Struggling Beauty Giant Coty to Restructure Operations
July 01 2019 - 8:48AM
Dow Jones News
By Sharon Terlep
Cosmetics and fragrance giant Coty Inc. said it would
restructure its operations and take a $3 billion write-down on the
multibillion-dollar beauty business it acquired nearly three years
ago from Procter & Gamble Co.
Coty, whose products include OPI nail polish and CoverGirl
makeup, said Monday it struck a deal with creditors to provide
enough funding to carry out a restructuring plan that will downsize
staffing and product offerings while reorganizing the business into
distinct geographic units.
The company, which has struggled with weak sales and changed
CEOs late last year, didn't say how many jobs would be affected. It
expects to book $600 million in restructuring costs over several
years.
"Clearly we are under performing, we want to close the
performance gap." Coty CEO Pierre Laubies said in an interview.
"The way to turn around is to start quickly and build
progressively."
As part of the plan, Coty will move its headquarters from New
York to Amsterdam, which is closer to the company's main markets
and a, "cost efficient and tax stable location," Coty said in a
statement.
Coty has been weighed down by the $12 billion purchase in 2016
of P&G beauty brands. The company has said the brands were in
worse shape than Coty anticipated when agreeing to the deal and
have continued to decline as consumers shift away from mass-market
brands sold in drugstores.
The merger, completed in 2016, gave Coty more than 40 brands
from P&G like CoverGirl, Max Factor and Clairol to better
compete against other conglomerates.
While Coty's luxury and professional divisions have performed
solidly, the consumer beauty unit, which comprised nearly half of
Coty's revenue, has continued to decline. Camillo Pane resigned
abruptly last fall as chief executive and was replaced by Mr.
Laubies.
Write to Sharon Terlep at sharon.terlep@wsj.com
(END) Dow Jones Newswires
July 01, 2019 08:33 ET (12:33 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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