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Coty Announces New Partnership with Younique

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Jan. 13 2017, Updated 7:37 a.m. ET

Price movement

Coty (COTY) has a market cap of $14.0 billion and rose 0.58% to close at $18.96 per share on January 10, 2017. The stock’s weekly, monthly, and YTD (year-to-date) price movements were 1.6%, 0.10%, and 3.6%, respectively, on the same day.

COTY is now trading 1.4% above its 20-day moving average, 2.1% below its 50-day moving average, and 22.5% below its 200-day moving average.

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Related ETF and peers

The AdvisorShares TrimTabs Float Shrink (TTFS) invests 1.0% of its holdings in Coty. The YTD price movement of TTFS was 1.7% on January 10.

The market caps of Coty’s competitors are as follows:

  • Procter & Gamble (PG): $223.5 billion
  • Walgreens Boots Alliance (WBA): $89.1 billion
  • Estée Lauder (EL): $28.1 billion

Latest news on Coty

Coty has entered into an agreement to acquire 60% in Younique for ~$600 million in cash. It will fund this transaction with cash in hand and debt facilities. Younique is an online platform for beauty segment.

The company reported: “This partnership will combine Younique’s high growth e-commerce platform and social selling direct-to-customer business model with Coty’s beauty product R&D and innovation know-how, as well as its extensive manufacturing and supply chain capabilities. Together, Younique and Coty expect to accelerate the product offering and geographical expansion of Younique.”

This transaction is expected to close in fiscal 3Q17.

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Coty’s performance in fiscal 1Q17

Coty reported fiscal 1Q17 net revenue of $1.08 billion—a YoY (year-over-year) fall of 2.7%, as compared to $1.11 billion in fiscal 1Q16. The fall was due to negative foreign exchange and the impact on its underlying business by resources used for the closure of the P&G Specialty Beauty Business merger.

However, the fall in revenue was partially offset by revenue from its Brazil acquisition. Revenues from its Fragrances, Color Cosmetics, and Skin & Body Care segments fell 10.1%, 9.8%, and 6.6%, respectively, between fiscal 1Q16 and fiscal 1Q17. The company also reported revenues of $73.0 million from the Brazilian acquisition in fiscal 1Q17.

Coty’s gross profit margin and operating margin fell 130 basis points and 300 basis points, respectively.

Net income, EPS, and cash

Coty’s net income and EPS (earnings per share) fell to $0.0 million and $0.00, respectively, in fiscal 1Q17, as compared to $125.7 million and $0.34, respectively, in fiscal 1Q16. It reported adjusted EPS of $0.23 in fiscal 1Q17—a YoY fall of 64.1%.

Coty’s cash and cash equivalents and inventories rose 1.5% and 9.0%, respectively, between fiscal 4Q16 and fiscal 1Q17. The company expects four-year synergies and working capital of $750 million and $500 million, respectively. It expects adjusted EPS of at least $1.53 in fiscal 2020.

Next, we’ll discuss Carlisle Companies (CSL).

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