About NOXELL CORPORATION

Sarah Jessica Parker, Beyoncé, and Lady Gaga are just a few of the celebs to promote Coty, the third-largest maker of fragrances and beauty products for men and women (behind LOréal and Unilever). Coty has turned heads since François Coty created his first perfume, La Rose Jacqueminot, in 1904. Its lineup ranges from moderately priced scents sold globally by mass retailers to prestige fragrances and nail polishes found in department stores. Coty's brands include COVERGIRL, adidas, philosophy, Rimmel, and Sally Hansen. Its prestige perfume labels are led by Calvin Klein and Gucci. In 2016, the company acquired Procter & Gamble's Specialty Beauty Business for $11.4 billion to boost its image in the beauty products industry.

Operations

Coty divides its activities among four product segments: Fragrances; Brazil acquisition; Color Cosmetics; and, Skin and Body Care. Fragrances are its main revenue engine and traditionally deliver 46% of all sales. Across the segments, Coty identifies "power brands;" its top 10 brands are leading sellers and have the strongest potential for further growth thanks to their presence in all major distribution channels in both prestige and mass markets. The vast remaining portfolio is recognized as "beauty brands," or mass-market products positioned to retain a mainstream following.

Coty manufactures about two-thirds of its scents and other beauty products at eight facilities dotting China, France, Monaco, Spain, the UK, and the US (Sanford, North Carolina). About 30% of Coty's products are made to specification by third parties.

The Brazil Acquisition segment represents revenues and expenses generated from multiple product groupings such as skin care, nail care, deodorants, and hair care products which are principally sold within Brazil.

Geographic Reach

The US accounts for 29% of Coty's sales. Europe, the Middle East and Africa accounts for 50% of sales, while the Asia-Pacific Region contributes about 12%. The New York-based company has five R&D facilities in the US (California, New Jersey), Europe (Switzerland, Monaco), and China. It also has eight manufacturing plants in the US, UK, China, France, and Spain.

The company has offices in more than 35 countries and markets, sells, and distributes products in more than 130 countries and territories.

Sales and Marketing

Coty's products are sold in retail stores and through travel retail sales channels, including duty-free shops, airlines, cruise ships, and other tax-free zones. It also sells products online, door-to-door in some markets, and via TV shopping channels, such as QVC. The company's advertising and promotional costs for fiscal 2016, 2015, and 2014 was $1.3 billion, $1.4 billion and $1.5 billion, respectively.

Recent ad campaigns have included Kate Moss, Georgia May Jagger and Rita Ora for Rimmel, Gwen Stefani for OPI, Christy Turlington and Ed Burns for Calvin Klein Eternity and a TV spot for Marc Jacobs Daisy Dream directed by long-time Marc Jacobs muse Sofia Coppola.

Financial Performance

Coty has seen its net sales decline since 2014.

In fiscal 2016 (ended June), net sales decreased by $46 million compared to 2015. The primary reason was due to decreased sales from its Fragrances segment. The Skin and Body care segment also contributed to the decrease.

The decline in Fragrance segment net revenues reflected negative foreign currency exchange translations and a decrease in unit volume. It also reflected lower net revenues from celebrity and lifestyle brands in the mass retail channel, in part due to brands that are later in their lifecycles and Coty's continued efforts to execute portfolio rationalization on lower-volume product lines in non-strategic distribution channels.

The Skin and Body care segment's net revenues decrease was the result of a negative foreign currency exchange translations, a decrease in unit volume, and a negative price and mix impact. The discontinuation of TJoy and China Optimization also had a negative impact on net revenues as the result of unit decline.

In fiscal 2016, Coty's net income decreased by $80 million due to increased acquisition-related costs and lower sales. That year the company incurred $197.5 million of costs related to acquisition activities, including $174 million primarily in connection with the acquisition of P&G Beauty Brands, and $20.3 million of costs related to the Brazil and Bourjois acquisitions.

Net cash provided by the operating activities decreased by $25 million compared to 2015.

Strategy

The Coty 2020 strategic plan includes developing its power brands, with a strong focus on superior innovation and increased investment in brand support; strengthening the company's global positions in fragrances and color cosmetics and expanding its presence in skin and body care through organic growth and acquisitions; expanding in emerging markets; leveraging its multichannel distribution capabilities; and gaining organizational efficiency and simplification through a global efficiency plan.

With soft sales in the developed world, Coty is looking to expand distribution in developing markets, including Brazil, China, India, and Thailand. In 2014 the company entered into an agreement in which Li & Fung will distribute some of Coty's power brands in China, including adidas, Rimmel, and Playboy. Coty and Avon Products also signed a deal that year by which select Coty fragrances will be marketed and sold through Avon Brazil's network of 1.5 million independent sales Representatives.

It is looks to joint ventures, including those with Piaggio Group in 2014, Frajo Internacional in 2013, and LG Household & Health Care in 2012.

Strategically, Coty has made the most of a number of licensing agreements. It holds a pact with the Italian design house Bottega Veneta, owned by Kering. Other high-profile agreements include fragrance partnerships with Beyoncé, Jennifer Lopez, and Lady Gaga. Brand names in Coty's prestige portfolio include Chopard, Davidoff, Jil Sander, and Vera Wang, to name just a few.

The company is known for back-to-back revisions to its growth strategy while rallying as "the new emerging leader in beauty." Coty is focused on making over its global power brand lineup through product innovation and diversification, acquisitions, and licensing agreements with high-dollar names.

Mergers and Acquisitions

In early 2017, Coty agreed to acquire 60% of privately held Younique LLC for $600 million, in order to reduce dependence on Coty's ailing fragrance business.

In 2016 the company acquired Procter & Gamble Company's Specialty Beauty Business, including the COVERGIRL and Max Factor cosmetics brands and the Hugo Boss and Gucci fragrance brands. The deal, valued at a hefty $11.4 billion, bolstered Coty's market presence as a beauty products company, ranking it third behind LOréal and Unilever. Coty also closed the acquisition ranked #1 in the market in fragrance products and #2 in salon hair products. Coty's geographic presence was also significantly expanded following the deal, which boosted its presence in its existing North America, Europe, Middle East, and Asia territories. It also gained greater access to key markets in Japan and Brazil.

That year, Coty acquired the personal care and beauty business (The Beauty Business) of Hypermarcas S.A. for R$3,599.5 million, providing Coty with a critical mass platform in the Brazilian beauty market. The Beauty Business's leading brands include Monange, Risqué, Bozzano, Paixão and Biocolor.

In 2015 Coty bought the Bourjois cosmetics brand from Chanel S.A. to strengthen its global position in color cosmetics. Based in France, Bourjois operates in more than 50 countries.

That year the company acquired UK based Lena White Ltd., an international distributor of nail care brand OPI, Coty's power brands. Lena White Ltd has served as OPI's distributor in the UK for the professional and retail beauty channels. Following the acquisition Coty directly distributes its branded products.

Company Background

The German investment firm Joh. A. Benckiser SE, bought Coty from Pfizer in 1992 to steer its fragrance and cosmetics business. In 2013, the company went public. Coty sold 57.1 million shares at $17.50 each to raise about $1 billion in its June 2013 initial public offering. By opening its doors to public ownership, the beauty products maker gave its owners, which included the billionaire Reimann family through Joh. A. Benckiser (JAB), an opportunity to cash out. Following the IPO, JAB and two other Coty owners, Berkshire Partners and Rhone Capital, control nearly 98% of the company's voting rights. Coty did not receive any proceeds from the offering.

Coty was founded in Paris in 1904 after François Coty created his first perfume, La Rose Jacqueminot.

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NOXELL CORPORATION

11050 York Rd
Hunt Valley, MD 21030-2098
Phone: 1 (410) 785-7300
Fax: 1 (410) 785-4743

Stats

  • Employer Type: Public
  • Vice President Admin: Stanley Boric
  • Vice President: Richard G Pease
  • Pres: Marc S Pritchard
  • Employees: 1,509

Major Office Locations

  • Hunt Valley, MD
  • Cincinnati, OH