Coty has announed it is "exploring strategic options" for its Professional Beauty Business -- and options include selling it.
Coty's pro beauty brands include Wella, Clairol, OPI, and ghd.
Coty is launching a process to explore strategic alternatives for its Professional Beauty business and associated hair brands, as well as the company’s Brazilian operations, including a divesture. The Company expects that the proceeds from any potential transaction will be used to pay down debt and return excess cash directly to shareholders.
This is the next step in Coty's ongoing transformation, a press release states, and moving forward the company will focus more intently on its fragrance, cosmetics and skin care businesses.
Coty stated: "After a thorough analysis, the management team and Board reached the conclusion that even with its strong current performance, the future growth opportunities of the Professional Beauty business lie increasingly outside the Company’s core strategic focus."
Pierre Laubies, chief executive officer, Coty, comments, “After stabilizing our operations in fiscal 2019, we announced in early July a plan to turn around Coty’s performance. Today’s announcement accelerates this transformation and will help reposition Coty as a more focused and agile company, deleverage our balance sheet, and improve our ability to invest in areas with the greatest growth potential."
Laubies continues, "The Professional Beauty teams have done an incredible job over the past three years in creating a strong business platform, putting us in the favorable position to find the best owner for that business while unlocking significant value for Coty Shareholders and allowing us to further grow our core remaining businesses.”
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.”
More About Coty's Professional Beauty Division
Coty’s professional business is the global #2 in professional hair.
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.
Once completed, Coty expects to be more focused, step up its innovation capabilities and benefit from its exceptional position in high-growth categories and ownership of world-class brands.
The luxury unit has a unique portfolio of licenses including Gucci, Burberry, Hugo Boss and Calvin Klein; the cosmetics business includes iconic brands such as Rimmel, Max Factor, Covergirl and Sally Hansen; and its leading skin care brands include Lancaster and philosophy.