Coty Acknowledges Market Has Changed Since P&G Brands Came Aboard
This article was originally published in The Rose Sheet
Coty’s ongoing integration of P&G beauty assets, going on two years after the deal’s completion, has compounded challenges for its Consumer business, which faces a very different market today compared with conditions when Coty outbid rivals for CoverGirl, Max Factor and other P&G castoffs.
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The firm’s “realistic” four-year plan, unveiled 1 July, is designed “to build a better business … while we gradually prepare for growth.” The turnaround effort is expected to cost Coty $600m over the 2020-2023 period and includes a $3bn impairment charge, largely within its ailing Consumer Beauty unit, to be recorded in fiscal 2019.
Following a third quarter marked by continued Consumer Beauty declines and downturns in its Luxury and Professional segments, Coty will present its promised turnaround plan July 1. Company leadership has emphasized a need for portfolio streamlining and targeted advertising and promotional investments; its strategy on the innovation front has been less clear to date.
Coty’s improved second-quarter results, and Pierre Laubies’ remarks in his first earnings call as the company’s chief exec, charmed the investment community, though a detailed strategy from management – including its plan for the ailing Consumer Beauty unit – is still to come.