Beauty Store Business magazine - January, 2020

Coty Explores Strategic Alternatives For Its Professional Beauty Business

Coty is exploring the sale of its professional hair and nail-care brands, including iconic brands such as Wella, Clairol Professional, OPI and GHD, as part of its strategic turnaround plan to tighten its portfolio and deliver financial improvements. Coty is even considering divestiture for its Brazilian operations in order to closely focus on fragrance, cosmetics and skin care. The management team and board at Coty believe the future growth opportunities of the professional beauty business lie increasingly outside the Coty’s core strategic focus.

While its consumer brands have struggled in recent years, Coty’s Professsional Beauty is strong. In fact, its professional hair division with its distinctive brand portfolio is number 2 in the world. It is the partner of choice for 250,000 hairdressers in 100 countries. The division is operationally distinct, with its own management and stand-alone business structures, as is Coty Brazil, with its distinct brand portfolio and route-to-market. The scope of the businesses under strategic review is expected to generate net revenues of approximately $2.7 billion in fiscal year 2019. The board has appointed Credit Suisse to assist with the strategic review of the Professional Beauty business and associated hair brands, as well as the company’s Brazilian operations and anticipates the process to be completed by summer 2020. Coty claims that proceeds from any transaction would be used to pay down debt and return cash directly to shareholders.

Peter Harf, chairman of the board of Coty and founder and managing partner of JAB Holdings, said “This announcement has the full support of the Board, as well as the company’s largest shareholder, JAB Holdings. The strategic review of the Professional Beauty business aims at finding the best option to realize significant value for Coty and its shareholders. The Board is highly confident in Coty’s ability to leverage our unique portfolio of fragrance, cosmetics and skin care brands, and capture the growth of the beauty category.”