Skip to main content

A trader works at the post that trades Coty on the floor of the New York Stock Exchange on June 13, 2013.

Brendan McDermid/Reuters

Coty Inc is exploring the sale of its business unit that houses hair and nail care brands such as Wella, Clairol and OPI as part of its plan to whittle down its portfolio and cut debt, sending its shares up nearly 14 per cent on Monday.

The cosmetics company has struggled to integrate about 40 beauty brands, including Covergirl and Max Factor, that it bought from Procter & Gamble in 2016, forcing it to take billions of dollars in writedowns and outline a four-year restructuring plan.

The company also said it was exploring options for its Brazilian unit as it shifts its focus to its fragrance, cosmetics and skin care businesses.

Story continues below advertisement

“Coty is the No. 2 player in the global professional hair business, which has high consumer loyalty and should be an attractive business to a potential buyer,” Wells Fargo analyst Joe Lachky said.

Lachky, however, said the company’s Brazil business was less attractive given the macro-economic volatility in the country.

Coty’s professional beauty unit, which primarily sells hair and nail care products to salon professionals, raked in about $1.81 billion in annual sales and accounted for about 21 per cent of its total revenue.

The unit, however, has seen falling sales in the last four quarters.

“(The announcement) accelerates this transformation and will help ... deleverage our balance sheet, and improve our ability to invest in areas with the greatest growth potential,” Chief executive Officer Pierre Laubies said.

Coty said it would use the proceeds from any of the transactions to pay down debt and return excess cash to shareholders.

The company, which is majority owned by German conglomerate JAB Holdings, has hired Credit Suisse to run a sale process for the units, which generated about $2.7 billion in net revenue in fiscal 2019.

Story continues below advertisement

Earlier this year, JAB raised its stake in Coty to 60 per cent, giving it a firmer grip on the company.

Our Morning Update and Evening Update newsletters are written by Globe editors, giving you a concise summary of the day’s most important headlines. Sign up today.

Report an error
Tickers mentioned in this story
Unchecking box will stop auto data updates
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter
To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies