He started his career in perfume at Jean Patou before joining the perfume and cosmetics division of LVMH Moët Hennessy Louis Vuitton in 1992.

He later became the Asia-Pacific managing director for Parfums Christian Dior in 1999, adding responsibility for Christian Dior Couture in 2003. Denis later ran the John Galliano brand as managing director, where he developed the contemporary lines and grew the licensing business. Jimmy Choo has a fragrance licensing deal with Inter Parfums.

Denis will replace Laubies, who had previously worked at Mars and most recently, was the ceo of Jacobs Douwe Egberts, where he successfully integrated the Mondelez coffee business. He had been in the role for a little over a year.

Laubies had succeeded Coty’s former ceo, Camillo Pane, who took the helm as Coty acquired 41 beauty brands from Procter & Gamble, in 2016.

That M&A move proved a major challenge for Coty, which found it difficult to integrate the P&G brands, and is planning to divest brands and divisions. The parent of brands including Rimmel and Max Factor delivered a poor performance in the quarter ended Dec. 31. Coty’s consumer segment posted a 17.4 percent year-over-year decline, with about $800 million in net sales.

Those numbers dragged down Coty’s overall figures for the quarter. The company posted $2.3 billion in net sales, down 6.6 percent from the prior-year period. Luxury division sales were down slightly, 0.1 percent, to about $1 billion. The Professional division, which Coty plans to sell, saw a 0.6 percent net sales gain in the quarter, to $528.8 million. Executives said the sale exploration process is on track to be completed by summertime.

Under Laubies, the aim of the turnaround strategy was to improve margins, lower the EBITDA ratio and institute an organizational restructuring complete with regional heads. Coty is also establishing a global headquarters in Amsterdam, although the Luxury division is to remain based in Paris and the Professional division in Geneva.

Coty’s announced target for fiscal 2023 is an operating margin of between 14 percent and 16 percent, free cash flow of around $1 billion, and a net debt to EBITDA leverage ratio of less than four times. Pillar one of the plan is to “rediscover growth” and the second pillar is operational leadership.

In a bid to fuel growth, Laubies’ strategy was to reshape and simplify Coty’s business. In August, as part of a new phase of the turnaround, Coty divested its 60 percent stake in Younique, marking its exit from the mulitilevel marketing business. The move allowed Coty to focus its energies on the other business units.

While divestitures have been part of Coty’s strategy — including hiring Credit Suisse in October to explore alternatives for Coty’s Professional division, with the intention to focus on fragrance and cosmetics — so, too, have acquisitions. In November 2019, Coty purchased a majority stake in Kylie Jenner’s beauty empire in a deal that valued the company at about $1.2 billion.

Not all analysts are on board with Coty’s current M&A strategy. Astrachan said he is skeptical of Coty’s plan to sell the “best assets,” meaning the professional division. “Nor do I think buying brands like Kylie are the answer, either,” he said.

Coty owns three of the top 10 fragrance brands, four of the top mass cosmetics brands and three of the top hair color brands.

Coty vies with L’Oréal for first rank in the designer fragrance category. It’s a race that has intensified, after the French beauty giant acquired the Thierry Mugler and Azzaro fragrance business from Groupe Clarins and scored the Prada and fragrance licenses from Puig.

Another pressure on Coty includes the shedding of some top management. Claudia Marcocci, for instance, who served as senior vice president of Gucci Beauty, has just moved over to LVMH Moët Hennessy Louis Vuitton as brand general director of Parfums Christian Dior.

Gucci owner Kering has also publicly expressed concerns over the beauty license. Jean-François Palus, group managing director of Kering, said Gucci beauty “should do far better” on the company’s Feb. 12 earnings call. “The potential is absolutely huge and we are quite frustrated by the speed at which this potential is being exploited,” he said, noting that Saint Laurent, which is five times smaller than Gucci in terms of revenues, has a bigger beauty business under its license with L’Oréal.

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