Coty Begins Portfolio Pruning; Farewell, Younique
Coty purchased a 60% stake in Younique in early 2017, touting the startup as “one of the most engaging and fastest-growing e-commerce companies in beauty.” However, growth in the social-selling business has slowed over the past year and “presenter” levels have declined despite enhancements to Younique’s compensation program, making it an not-so-surprising discard in Coty’s simplification effort.
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Leadership assured analysts on 6 November that Coty's Professional Beauty and Brazilian businesses are strong performers of high interest to potential acquirers, unlike Younique. Coty recently sold its majority stake in the social selling company back to its founders at a price that raised eyebrows.
Historically, Coty has been too dependent on promotion versus advertising and shy about taking pricing – but no longer, says CEO Pierre Laubies. Along with strategic innovation and portfolio optimization, stronger advertising behind leading brands is key to re-energizing the firm’s Consumer Beauty business, the exec said, noting, “Our consumers need to be reminded permanently of the strength of our brands.”
The firm’s “realistic” four-year plan, unveiled 1 July, is designed “to build a better business … while we gradually prepare for growth.” The turnaround effort is expected to cost Coty $600m over the 2020-2023 period and includes a $3bn impairment charge, largely within its ailing Consumer Beauty unit, to be recorded in fiscal 2019.