Coty forms new subsidiary in South Africa
NEW YORK — Beauty company Coty has announced the formation of a new, wholly owned subsidiary in South Africa in order to direct, manage and fully operate all of its South African business as well as its business in 13 other African countries.
Through a strategic agreement with long-term partner Indigo Brands Proprietary, a wholly owned subsidiary of AVI, Coty has secured Indigo and other subsidiaries of AVI as the exclusive manufacturer, distributor and marketer of Coty’s brands. For the past 13 years, Indigo has served as the exclusive licensee of Coty’s mass brands in South Africa.
This new agreement will allow Coty to closely manage its business, give it more financial freedom to promote Coty mass brands sales growth and enable Coty to increase its footprint in the region, the beauty company stated.
"This enhanced operating agreement will allow us to drive growth in Africa," stated Michele Scannavini, CEO of Coty. "We have been very happy with our partnership with Indigo and look forward to working with AVI. Our 13 year history of successful collaboration is a positive sign of even better developments yet to come."
Coty reports Q1 results
NEW YORK — Coty posted a decline in net revenues during the first quarter, driven by a slowdown in the mass nail and fragrance markets, and consequently reduced low orders and trade destocking particularly in the U.S. mass channel.
“In the first quarter we faced a significant market slowdown in the fragrance and nail categories, particularly in the United States. This triggered heavy trade destocking and a slower order pace that meaningfully affected our U.S. mass market and overall business,” stated Michele Scannavini, CEO of Coty. “On the other hand, we are very pleased with our growth in the prestige channel and in the emerging markets, areas we had targeted for accelerated development.”
Net revenues during the quarter ended Sept. 30 totaled $1.2 billion, down 2.6% like-for-like and 2.9% as reported from the prior year. The company noted that the like-for-like decline was driven by the Americas, which experienced a 10% drop largely due to consumption slowdown in the mass nail and fragrance markets.
Net income increased to $93.5 million from $86.7 million in the year-ago period.
The decline in revenues was concentrated in color cosmetics, particularly Sally Hansen, which was impacted by the sudden and sharp trend inversion in the U.S. nail market, as well as increased competitiveness in the category.
Meanwhile, Rimmel continued to grow during the quarter. Over the last 12 months, Rimmel has been the fastest growing color cosmetics brand within the top 10 in the U.S. mass market, the company stated.
Fragrances grew 1% like-for-like, led by power brands Calvin Klein, Chloe and Davidoff. Segment growth also was driven by the strengthening of the Roberto Cavalli brand through new launches Just Cavalli for Him and Just Cavalli for Her, and the new launch of Katy Perry’s Killer Queen. Overall growth, however, was mitigated by the decline in certain celebrity fragrances and by expired licenses, including Kenneth Cole.
In the skin and body care segment, net revenues slipped 2% on a like-for-like basis, due in part to declines in the TJoy brand, mostly because of distribution network reorganization.
Looking ahead, the company stated that it expects to see the challenges coming from the market slowdown and trade destocking in the United States, and from the highly promotional environment in Europe, to continue in the next quarter. In the second half, Coty is looking to return to top-line growth in line with or better than the markets where the company competes, fueled by further acceleration of its growth in emerging markets, innovation and investment plans supporting its power brands.
L’Oréal USA names Digitas its digital agency of record
NEW YORK — L’Oréal USA has named Digitas its new digital agency of record, responsible for the digital media planning and buying for all of the company’s brands.
L’Oréal USA has been on an aggressive path in growing its digital business during the last several years as it continues to be an increasing part of its media mix. The 2013 L2 Digital Index was recently released showing L’Oréal USA brands in the top three in beauty in the Genius Category. These included Lancome, Kiehl’s Since 1851 and L’Oreal Paris.
"As the company continues to aggressively grow its presence in the digital media landscape, it is important to partner with an agency that will continue to drive up our ROI for the business," stated Marc Speichert, chief marketing officer of L’Oréal Americas. "We are confident that the selection of Digitas will serve to achieve this as the agency works to increase the company’s leverage with our strategic digital joint ventures and business partners. Digitas will also play an important role as we continue to drive innovation and experimentation in digital, which is critical to L’Oréal’s global goal of gaining one billion new consumers by 2020."
The move does not affect Labelium who will continue as L’Oréal USA’s search agency of record for SEO and SEM.