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The New York-based firm, which has a strong European sensibility, is looking for targets to fortify its color cosmetics and skin care businesses, and lessen its dependence on the troubled fragrance industry. The strategy also will catapult Coty to its goal of hitting the $5 billion mark by 2010.
In December, Coty took a decisive step closer to becoming a more well-rounded beauty player by acquiring DLI Holding Corp., which is known in the beauty industry as Del Laboratories, for an estimated $800 million.
"We have a strategy to really build out our three pillars: fragrance, color cosmetics and skin care," said Coty chief executive officer Bernd Beetz. "We succeeded over the last five years to have double-digit growth on our existing base business, and that is what we continue to project for the future. Plus we always think about adding acquisitions."
The Del Labs purchase — which added Sally Hansen, the budget color line NYC New York Color, La Cross implements and Orajel oral care — has shifted the ratios of Coty's key pillars of fragrance, cosmetics and skin care. Prior to Del Labs, fragrance accounted for 70 percent of company sales, color cosmetics for 15 percent and toiletries and skin care for the remaining 15 percent combined. Those percentages have now shifted to 61 percent for fragrance, 25 percent for color and 14 percent for toiletries and skin care.
Coty plans to grow its cosmetics business — which prior to Del Labs was anchored by the Rimmel brand — with the launch next month of Sally Hansen Natural Beauty, a cosmetics line created in collaboration with the resident makeup artist Carmindy of TLC's "What Not to Wear." Natural Beauty marks Sally Hansen's second stab at color — the brand launched the now defunct Healing Beauty line in 2003. High prices were likely to blame for Healing Beauty's shortcomings, said industry sources, but retailers seem optimistic about the introduction of Natural Beauty.
Sherry Saffert, divisional merchandise manager of beauty care for CVS Pharmacy, said of Natural Beauty, "The new line has a quality ingredient story with premium packaging and pricing. It is a full color assortment line inspired by Carmindy...with the customer in mind." She added CVS has allotted two-feet of space in its "best doors" for Natural Beauty, alongside similarly positioned brands, including Physicians Formula, Almay and Neutrogena.